BUS020C407A Business Organisations in a Global Economy Assignment Sample
INTRODUCTION. ( BUS020C407A Business Organisations in a Global Economy Assignment Sample )
Due to globalization and increasing technology day by day every company wants to expand its leg in the international market. Tesco is a UK based retail chain giant that has more than 6800 stores all over the world. The company is now planning to enter the Indian market with the help of Trent Hypermarket Limited, which is part of the Tata group and runs the Star Bazar chain.
Both companies have signed a deal to explore the Indian retail market with an estimated value of 500 billion dollars. In this high competition market without global expansion, the company can’t survive (Thompson et al., 2020).
Tesco is doing very good business in the UK but the market size of India for groceries is highly attractive for foreign companies so Tesco is planning to enter into the Indian market. Foreign Direct Investment in India is continuously increasing in the fiscal year of 2018-19 it was 62 billion dollars. Increasing FDI indicates that India is becoming a favorite place for foreign investors.
In this report, all other factors which can affect the company’s expansion in India are discussed. Critical analysis of all the factors will be do9ne in this rapport. The company has chosen a well established and well-known partner for entering in the market and so it will be in the favour of the company.
PESTLE ANALYSIS
Political Factors –
Political factors are very important factors to consider if the company is planning to enter the foreign market (Hecker et al., 2019). The political conditions of the UK are completely different from the political conditions of India so Tesco must have to analyze all the factors before planning to enter.
The Indian government is in favor of foreign investment in the country. The Foreign Direct Investment (FDI) of India is continuously increasing it was 55 billion dollars in 2015-2016, it increased to 60 billion dollars in the financial year of 2016-2017, and in the FY of 2018-2019, it has increased to the value of 62 billion dollars. The increasing graph of the FDI shows that the policies in India are in the favour of foreign companies that want to invest in India.
The political condition of the UK is also in the favour of the company then only the company is continuously doing growth in the UK. The company has chosen TATA as a partner to enter India and TATA is a favorite brand for the Indian government so Tesco is going to take advantage of the reputation of Tata in the Indian market.
Economical factors-
The economy of India is continuously increasing so it is the biggest market for any product so various foreign companies are attracted to it. The retail market in India has a value of 500 billion dollars and Tesco will get a huge market for its retail products.
The UK is the fifth-largest economy in the world with a 2.11 trillion dollar GDP. in the UK also companies have a great market for their products.
Tesco has total revenue of 55.5 billion Euros and it is operating in nine countries with more than 60 million customers. India is the next big target for the tesla for its global growth.
Social factors-
Social factors of the country highly affect the business of the company in any country. The behavior of the customers and the purchasing power of the customers all highly affect the market of the country (Amankwah et al., 2018). The employment rate of the country is also a very big factor to consider for the company. The purchasing power of the customers is directly proportional to the employment of the customers.
India is the second-largest country in terms of population with a 1.25 billion population so Tesco is going to get a huge number of customers here. Tata is already a trusted brand in India so Tesco will get the benefit of its trusted customers.
Tesco is selling groceries, which include the daily use items, so in India customers will be automatically attracted towards Tesco.
The culture of India is very different from the culture of the UK so companies have to think about this factor very seriously and sensitively.
In the UK, most of the customers are educated and it affects the purchasing behavior of them but in India, Tesco may have to face some difficulty in terms of the behavior of the customers.
Technological factors
The UK is more advanced than India in terms of technology so the company is using high technology for the marketing and other developing processes of the company. Tesco uses the internet and social media power for the advertisement of the products in the UK every person is using the internet and social media but in India, there are some regions where people are still unaware of the full use of the internet (Hesitate et al., 2020).
The company may face some issues in the advertisement of the product but Tata has great access to every corner of the country so Tesco will get support from Tata in full expansion of the retail chain.
Nowadays the most important factor for every company is the technological factor because it is the tool, which is used to attract the customers in the store. Tesco will also do online selling of the products with the use of technology. If their stores are equipped with different technological equipment then it will attract a huge number of customers.
Technology plays an important role in today’s world for the expansion of the business. By the use of social media platforms and different online methods, companies are enhancing their reach towards the customers.
Legal factors
Legal factors include the different type of rule and regulations which are made in the country by the government to regulate the different sectors (Christiansson et al., 2016). In India, there is not any specific law regarding retail sectors. This sector operates based on different laws like labor laws, employment laws, foreign exchange laws, and tax laws.
