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UNDERSTANDING TESCO'S BUSINESS ENVIRONMENT (MACRO AND MICRO-BUSINESS, COMPETITIVE ADVANTAGES, PORTER'S FIVE FORCES AND LIMITATION OF PORTER'S FIVE FORCES Free essay! Download now

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UNDERSTANDING TESCO'S BUSINESS ENVIRONMENT (MACRO AND MICRO-BUSINESS, COMPETITIVE ADVANTAGES, PORTER'S FIVE FORCES AND LIMITATION OF PORTER'S FIVE FORCES

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UNDERSTANDING TESCO'S BUSINESS ENVIRONMENT (MACRO AND MICRO-BUSINESS, COMPETITIVE ADVANTAGES, PORTER'S FIVE FORCES AND LIMITATION OF PORTER'S FIVE FORCES

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UNDERSTANDING TESCO'S BUSINESS ENVIRONMENT (MACRO AND MICRO-BUSINESS, COMPETITIVE ADVANTAGES, PORTER'S FIVE FORCES AND LIMITATION OF PORTER'S FIVE FORCES.
TESCO’S MACRO ENVIRONMENT
There are many factors that affect the dynamic of business environment and the decisions that the firm might take such as government regulation, economic situation, change in technology, change in taste and demographic change. In understanding these factors firms can group them using PESTLE analysis.
Political and legal factors
Government regulation: this is where laws are placed in order for businesses to practice fairly. The UK Government reinforced their presence and promotes fair trading practices and fair competition. For instance, according to OFT- Office of Fair Trade (2007), large UK retailers (the big four) which include Tesco collude and involve in anti-competitive practices over milk price and the parties were fined of over £116 million. This will affects Tesco’s margin and discounter strategy as they have to find another way to maximise profit due to laws impose by the Government. Also involvement in such practices might affect their reputation in the society (customer).
In addition, large supermarket using land holdings to hinder competition, in the sense that, when this top supermarkets like Tesco want to buy land they buy massive size in order to prevent its rival from coming around them and compete with them. Now the land commission said that a law will be introduced to prevent super stores from banking lands, (Rigby, 2007 Financial Time). This means that Tesco as a firm will create alternative method to stop its rivals from coming into the markets or around the stores locations. All the laws and regulations introduced by the Government is affecting Tesco from growing rapidly.
Economic factor ( Business Environment )
The UK economy is presently experiencing its worst situation as the economy declines (Credit Crunch), which has an impacts on people’s disposable income in which people are more focused on saving their money rather than consuming. This has impacts on Tesco. For instance, Tesco reveals its worst UK sales performance since the last recession caused by its heavy discounter, in order for consumer to be able to afford it, though its attracted more customers, (Braithwaite 03/12/2008 FT). However, The government has reduced interest rate 5.75% in November 2007 to 2.00% in December 2008 and also reduce VAT by 2.5%,(Bank of England 2008) in order to encourage people to spend more. Although, has failed to increase sales, (Braithwaite 06/12/2008 Financial Time).
Socio-cultural factors( Business Environment )
It is an uncontrollable variable to predict by which is the cultural value of an environment. Since the “Credit Crunch” has a massive impact on people’s spending. Notion of healthy eating, people will be more interested in buying food at supermarkets and cook it at their homes ...

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