Analyze Ways in Which Tesco Might Successfully Respond to a Key External Influence

Social Factors include - change in attitudes, lifestyle and issues which concern the public, such as FairTrade and the increasing demand for foreign food.

Tesco plc is a UK based international grocery and general merchandising retail chain. It is the largest British retailer by both global sales and domestic market share, is the world's third-largest grocery retailer, and is the fourth-largest retailer behind Wal-Mart of the United States, Carrefour of France, and The Home Depot of the United States.

Originally specializing in food, it has diversified into areas such as clothes, consumer electronics, consumer financial services, selling and renting DVDs, compact discs and music downloads, internet service consumer telecoms and most recently budget software.

Social Issues

Issue:

One of the most recent and controversial social issues are about the wages of farmers living in the third-world countries: the debate discusses why the farmer doesn't reap what he sows. The pressure group called "The Fairtrade", has used their power to encourage the public that it is more eco-friendly, especially for the third world countries, for large supermarkets to invest in only Fair Trade goods.

Business response:

Tesco's response to that was to invest in Fair Trade foods as soon as possible, but, they also realized that fair trade goods by its nature cost more than their previous stocks, so they decided to keep half of their other stocks and label The Fair-Trade goods with a label/logo for ease of reference by Tesco's customers.

Issue:

Because of the increased populations of migrant families within Britain, it has lead to many diverse consumers. In many regions of the UK, there is a dominant ethnic group within certain regions who have specific demands - where there is demand; there is money to be made. In the East End of London, there is an increased number of Ethnic Minority such as the West Asians. This trend needs to be catered for by Tesco by providing specialized foods.

Business response:

Currently East London branch of Tesco's provide rice, popular ready made Asian dishes and Asian spices. However, Tesco should in the near future invest in providing Halal food for the growing Muslim population for that region. At this time in experimentation, some Tesco stores are currently selling Halal food to see if sales are rapid and the popularity of the food.

Issue:

In the UK, there are many charities that need funding. The public believes that the big supermarket giants, including Tesco, are very wealthy and are trying to rip off customers.

Business response:

Because Tesco have made phenomenon profits on their supermarkets, they can afford to spend their money on charities and education. A key influence in this is that Tesco not only gets a reputable name but also the Tesco founder(s) have more power as not only do they have money but also some governmental connections.

Issue:

One of the features Tesco wants to add to its empire of supermarket chain stores is to expand Tesco's business. The problem with Tesco is that they've already expanded their business so much that it leaves no loopholes for their competitors to catch up. Also, there is an increase awareness of public realization of what is really going on; customers are beginning to suspect Tesco of being just greedy. Tesco's plan to expand their branches throughout the UK has been massively criticized in the forms of public protests and letters from angry mobs. Now, there is evidently a clear disapproval by majority of communities around the UK on not wanting more Tesco stores. This leaves Tesco with a barrier in terms of expansion of business and also prevention in the near future of keeping up with rivals.

Business Response

Again, the concept of expansion of business is challenged in terms of what Tesco has to offer. Tesco offers a wide range of goods ranging from electronic goods to clothing goods. However, Tesco's main outlet of goods should be food and groceries. Tesco's wide range of outlets means that they aren't going to be as good as specialized goods shops. For e.g. Waterstones caters for books, obviously they will have a large range of catalogue of books from all sorts of authors, but Tesco can't afford to have a wide range of catalogue - so they choose to stock the most popular books that sell like celebrity autobiographies; in this way they can keep up with demand and sell more goods - increase in profits.

So as you can see, even though Tesco cannot achieve a total control of more branches, they can change their stocks to cater for a wider range of personalities and different shopping habits.

One thing that Tesco can do to help boost their profits is to offer the best customer service from any of the other major supermarkets; these include mobility access and the type of music used to tempt customers to stay. One feature they could invest in is using better technology to scan products and maybe something for the kids, like an indoor play pen for small kids or something similar.

Overall business response:

All in all, Tesco can't improve on large scale expansion like constructing newer branches, but they can offer the best customer service possible. If Tesco took a leaf from the original guidelines on how to make a successful business, they would realize that the best customer service always makes profit and gets recommendations. Tesco should pride customer loyalty by improving their Tesco clubcards so that customers get more out of it.

Tesco should now look at how their key external influence affects the public; after all, it is the public who do most of the shopping. In this fragile society that we now live in, we are ever more conscious of our surroundings and especially changes. Critics' criticisms on Tesco will have huge impact on customers, most customers would need reassurance that Tesco is not as "evil" as most critics portray it to be. So therefore, now more than ever, Tesco has to get its act up to scratch if it wants to keep it multimillionaire business running any longer.