Business Environment: Tesco's Strategic Plan and Analysis

This report discusses the business environment of Tesco, including its strategic plan and analysis. It covers Tesco's value chain analysis, marketing mix strategy, customer loyalty program, online services, and SWOT analysis. The report also highlights the opportunities and threats faced by Tesco in the retail industry.

BUSINESS
ENVIRONMENT

Table of Contents
BUSINESS ENVIRONMENT...........................................................................................................1
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Part A (1).....................................................................................................................................3
Part A (2).....................................................................................................................................4
Part B...........................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
Books and Journals......................................................................................................................9

INTRODUCTION
Business environment is the existence of various factors which affect the functioning of
an organisation. It is consisting of external and internal environment which can be further
divided into macro and micro factors (Głodowska, 2017). Tesco is a multinational retail brand
operating in different countries across the world. It has wide product portfolio which carters the
need of consumer. In this report it includes strategic plan which focuses on the selection of
various strategic choices require to achieve company objectives and goals.
MAIN BODY
Part A (1)
Tesco is one of the largest, well known UK retail organisation that have achieved the
standards of earning huge profits by providing excellent customer services and high quality
products at low prices. It is at the healthiest position and is the most valuable brand of UK. It is a
leading retail grocery store serving over 25 percent of the market share (Tesco PLC- Statistics
and Fact, 2020).
Value Chain Analysis
It is the manner for visually analysing an organisation's activities and understand how it
adds value to the company's product or service, therefore generating high profit margins. It
allows businesses for examining their operations and discover competitive opportunities. The
purpose of it is to increase production efficiency and delivering maximum value at the least
possible cost. The value chain analysis of Tesco is as follows:
Primary Activities
Operations- Tesco has achieved economies of scale, which lowers the cost and keeping
the prices unchanged, it generates high profit margins for the organisation. Also, Tesco has
expanded its operations in various other countries as well.
Marketing and Sales- Tesco has a brand image of lowest price supermarkets and it
providing high quality products. It has launched various campaigns for boosting the demands of
goods and services offered by it. In addition to it Tesco is committed towards helping families in
the tough times. By using its price campaigns, it has attracted customer’s attention and Tesco has
successfully achieved its goals (Hamilton and Webster, 2018).

Service- Tesco was the first retail store of UK to start online shopping services to its
clients and facilitated them to buy groceries and cloths at their convenience and was time saving
for them.
Outbound Logistics- Tesco facilitates online purchase of goods which can be directly
delivered from the warehouses and eliminates need of having local stores, it saves time and
provide to its clients. It not only enhances customer satisfaction but also improves efficiency in
stock updating.
Inbound Logistics- Tesco maintains a strong bond with its suppliers which enable it for
putting the goods at right time in the stores and meet customer's demand effectively. It is one of
the competitive advantages of Tesco and helps in maintaining its position in the market.
Supportive Activities
Technology- Technologies plays a crucial role in development of an organisation. Tesco
is taking optimum utilising of digital technology for serving the needs of its clients and is selling
more products at a lower price building strong and loyal relationship with its customers.
Human resource Management- Tesco have excellent and talented staff for managing its
huge operations and processes. Also the company pays a lot of attention for training and
development of its employees and make them skilful.
Infrastructure- Tesco has changed its distribution to just in time system and has
developed its stores as warehouses for meeting the needs of customers ordering online which has
reduced the dependency on infrastructure resulting in low cost of operations.
Part A (2)
Tesco's Vision is to be most valued organisation by its customers and to operate with
loyal and committed staffs working for growth and expansion of the organisation. In alignment
with Tesco's vision mission and values it is formulating strategies for building trust among its
customers and building its reputation which was lost due to low prices (Hamilton and Webster,
2018). Tesco has successfully fought against the rivalry supermarkets and offers a wide range of
products and services to its clients. It has achieved a remarkable success in terms of e-commerce,
customer services, loyalty cards, etc.
Tesco's marketing Mix strategy- It works on providing high quality products at an
affordable price to its customers. It has launched various multi buyer’s initiatives for enabling its

customers to save money. Therefore, it has sustained a dominant position in the market by
attracting more customers and increasing its buyer base.
Customer Loyalty Program of Tesco- Customers are distinguished and have different
preferences. For maintaining the customer loyalty Tesco rewards its customers using its club
cards. Club Cards is the most booming customer loyalty scheme and helped Tesco in expending
its customer's loyalty day by day. It also offers wide range of products of high quality but at a
low cost (Krajnakova, Navickas and Kontautiene, 2018).
Online Services provided by Tesco- Tesco constantly works for improving its online
business for providing a valuable shopping experience to its customers. It has also introduced
click and collect services that allows the customers to purchase the groceries and other
necessities via online and fetch them from any Tesco store. It has reflected a remarkable growth
in the online business of Tesco.
SWOT Analysis of Tesco
Strengths
Financial Turnaround- With the help of strong leadership has resulted in excellent
performance financially for the company. It can be ascertained with the recovery of company
financial performance from losses to profits.
Market Share- Tesco has increased its market share with the effective growth rate in the
last few months. It has increased its market share from the dominance of sainsbury which has
resulted in effective market performance.
Good Performance during Pandemic- Company has shown great performance during
the time of pandemic with the help of online sales and market growth. It has benefited company
due to the presence of online channels and platforms. Retail industry has been working at great
pace during the time of pandemic. Online services provided by the company has been very
effective which has resulted in strong performance during the time of pandemic.
Innovation- It is one of the major strength of company to provide innovative and
customisable products in the market. Innovation has been considered as one of the important
ingredient in the achievement of success by a company. Tesco has been working on
strengthening its performance in this area to increase its market share as well as growth.
Adaptability- Company has strong power of adaptability with the help of in store and
online store purchases during the time of pandemic. It has doubled its delivery capacity with

