Contemporary Business Management: A Case Study of Tesco

This report analyzes the business strategy of Tesco, a UK multinational retail firm, and provides recommendations for its future strategic directions. It includes an external analysis of the business environment, an internal analysis of the firm, a SWOT analysis, and an analysis of the business and diversification strategies. The report concludes with recommendations for growth measures.

BUSINESS MANAGEMENT
Business Management
Business Strategy
Mohsin Farid
Leeds Beckett University
Module Tutor-Francis Patton

1BUSINESS MANAGEMENT
Executive Summary
This report intends to shed light on the aspect of contemporary business
management in the particular context of the UK multinational retail firm, Tesco. The
report begins by its stating the aims and objectives, definition of strategy and an
overview of the firm Tesco and the retail industry of UK. The report next undertakes
an analysis of the external business environment in which it is operational to
determine the threats and the opportunities that galore the organization under
discussion here. The researcher finds that most of the macro-environmental factors
are favorable for the firm however the result of the micro-environment analysis
reveals that the firms faces a high level of business competition in the UK retail
industry. Furthermore, the report also conducts an internal analysis of the firm on the
basis of the Barney’s VRIO framework. This analysis reveals the fact that the
organization has the right kind of resources for the attainment of competitive
advantage and sustainability. The report next undertakes a SWOT analysis of the
firm and finds that the firm has various opportunities like international expansion,
product diversification and others however the fierce competition, Brexit and others
are some of the major threats that the firm currently faces. The report also
undertakes an analysis of the business as well as diversification strategies which are
being followed by the organization under discussion here. In addition to this, the
report also highlights the various issues that the organization is currently facing
related to politics and also sheds light the business model (Platform Strategy) which
is being followed by the concerned organization. Lastly, the report concludes by
recommending three measures that the organization can use to attain a higher level
of growth, namely, use of e-commerce business model, international expansion and
providing beauty, healthcare and other products to the customers.

2BUSINESS MANAGEMENT
Table of Contents
1.0 Introduction.........................................................................................................4
1.1 Aim and Objectives.............................................................................................4
1.2 Strategy Definition...............................................................................................4
1.3 Overview of Tesco and the Retail industry of UK...............................................5
2.0 External Analysis................................................................................................8
2.1 PESTLE Analysis................................................................................................8
2.1.1 Political Factors............................................................................................9
2.1.2 Economic Factors.......................................................................................10
2.1.3 Social Factors.............................................................................................11
2.1.4 Technological Factors................................................................................13
2.1.5 Legal Factors..............................................................................................14
2.1. 6 Environmental Factors..............................................................................15
2.2.0 Micro-Environment Analysis..........................................................................16
2.2.1 Porter’s Five Forces Analysis........................................................................16
2.2.1.1 Bargaining Power of Suppliers................................................................17
2.2.1.2 Bargaining Power of Buyers....................................................................17
2.2.1.3 Threat from new entrants........................................................................17
2.2.1.4 Threat from substitutes...........................................................................18
2.2.1.4 Industry Rivalry........................................................................................18
2.3 Summary...........................................................................................................18
3.0 Internal Analysis...............................................................................................19
3.1 Strategic Capabilities........................................................................................19
3.2 McKinsey 7S Framework..................................................................................25
4.0 SWOT Analysis.................................................................................................26
5.0 Strategic Analysis.............................................................................................27
5.1 Ansoff Matrix.....................................................................................................27

3BUSINESS MANAGEMENT
5.2 Business Level Strategy...................................................................................27
6.0 Issues and Business Models............................................................................29
7.0 Conclusion and Recommendations......................................................................30
8.0 References.......................................................................................................32

4BUSINESS MANAGEMENT
1.0 Introduction
1.1 Aim and Objectives
The aim of this report is to critically analyze and evaluate Tesco’s business
strategy in order to make recommendations on its future strategic directions. This will
be achieved by-
 Critically analyzing and evaluating the external business environment in order
to identify any opportunities or threats
 Critically analyzing and evaluating the internal environment in order to identify
any strengths or weaknesses
 Critically analyzing and evaluating the existing strategic options taken by
Tesco to identify the business opportunities
 Offering recommendations on future strategic options
1.2 Strategy Definition
As opined by Hamilton and Webster (2018), the advent of globalization and
the extensive usage of different kinds of innovative technologies had positively
affected the contemporary world of business in a significant manner. Uhl and
Gollenia (2016) are of the viewpoint that this on the one hand significantly increased
the competition within the spectrum of the business world whereas on the other hand
enhanced the number of choices or options that are available to the customers. More
importantly, in order to not only mitigate the adverse effects of this fierce competition
but also to attain a higher level of financial growth the modern organizations opt for
the use of various kinds of effective strategies (Mugurel-Alin 2018). In this regard,
Erasmus, Strydom and Rudansky-Kloppers (2016) have defined strategies as high
level plans which are intended to achieve one or more goals of the firms under
conditions of uncertainty. More importantly, in the particular context of the business
world the strategies refers to the tactics or a range of measures which are being
adopted by any firm for the attainment of the business goals that they have outlined
for themselves.
The earliest usage of the term ‘strategy’ dates back to the 6th century BC
when it was used in the particular context of the “art of troop leader; office of general,
command, generalship” (Wheelen et al. 2017). However, over the years this notion

