Understanding Retailing Unit 29

1481 words 6 pages
P4 - Identify the competitive factors in the retail environment a selected organisation faces
In this assignment I will identify what competitive factors and changes Tesco faces in the retail sector and how it might respond to these under the following headings; retail environment using PESTEL, and competitive environment based on overcoming barriers to entry, pricing, new markets and mobile population. In this assignment I will be talking about how Porter’s five forces are being used by Tesco.
By using PESTEL we can see the changeable environment in which Tesco functions.
PESTEL
Political
Tesco operates in 14 different countries. Therefore its performance may be influenced by the local legislation and political factors. There are
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Technological devices used in Tesco are things such as; self checkout machines, electronic shelf labelling and electronic fund transfer system. These devices have helped Tesco improve their stocking and distribution system.
Environmental
Tesco must take social responsibility when developing a product. Tesco must cut the wastage when manufacturing a product. They must also decrease the usage of resources and reduce the environmental damage. The government has also launched new strategies for businesses to cut production waste and to reduce utilization of resources.
Legal
Tesco’s performance is affected by the laws put in place by the government. For example we can see that the Food Retailing Commission imposed Tesco to use standard pricing for products. Most businesses try to change prices on a regular basis to attract customers. However with this law retailers cannot amend the prices without any notice and it should not insist the expense from the suppliers. In order to apply politically correct pricing policies, Tesco offers customers a price cut-back on fuel purchase based on the amount spent on groceries in store. Because prices are lowered on promoted goods, prices are therefore raised elsewhere in store to balance.
Porter’s Five Forces
Porter’s five forces is a framework for an industry to analyse its business strategy and development. The five forces determine the strength and

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