Strategic Analysis of Tesco: Market Analysis, Opportunities, and Threats

[STRATEGIC
MANAGEMENT AND
LEADERSHIP]
2019
Tesco

MANAGEMENT 1
Table of Contents
Introduction................................................................................................................................2
Overview of Tesco.................................................................................................................2
Mission of Tesco................................................................................................................2
Market Analysis.....................................................................................................................3
External Environment Analysis of Tesco..............................................................................3
Political Factors..................................................................................................................3
Economic Factors...............................................................................................................4
Social Factors.....................................................................................................................4
Technological factors.........................................................................................................5
Environmental Factors.......................................................................................................6
Legal Factors......................................................................................................................6
Opportunities..........................................................................................................................7
Threats....................................................................................................................................7
Porter Five Force Framework................................................................................................8
Critical evaluation of Tesco Resources................................................................................10
Value Chain Analysis of Tesco............................................................................................12
Primary Activities............................................................................................................12
Support Activities.............................................................................................................13
Challenges for Tesco............................................................................................................14
Conclusion................................................................................................................................15
References................................................................................................................................16

MANAGEMENT 2
Introduction
The term strategic management is mostly used for representing a branch of management that
is related to the development of the vision, setting objectives, and executing strategies and
taking corrective actions for the identified deviations for attaining the strategic intent of the
organization. Strategic planning is considered as the blueprint for the success of the business
(Wit and Meyer, 2010). This helps business in remaining competitive in the industry against
its competitors and standing out in the crowd. An effective strategy supports the management
to prioritize the company’s activities and the way resources need to be spent. It is an
organized way of executing the initiative of the company and objectives under the assistance
of the leaders (Wheelen, Hunger and Bamford, 2010). The intent of this paper is to perform
the strategic analysis of the Tesco Company which is involved in the retailing of groceries
and general merchandising in the UK. The strategic analysis is comprised of the review of the
external market environment of the company in order to identify the threats and possible
opportunities for the company. In addition to this, the organization's key resources are being
discussed and the challenges that a company can face in the coming future.
Overview of Tesco
Tesco is a well-established groceries and general merchandise retailer of the United
Kingdom. It is considered as the third largest retailer across the world in terms of gross
revenue. The company offerings its business in seven nations all over in Europe and Asia and
is the leading retailer in Ireland, Thailand, UK, and Thailand. The company was founded in
the year 1919 by Jack Cohen (Ma, Ding and Hong, 2010).

MANAGEMENT 3
Mission of Tesco
The mission of Tesco is to effectively work towards creating value for the consumers such
that it can earn their loyalty for the lifetime (Mollah, 2014).
Market Analysis
The discount retailers in the grocery market of UK are the trendsetters and continue to stand
out in the entire channel. This growth is being supported by the increasing price sensitivity by
the customer and on-going expansion by some of the leading businesses in terms of the store
network, together with the increasing concentration of the luxury discounting. For instance,
Lidl is involved in offering the cheapest lobsters in the United Kingdom market in 2016 at
just GBP2.99. Tesco is the strongest player in the grocery retailing and holds 21% share in
the market as per the report of 2016. The benefits of the growth that company has gained are
by its presence in different channels, leading hypermarkets, supermarkets, and convenience
stores with 20%, 36%, and 24% share respectively in the market and have a presence in the
forecourt retailers (EuroMonitor International, 2017). However, the company lost its some
percentage of the share in the market in 2016, due to tough competition from the discount
retailers and a shift of the customers towards online shopping. Tesco was also involved in
closing some of its stores in the market in order to overcome the challenges and increase the
profits which are notably decreasing the volume of the outlets by 4% (EuroMonitor
International, 2017). Besides this, the loss that was incurred in the company is due to price
cutting, which resulted in a reduction in the prices of the products to 6% in the same year.
External Environment Analysis of Tesco
Political Factors
One of the major political impacts that have affected Tesco is Brexit. The key tangible impact
of Brexit is the negative impact on the prices of food that has increased from 2016 and
resulting in the reduction in the value of the pound sterling that is not limited to just to the