Tesco SWOT Analysis and Porter's Five Forces

This assignment is a detailed analysis of Tesco's business environment using SWOT analysis and Porter's Five Forces model. The report evaluates the company's strengths, weaknesses, opportunities, and threats, as well as its competitive position in the market. It also discusses the importance of stakeholders mapping in fulfilling the needs of stakeholders and maintaining strong relationships with them. The document is based on various references, including books, journals, and online resources.

Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Overview of the company............................................................................................................1
MAIN BODY...................................................................................................................................1
Businesses and Purposes..............................................................................................................1
Stakeholder Mapping...................................................................................................................3
Macro and Micro Industry Analysis............................................................................................4
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Overview of the company
Tesco plc is a multinational firm working in retailing industry. It is one of the leading
retailing enterprise in the world. Its headquarters is in England, United Kingdom (UK). It serves
its products and services to the worldwide area. It was founded by Jack Cohen in year 1919. It
has around 7000+ shops. It has given employment to the 4,60,000+ employees all over the world
(Correspondent, 2019).
This report will highlight the three types of organization and their purposes. It will also
analysis the influences of stakeholders through stakeholder mapping. It will also evaluate the
micro and macro environmental factors which affects the business activities and decision
making.
MAIN BODY
Businesses and Purposes
Types of
Organization
Public Sector
Company
Private Sector
Company
Voluntary Sector
Company
Meaning Public sector company
are those types of
organization in which
government and their
authorities are the one
who owns, corporate
and control the
activities of the
business. Their main
motive is to provide
social benefits to the
societies rather than
earn profits. Their
major funds sources
are public funds.
Private sector
company are those
types of organization
in which the
ownership, operation
and control of the
company are in the
hands of individual or
group of individuals.
Their main motive is
to earn profits. They
operate under the strict
requirements of
company law
(Brunsson and Olsen,
Voluntary sector
company are those
types of organization
in which the members
of the company who
are called Volunteer
focus on the social
issues and work for the
welfare of the society.
Their major funds
sources are charities
and government aids.
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2018). Their major
sources of funds are
their own funds.
Chosen organization Highways England
Company Limited
Tesco PLC limited NHS England
Organization's
purpose
Their main purposes
are -
 To maintain
and improve
the England's
motorways and
roads.
 To provide
information
services
through the on-
road signals
 To deals with
the all
incidents
which is
related to the
highways,
roads and
motorways.
Their main purposes
are -
 To earn and
maximize their
profits
 To provide
goods and
services to
their customers
 To beat the
competition
and become
market leader
in retail
industry
Their main purposes
are -
 To improve the
health and care
services in the
UK
 To provide
accurate health
and care
information so
that quality can
be improved
 To support
health and care
organizations
to get advanced
technological
tools and
techniques in
order to
improve and
enhance their
service quality
(Spillman,
2018).
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Stakeholder Mapping
Stakeholder mapping refers to the techniques through which company analysis its
stakeholders' impact on the company. Through this technique, firm is able to identify the needs
of stakeholders.
Customers
Customers is the most important part of every company. The potential customers of the
Tesco have expected with business that they provide the best services to the customer and
operate the business in fairly and honestly while also offering a valuable product (Hillary, ed.
2017). So the impact of consumer in the performance of the firm which generate the high
profitability. Tesco has doing the market research for identifying the needs of the customer.
Customer wants the valuable product and they also purchase those products who attract the most.
So customer is the key part of the firm which generate the high profit of the company because
they purchase the products of the firm and increase the revenue of the company.
Employees
Employees is the main resources of production they produce more and increase the sales
of the company. The employees of the Tesco expect with the company that they provide the
healthy environment in the work place which increase the motivation among the employee
(Kolk, 2016). Employees helps to the company for making the best product they make the
product according to the requirement of the market. without employees company cannot make
the product because employees is the main resources which produce the product and also help to
reduce the cost of production.
Suppliers
Suppliers is also the main key of company which distribute the product in every location
so company must maintain the good relationship with their suppliers to manage all the activity of
the company. Suppliers expect to the Tesco that they manage your business relationships with
high conscientiousness and responsibility and provides timely payments (Charter, 2017). So the
impact of the suppliers in the firm is its helps to maintain the distribution channel and helps to
provide the product on timely and creates the good impact of the consumer towards the profile of
the company.
