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Pestle Analysis

In: Business and Management

Submitted By yoyowong
Words 1728
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Context Page

1.0 Introduction------------------------------------------------------------------------ Page 3

2.0 The history of the Co-operative Group--------------------------------------- Page 3

3.0 The strategies and reason for the growth in Co-operative---------------- Page 3

4.0 Finding

4.1 The definition of PESTLE Analysis-------------------------------------- Page 4

4.2 Political factor --------------------------------------------------------------- Page 4

4.3 Economic factor ------------------------------------------------------------- Page 5

4.4 Socio-logical factor --------------------------------------------------------- Page 5

4.5 Technology factor ----------------------------------------------------------- Page 6

4.6 Legal factor ------------------------------------------------------------------- Page 6

4.7 Environment factor --------------------------------------------------------- Page 7

5.0 Conclusion ---------------------------------------------------------------------Page7

6.0 References List----------------------------------------------------------------Page7

1.0 Introduction

This report will focus on the Co-operative Group and seek to identify the main areas of business environment such as the strategies of Co-operative Group which helped it to grown into such a big company, the definition of PESTEL analyses, and use the PESTLE analysis tools to scrutiny how six factors of external environment affected Co-operative Group. After the evaluating of these factors, this report will give the reason why about these factors will influence on the Co-operative Group. The report will settle with giving some suggestion if any problems were exposed through the study.

2.0 The background of the Co-operative Group

According to The Co-operative Group (2013), the beginning of The Co-operative Group Ltd. is compose from many independent retail stores and founded by Rochdale Society of Equitable Pioneers from 1844. It has developed over 165 years and has over 4,900 stores in UK. It is a British retail business. The group comprises service included: Food, Travel, Financial Services, Pharmacy, Legal Services and Online Electricals etc. And it has over 6 million members which is a very big company nowadays.

3.0 The strategies and reason for the growth in Co-operative

A significant corporate level strategy is diversification. According to Carol (2001) the strategy of Co-operative Group is doing a range of non-linked diversification under Co-operative including the main business of the food stores also containing the Co-operative bank, the funeral service, the travel agency and other various businesses like farming, energy services, etc. It is all succeeded under the same viewpoint which is “Here for you”. Plus, their work describing the different branches of their business under the same umbrella rather completely separate business enterprises.

4.0 Finding

4.1 The definition of PESTLE Analysis

According to Office of Government Commerce (2010) PESTLE analysis is a tool for company to understand where they stand recently and which external factors would influence their purpose in different aspect included political, economic, social, technological, environment and legal factor. In order to analysis more efficiently, beginning to analysis the factors will be definite clearly and explain separately to make sure that will completely distinguish the impact of external factors.

4.2 Political factor

As a public organization, the action of Co-operative Group can be extremely affected by the political and governmental. In term of UK employment law (2012-2013) until 2010 there are several fragments split by discrimination legislation in the UK comprise The Sex Discrimination Act (1975), the Race Relations Act (1976), the Disability Discrimination Acts (1995) and the Employment Equality (Age) Act (2005). These regulations ensure that all employees have an equality and fairness employment opportunities. Therefore Co-operative Group understands that retail business has excessive effect on jobs demand. Thus Co-operative Food offer great amount of job for needy and incapacitated teenagers to meet the request for the government which is employed from different population groups.

4.3 Economic factor

One of the economic factors is the high unemployment level. Statistic information from Older Workers Statistical Information Booklet (UK Government, 2012) showed that the unemployment rates in UK (which will be shown in Table 1) are increasing in recent years. For example, 18-24 age group unemployment rates from 9.6% in 2001 rise to 19.3% in 2012 it have increased nearly 10%. These ascend will be disturbing the demand of luxuries, even the demand for necessaries decreased for many products. As a result this factor will tend to have some negatives effect on Co-operative food in the UK food market. For instance, the financial result for Co-operative Food (2011-2012) (shown in Table 2) display that their profit have slightly decline which might be relate on this economic factor.

FINANCIAL PERFORMANCE SUMMARY 2012 2011
Food £288m £318m

4.4 Socio-logical factor

The change of demographic and lifestyle such as eating habit will lead to a reformation on the offer of product. Diagnostics Social and Market Research (2001) indicated that 20% of the clienteles from co-operative will buy the original food but 30% of the consumers are willing to buy the pre-prepared food instead of making it themselves. Also, Clarke & Bennison, et.al (1994) stated that the decreased in homemade food because of the change in demographics which is when women working nowadays are more common than before. Therefore, Co-operative need to change their products offer and increased the amount of pre-prepared products recently. Moreover, health issues are more important in recent year. Customers are willing to buy organic food more than processed food. Thus, Co-operative Food in order to satisfy the buyers need, they will increased the supply of the healthy food.