India is very interested in attracting foreign investments so the laws regarding the tax for the foreign companies investing in India are not much rough and tough. The Indian government is trying to increase its FDI so the policies and laws regarding foreign investment are very lenient.
Tesco is entering the Indian market with the help of Tata which is a very law-abiding company in India so Tesco will not face many difficulties in handling the laws of the Indian market.
The UK has also various laws to regulate the retail market and as the company is growing in the UK, it means Tesco is also a law-abiding company.
Labor law is a very critical law in India and companies must have to follow it strictly.
Environmental factors-
Environmental factors imply the effects a company will create on the environment due to its operation. The company is running the retail chain so there is not any big environmental threat. Environmental issues mostly occur with the manufacturing companies because their manufacturing plants can affect the environment (Alikutepa et al., 2016). Tesco is entering the Indian market with the help of Tata, which is the most trustworthy brand in India, so in terms of the environmental issue, Tesco will get the clearance very easily.
PESTLE analysis is important for any company, which is planning to enter the new market for expansion (Drive et al., 2017). If a company is expanding internationally then many factors get affected. The company now has to operate in a completely new environment to planning and analysis of the various factors quill make the company understands the condition of their new country.
Tesco is operating in the UK and various countries successfully and it has bagged the fifth position in terms of the total revenue. Now the plan of the company to enter the Indian market with Indian retail giant Tata is completely based on the analysis of the factors the company will face in India.
TESCO , was founded by Jack Cohen in 1919 as a group of market stalls in Hackney , London. It is a British multinational retailer merchandise. The headquarter is situated in Welwyn Garden City, England. It positioned world wide 3rd largest and 9th by measuring gross revenues. It’s a global retailing market. It offers various food and grocery items worldwide. The company provides its marketing on an online platform too.
As it is a very engrossing company, it faces many speed breakers too, like it has many competitive companies, wanted to take it down. As it is a big company there is the pressure of stakeholders too. That is why the company should have to change its strategy frequently. To make it position stable, it is a very big challenge to the company.
TESCO, the 1 and only retail and technology based international company, operates worldwide. The team restlessly works for the company, innovates new ideas to develop the experience better for the customers and makes it simple.
TESCO is now in Bengaluru, India, serving better every other day. The goal of the company is to “to create a sustainable competitive advantage for Tesco by standardizing processes, delivering cost savings, enabling agility and empowering our colleagues”
The company started its expansion in India, in this expansion there are some positive and negative matters to know. The positive things strengthen the company to expand while the negative things are big challenges to TESCO.
- The company was established at the time of world war 1 and now it becomes 3rdlargest engrossing company worldwide, it’s a great achievement and maintaining the position is also a great thing it has achieved. The position(Adelakun, A.)of this company is the biggest strength with highest sales and revenues make it possible.
- As it is a very big company, it has almost 27% shares in the worldwide grocery market. It holds a great dominance toward the whole retailing market. It can be challenged by anyone.
- The company diversified its branches globally. It has more than 6775 stores in 12 countries. It occupies a great market share in Asia also.
- Day by day, TESCO, enlarging its business by launching more retailing stores worldwide. It holds more shares too. The company is not stopped just with retailing business, it has launched many other divisions too, like TESCO METRO, TESCO HOMEPLUS, TESCO SUPERSTORES etc.
- TESCO makes it possible to intensify its diversity of business, like it has launched clothing items, home-ware items , mobile ranges etc.
- The biggest strength of the company is its manpower because TESCO offers more than 740K jobs worldwide.
- Though we may feel it is a very big company worldwide, we have to know that it fails to do business in Japan due to some export operations.
- TESCO was charged with fines due to a false accounting problem and it misrepresented its profit.
- Sometimes due to the fall of shares it can not operate well.
- Sometimes high debt and dues make it impossible to create a big profit. It leads to a lower margin of profit.
- TESCO has introduced many new branches like Jacks, which elaborate its path to grow.
- TESCO has enabled many new strategies to make it bigger. That’s why it can not be chased by competitors.
- TESCO introduces JOINT VENTURES where the retailing business is not growing well. It is a profoundly well market opportunity.
- TESCO is emerging its business to other countries as well in South Korea, Turkey . it can be profitable too.
- TESCO has been faced with many controversies like in the 2017 Christmas advertisement. It defames the company and makes it disrespectful.