Shareholders
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Shareholder are owner of the company. Tesco sale their share to the investors also provide
the partial ownership in the firm, In exchange of investment amount for operating the firm. So
shareholders affect the business operation because shareholders helps to company for
maximizing the profit. Tesco is the biggest company and also generate the high profitability.
Also, is essential in attracting and prevent stockholders and having a solid stock value.
Macro and Micro Industry Analysis
Business environment consists of macro and micro business environment. Macro
Business environment are the environment consists of those factors which impact the whole
industry and all those companies who are working in that industry. Micro business environment
is the environment consists of those factors which only impact the operations of the particular
company, not impact the industry at whole (Hamilton and Webster, 2018).
There are various models and theories through which Tesco can evaluate their macro and
micro business environment. These models and theories are as follows -
PESTLE ANALYSIS
It is a strategic tool used by various companies to analyse their macro business
environmental factors which have impact the business decisions making and business activities.
It consists of six factors which are as follows -
P – Political Factors
E – Economic Factors
S – Social Factors
T – Technological Factors
L – Legal Factors
E – Environmental Factors
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Impact of these 6 factors on Tesco's activities and Tesco's decision making are as follows -
Political Factors
Political factors are those factors which deal with the government and their policies.
Example of these factors are government policy, tax policy, monetary policy, trade policy,
foreign trade policy, trade restriction policy etc.
These all policies impact the business activities and decision making of Tesco. Suppose
there is an increase in tax rate, this will impact the business. Tesco has to reduce the overall costs
of the company and their profitability will reduce.
Economic Factors
Economic factors are those factors which deal with the economic performance and
economy of the nation. These factors are demand and supply pattern, interest rates, inflation rates
and economic stability etc.
If there is an increase in demand of Tesco particular products. This will impact the
production activity of the company and company have to increase their production units as well
as their production capabilities.
Social Factors
Social factors are those factors which is related to the customers & societies and their
needs, wants, perceptions, values, cultures and religions etc. These factors include population
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Illustration 1: Factors of Pestle Analysis
(Source: Scanning the Environment:
PESTLE Analysis, 2016)

growth rate, age distribution, income distribution, career attitudes, safety emphasis, health
consciousness, lifestyle attitudes and cultural values.
These factors impact the activities of marketing department of Tesco who are doing
segmenting, targeting and positioning of their products and services according to their target
audience.
Technological Factors
Those factors which is related to the technologies being use in Retailing industry are
called technological factors.
If there is any new technology come in retail industry, this will impact the company's
activities because that new technologies required a lot of investment which impact the
profitability of the company.
Legal Factors
Legal factors are those factors which is related to the various employment and
commercial legislations governed by the government of that nation in which company is
operating its business. These legislations are highly impactful for the decision making and
activities of the Tesco.
For example – In The Equality Act 2010, it is clearly mentioned that company can't do
discriminate there any of employees on the basis of various characteristics. Thus, Tesco has to
implement this rules in their policy and business cultures (Scanning the Environment: PESTLE
Analysis, 2016).
Environmental Factors
Environmental factors are those factors which is related to the nature, climates and
weather of the nation. Change in these factors also impact the activities and decision making of
the Tesco.
Today's societies are more conscious about the environment and its related issues. This
lead company to take decisions regarding products in the favour of environment. For example,
company is starting launching and producing eco-friendly and green products.
PORTER'S FIVE FORCES MODEL
Porter's five forces can help Tesco in analyzing the five separate force which can help in
determining the extent of overall competition within the industry, it can also help in determining
the industrial weakness and strengths. It is mainly used to identify the structure of industry in
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order to determine the corporate strategy (Mathooko and Ogutu, 2015). It can also help in
analyzing the competitive environment of the organization. By analyzing the elements of Porter's
five forces can be used as a guide for developing a strategy for achieving the competitive
advantages within the industry.
Illustration 2: Porter,s Five Forces
(Source: Porters Five Forces of Competitive Position
Analysis, 2019)
Porter's 5 forces on Tesco is as follows:
Competitive Rivalry: Tesco is facing high competitive rivalry in the various aspects of
the markets from some of the major components with in retailing food industry for example
Sainsbury, Waitrose, Morrision and Asda. All these companies compete with each other and with
Tesco through promotions, price and product. But mainly Tesco is facing high level of rivalry
with Sainsbury local and also with Co-op which give tough competition to Tesco. So this force is
high for Tesco as there are number of rivals available in the UK markets.