4.5 Technology factor

Technological factors refer to some new electronic technique included the changes in information and mobile technology, Electronic Funds Transfer Systems (EFTPoS) and Electronic Point of Sale (EPoS) etc. and this change will lead an innovation of Co-operative Food selling format. According to Office for National Statistic (2012) there are 80% of households in UK with internet access. Besides, the Figure below from UK government (2012) also point out that the amount of families with internet contact is progressively in UK. Thus, many supermarkets in UK have the ability and willing to sell or send their products to their customer online. The information from Co-operative Group (2013) also shown they have been presented a technological service in 2001-2002 which is an online selling and delivery service called Co-op 2u.

4.6 Legal factor

Different government legislations have a strongly link on the express to the Co-operative Group. For example, Mintel Report (2004) mention the Food Retailing Commission (FRC) advised an enforceable Code of Practice should be set up banning many of the current practices, such as demanding payments from suppliers and changing agreed prices retrospectively or without notice. The presence of powerful competitors with established brands creates a threat of intense price wars and strong requirements for product differentiation. The government’s policies for monopoly controls and reduction of buyers’ power can limit entry to this sector with such controls as license requirements and limits on access to raw materials. In order to implement politically correct pricing policies, Co-operative Food offers consumers a price reduction on fuel purchases based on the amount spent on groceries at its stores. While prices are lowered on promoted goods, prices elsewhere in the store are raised to compensate.

4.7 Environment factor

In the environment factor, “pressure groups” such as Greenpeace and the companies recognize that they have responsibility to society are very important factor that will affect in this aspect. Levy (1997) situations that global warming has becoming a serious problem recent year. Hence the Co-operative Group (2013) aim to reduce the greenhouse gas from their company and hope it can reduce around 50% until 2020. Moreover, they also mention that they are the largest buyers of renewable energy in the world as the used of electricity from their companies over 98% are green sources. In addition, Graiser and Scott (2004) illustrates that as government want to reduce the environmental damage of wasting consumption and food so government created a new tax if supermarket promote the food with highly fat. As a result, it will affect the goods range of Co-operative Food. Also need to pay extra tax to promote cause a decreased in profit.

5.0 Conclusion

To conclude, one can definitely say that the Co-operative Group had been developed into a very large and successful business during the 165 years. With the use of diversification in its business plan, they were able to include a lot of various businesses other than just food store. Although the company has been successful, there had been many factors affecting its growth throughout. Such as technology, environmental and economic factor. However, I believe the factor that had been the most effective to Co-operative Group were the legal and economic factor. The legal factor showed that the law had forbidden effective ways on how Co-operative Group makes profit. Along with the government new policies on buyer’s restriction, most likely had been a cause to slow the growth of the company. As well as economic in UK for the past few years, unemployment rate had been increasing and people would not have had the same amount of purchasing power to consume. Although factors had been affecting Co-operative Group, without doubt it is still one of the largest groups in UK at the moment.

6.0 References List
Office of Government Commerce, (2010). Management of risk: guidance for practitioners. Stationery Office, Ruth Murray-Webster.

Williams, D(2013) A guild of uk employment law (2012-2013). Head of Employment kelplittle

UK Government. Older Workers Statistical Information Booklet Published 13 December 2012 http://www.kemplittle.com/Publications/UKEmploymentGuides/Kemp%20Little%20UK%20Employment%20Guide%202012-2013.pdf#page=3&zoom=auto,0,595
UK Government. Preliminary results for The Co-operative Group for the 53 weeks ended 5 January 2013. Published March 21, 2013 http://www.co-operative.coop/corporate/Press/Press-releases/Headline-news/2012-annual-results/
Diagnostics Social And Market Research LTD.The Diffence Engine, 1999.The Failmaily Study, Manchester, CWS Ltd p.6

The Co-operative Group. http://www.co-operative.coop/corporate/aboutus/ourhistory/

The co-operative group – A Family of Businesses, Manchester, 3 CWS Communications 2001, p. 9

Strategic Management Carol Hughes REFERENCES THE CO-OPERATIVE GROUP, Working Together – CWS Social Accountability Report Year 1 Ended January 8 2000, Manchester, CWS Communications,2000. p.2 The co-operative group – A Family of Businesses, Manchester, CWS Communications 2001, p. 9

THE CO-OPERATIVE GROUP, Working Together, op. cit. p. 49 HOOVERS, Co-Operative Group Search at www.hooversonline.com

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