- TESCO was labeled as it misled its customers by fake farm names. It faced many legal procedures.
- The retailing market found it a bigger problem as Britain is not in the European union now.
- And lastly, the growing competition is the biggest threat to the market as well as challenge. If the company wants to stabilize its position it has to work well in any situation.
PORTER’S FIVE FORCES ANALYSIS OT TESCO
In a detailed Porter’s five forces analysis of Tesco aims to investigate the result of the forces, i.e.
Competitive rivalry – It depends on the power of competition with rival companies. The more the competition intensifies, the more (Dumon et.al) the companies can attract customers with more cuts of price and high impact on marketing campaignings. Tesco is a UK based company but as soon as it expands the company, the company has found more rivalries as well.
The power of the supplier – This is the situation when the suppliers increase the cost of their products. The more you have to choose, it will be easy to change in the market. It is the effect of the number (Kung’u, 2017) of supplied goods and services, how important the materials are, how much it costs,
all are important in a company to switch to another supplier. The more the organization will depend on a supplier, the more the supplier will have power. If Tesco can keep the cost low for input, it will be profitable.
Buyer power – Power will increase (Bentham, 2018) only when you have more customers. It depends how many customers the company has. The company has to produce more options to be available for customers. The customer is everything in any business, customer numbers define the profit you will get. The product must as required by the customer.
Threat of substitutes – If the customers find a new substitute against yours, it will very intensify the market as well. There are many companies who offer more, that’s why the customers find them as substitutes. It can be a loss for Tesco.
The threat of new entrants – The position you are in can be threatened by a new entry in the business. For this competition must be (Haleem, F, 2017) so even. It is a big challenge for Tesco because many new companies are arriving in the market. They all are rivalries. To manage the threat of new entrants Tesco has to be strategic to face it as a challenge.
All the five forces are very important to grow for a company. Tesco is a growing company and its expansion in India will be very successful.
CONCLUSION
TESCO is a very well established company and it makes it possible to grow itself by its strategy. It always focuses on its customers to get the best. May the company grow more well. Tesco makes their way to reach very easy to use so that people can use it with ease.
If any customer found any problem regarding anything, they can go through its helpline. The first focus is to attract more customers to keep the customer attached with the company.
In spite of the gradually growing influence and spread of the company, recent studies concerning the phenomenon are still at the beginning. This tendency is confirmed by the fact that Global Fortune many firms recognize the inherent importance of the company.
The company is present in the classical promotion mix as a new, hybrid element, which affects the traditional (one-way) communication flow. Nevertheless, the first stage of the afforested studies has not described Tesco with a clear and unique perspective.
Reflective
In a wonderful and permanent manner, the advanced modern economy of the 21st century has changed the mechanical, social, instructive and world of politics. It is comprised of a threesome of intuitive powers, including globalization, advancement of business sectors and the unrest in data innovation and correspondences.
Globalization has softened public limits, free exchanging has expanded worldwide combination, and topography and time have been made old by the data and correspondence development. In the advanced worldwide economy, the position and elements of business have gained added significance and face intensifying difficulties.
We are living in an overwhelming world with continually advancing financial occasions, where the private area has become the main driver of monetary turn of events and the job and intensity of the public area has declined. The new standards of commitment in the monetary climate are set up by business people as they face contemporary difficulties and new possibilities.
Business people need to communicate an even minded vision, practice solid administration and assemble an able development plan in this advanced setting. To improve their serious edge, they should construct cooperative energies that will permit them to fuse the intelligent parts of the advanced economy. Adaptability, quick response time and an inspirational mentality to financial open doors should be embraced in their corporate procedures.
This paper will likewise list the business aptitudes, gifts, abilities and encounters that are significant pre-imperatives for accomplishment in the twenty-first century’s new worldwide economy. In a word, a worldwide business person with an unfamiliar standpoint is the financial heartbeat of the cutting edge economy.
Driven by innovation, fuelled by inventiveness and business, the monetary profile of the cutting edge modern economy is centered around new developments, new experiences and new business techniques. It has made the way for new possibilities for business venture and has filled in as an impetus for work development.
Around a similar time, the monetary climate has been modified by the cutting edge economy and the ties between different portions of the economy have been realigned. So, in the advanced modern economy of the 21st century, mechanical imagination and enterprising ventures are perfectly healthy.
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