Threat from substitutes: When any new product or service is capable to meet the
similar products in various way it can have negative effect on the profitability. There is a high
range of products which are sold by Tesco and supermarket chain sells wide range of products
and also sell substitutes for majority of products within the industry so it can be said that this
force is also high for Tesco as there are number of substitutes available for the products which
are sold by Tesco. But Tesco can tackle this threat from substitutes by becoming a service
oriented company too rather than only product oriented.
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Bargaining power of Supplier: In retailing industry all companies buy raw materials
form various suppliers and if supplier is in dominant position it can decrease the profit margin of
the company. Tesco has got number of suppliers and also there is low or minimum supplier
switching cost in the supermarket chain (Zhao and et.al., 2016). It is noted that suppliers are
totally inclined toward the grocery and food retailers and are worried about not losing the
business contracts with the large supermarkets. So this has strengthened the position of Tesco
and have lowered their bargaining power due which Tesco gets the lowest possible price from
their suppliers.
Bargaining Power of buyers: Buyer keeps on demanding lot from the companies as
they want the best offerings for the products and services which buyers want to purchase and
want pay minimum price as possible for the products. This has put lots of pressure on Tesco's
profitability within the long run. The bargaining power of buyer is high in the case where the
products have some differentiation and are more standardised and also the switching cost is low
and buyers can easily switch from one brand to another brand. This force can be lowered by
offering the product at low prices as customers get attracted towards low prices.
Threat from new entries: In retailing industry new entrants brings innovation and new
ways of doing business which can pose threat for the existing company in the industry. As many
companies enter in the retailing industry which has posed threat for Tesco through reduction of
cost, low pricing strategy, innovative technology and provide the new value proposition for the
customers. Tesco need to manage all of these challenged and should try to build effective barrier
in order to safeguard their competitive advantage with in the industry.
SWOT ANALYSIS
Swot analysis is strategic planning which use to identify the organization’s strengths,
weaknesses, opportunities and threats which are related to business. It is also a framework which
can help in evaluating the company's competitive position can help in developing a strategic
planning (Bull and et.al., 2016). Swot analysis of Tesco is explained below:
Strengths: Tesco is one of the largest and the most profitable supermarket in the world
which is the one of the major strengths of Tesco. It has the leading market share, as it dominates
the grocery retailing markets and has the large number of stores across the world i.e. more than
6800 stores which is also the strength of the organisation.
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Weaknesses: It has the weak financial performance and its brand image was damaged by
the commercial income scandal in 2015 which has proved to be one of the major weaknesses of
the organisation. Another weakness is that Tesco is not successful in integrating the firms with
different cultures and also there are gaps the range of products which are sold by the company.
There is lack of investment in new technologies which is also the major weakness of the
organisation as it can limit its growth.
Opportunities: There are lots of opportunities available for Tesco within the industry
like it make strategic alliances with other brands also it can enter in the joint venture with other
where company is not performing well. As local companies of the market can provide huge
information which can help Tesco in improving its business (Abdel-Basset, Mohamed and
Smarandache, 2018). Tesco also has got the opportunity to grow and upgrade its online shopping
business and can also can provide homer delivery service to the customers which can increase its
business efficiency. Tesco has got the opportunity for expanding business to various emerging
countries like Indonesia, Turkey and South Korea can increase the profits of Tesco.
Threats: Tesco is facing high level of competition with various supermarket gain which is
posing a huge threat for the organisation. Another threat for the organisation is Brexit
Referendum, Britain no longer being part of European Union face the threat of lost of deals and
increase in the cost which is posing a threat for Tesco. Falling value of Pound has led to increase
the costs for Tesco and also inability to sustain the cost leadership competitive advantage can be
also another threat for the organisation.
CONCLUSION
The conclusion is being drawn from the above project report its described the business
environment of the Tesco. The report has been described that there are different organization
which have also the different structure of the business. Further, it has been concluded that with
the help of stakeholders mapping, Tesco is able to fulfil the needs of their stakeholders and able
to maintain strong relationships with all of them, At the last report has been evaluated micro and
macro environment of the company by using the pestle, swot and porter five forces model which
helps company to get to know about the impact of various factors on the business activities and
decision making.
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