increase competitive position. It is all achieved with the help of strong management and
leadership skills present in the company (Lee ed., 2017).
Weaknesses
Inventory management- Company is unable to manage its inventory in stores leading to
big threat and weakness. It is consisting of outdated products with expired date leading to
removal of various items from the stores. It has been observed that company is unable to manage
inventory in stores leading to face losses.
Food safety issues- Company has faced various consequences due to presence of
ineffective food products due to availability of reduction in the quality of products. Food safety
is one of the major company faces with urgent recalls after the discovery of various issues in the
safety of customers.
Quality control- Tesco is unable to control quality of its products with the presence of
quality measures for the improvement. Customer complaints have become one of the major
issues in the performance of a company. This results in big weaknesses for the company due to
presence of food products in the company portfolio. It has been dealing with control measures
but with the presence of disturbing complaints reflects position for improvement in the company.
Change management- Change is one of the critical factors which can have vital impact
on the functioning process of a company. It is important to timely implement change in a
company leading to effective results or outcomes for avoiding threats from external environment.
Company has faced change in leadership qualities while pushing through massive acceleration
towards online (Uluskan and Godfrey, 2018).
Opportunities
Growth of Online platforms- During the time of pandemic, people has been restricted to
step outside their home due to the spread of Covid 19. This restriction has led to increase in the
purchase of online groceries and other necessity products. Also, it has increased the growth rate
in retail industry with extreme demand for necessary products in this pandemic. Thus, online
buying has become a new trend in the market leading to rise in online sales as a great opportunity
to be leveraged by the company.
AI and Machine learning- Utilising AI and machine learning in the retail industry is a
game changer for the growth of a company. It helps in predicting market insights and demand for
a product. It has come with various benefits leading to a revolution for the industry with advance

technology products and software. It leads to an opportunity for the company for improving
operations and productivity in supermarkets.
High unemployment rates- This has become one of the major issue during the time of
pandemic stated in a research leading to fall in the employment in younger generations.
Supermarket still has hoped to get employed by young generation in the time of high
unemployment rates. This has led to form a great opportunity for Tesco to find competent people
for acquiring high growth with employment.
Threats
Competition- Competition has posed a great threat to the company leading to decrease in
the market share. It faces severe rivalry between big and established retail brands such as
Walmart, Sainsbury and recent acquisition of Asda by Issa brothers. This has posed a serious
threat for tesco’s market share.
Brexit- It has led to various changes in the import of food products which has imposed
restrictions at port entries. This has impacted the flow of goods in the country with affecting
supply chain for the company.
Economic recession- This has posed a great threat to the company with falling
purchasing power of customers due to economic recession in the country. Also, with the rising
unemployment rates has led to another threat for financial uncertainty (Głodowska, 2017).
Part B
From the above report I am glad to have this opportunity which has resulted in various
learning insights with the analysis of a big retail company. In this I have deepen my learning
with increase knowledge and skill for developing strategic plans during the tough times. I have
analysed company’s performance in various areas such as its value chain system, competitive
strengths and other key areas. Online learning and its various platforms has been a great help in
writing this report. With the help of latest technology, I receive contributions from teachers and
friends by connecting with them. Thus, this project has helped me a lot in gaining knowledge for
pursuing my career ahead and cleared my plans for developing a flourish career.

CONCLUSION
From the above report it can be concluded that business environment is essential for the
operations of a company. It impacts performance with the availability of various factors affecting
decision making and strategies or policies framed in a company.

REFERENCES
Books and Journals
Głodowska, A., 2017. Business Environment and Economic Growth in the European Union
Countries: What Can Be Explained for the Convergence?. Entrepreneurial Business and
Economics Review. 5(4). pp.189-204.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Krajnakova, E., Navickas, V. and Kontautiene, R., 2018. Effect of macroeconomic business
environment on the development of corporate social responsibility in Baltic Countries
and Slovakia. Oeconomia Copernicana. 9(3). pp.477-492.
Lee, I. ed., 2017. The Internet of Things in the Modern Business Environment. IGI Global.
Uluskan, M. and Godfrey, A.B., 2018. Business environment-supply chain framework and
benchmarking supply chain structures. Benchmarking: An International Journal.
Tesco PLC- Statistics and Facts. 2020 [Online] available through:
<https://www.statista.com/topics/3807/tesco-plc/>