5BUSINESS MANAGEMENT
had undergone a substantial amount of change and is being extensively used in the
genre of the business world as well. The strategies formulated as well as
implemented by the firms should be on the basis of the requirements of the external
business environment in which the concerned organization is operational. In this
regard, Prajogo (2016) has noted that an assessment of the external business
environment at the same time reveals insightful information regarding the threats
faced by an organization in the business market. This is important since it helps the
organizations to formulate the kind of strategies which are likely to help them to take
full advantage of the opportunities and also to mitigate the adverse effects of the
threats.
1.3 Overview of Tesco and the Retail industry of UK
Tesco plc, presently trading as Tesco, was founded in the year 1919 by Jack
Cohen and is headquartered in Welwyn Garden City, Hertfordshire, England, United
Kingdom (Tesco.com 2019). It is a “UK multinational groceries and general
merchandise retailer” and also the 102nd largest private business firm of the world in
terms of the revenue generated by it (Forbes.com 2019). More importantly, the firm
under discussion here is known for the wide range of services or products that it
offers to the customers and its product portfolio includes books, clothing, petrol,
groceries, furniture, liquor, telecom, internet, financial services and others
(Tesco.com 2019). In this regard, it needs to be mentioned in the 20th century the
firm used to focus mainly on the grocery products or services however in the 21 st
century the firm taking into effective consideration the needs or the requirements of
the customer base which it serves had diversified its product portfolio
(Retaileconomics.co.uk 2019). This in turn had enabled the firm to offer the above
mentioned and other services or products to the customers in the present times.
The process of globalization had positively affected the business of the firm
under discussion here and it is seen that following the precepts of globalization the
firm had expanded its business into the different nations of the world like Ireland,
India, Thailand, Malaysia, Hungary, Czech Republic and others (Forbes.com 2019).
Furthermore, it is seen that the firm had been able to set-up more than 500 different
stores in the nation of UK itself (Tesco.com 2019). These activities have positively
affected the financial prospects of the firm and the gross revenue generated by the

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firm in 2018 £57,491 million (Statista.com 2019). This in turn had the firm the 3rd
largest retailer of the world in terms of gross revenue and the 9th largest one of the
world in terms revenue (Tesco.com 2019). More importantly, as of 2017, the firm
offered employment to more than 460,000 individuals and the different affairs of the
firms are being managed by John Allan (Non-Executive Chairman) and Dave Lewis
(Group CEO) (Tesco.com 2019). In addition to this, it is seen that the firm in order to
maintain an effective market or brand image and also to contribute in an adequate
manner towards the society, economy and the environment of the world is taking the
help of different kinds of corporate social responsibility (CSR) initiatives like attempt
to stop discrimination, eradicate slavery in Thailand, gender equality and others.
Figure 1: Net Revenue generated by Tesco from 2015-2018
Source: Statista.com
The retail industry of UK over the years had come to form the backbone of the
national economy of UK. As per Retaileconomics.co.uk (2019), the net revenue
generated by the concerned industry in UK in 2018 was more than £366 Billion (5%
of the GDP of the nation) with an average yearly growth rate of 4.3%. In addition to
this, the industry offers employment services to more than 2.9 million people of the
nation and there are more than 294,280 retail outlets in the different parts of the
nation (Forbes.com 2019). In this regard, it needs to be said that some of the most

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important retail firms of the nation are Tesco, John Lewis, Asda and others
(Retaileconomics.co.uk 2019). However, in the recent times because of the
increasing propensity of the customers towards e-commerce these firms are
increasingly embracing the “omni-channel business model” to offer both online and
offline services to the customers (Retaileconomics.co.uk 2019). This is important
because of the fact that the online retail industry of the nation had shown a growth
rate of more than 16% in the year 2018 itself (Forbes.com 2019).

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2.0 External Analysis
Walsh and Dodds (2017) are of the viewpoint that the framework of external
analysis enables the firms to analyze the business environment in which it is
operational and its focus is on the attributes of competitive structure, dynamics,
competitive position, history and others. On the other hand, Schulz and Flanigan
(2016) have argued that an effective analysis of the external environment offers
insightful information to the firms regarding the political, social, economic,
technological, environment, legal and other factors which are likely to affect their
business operations. More importantly, this framework in a succinct manner reveals
that the threats and opportunities which galore the firms because of their business
operations in any business market (Mugurel-Alin 2018). This is important for the
firms because of the fact that it enables them to formulate strategies which in turn
will enable them to mitigate the adverse effects on the threats and take full
advantage of the opportunities.
2.1 PESTLE Analysis
As opined by Morschett, Schramm-Klein and Zentes (2015), the framework of
PESTLE analysis enables the firms to analyze as well as monitor the macro-
environmental factors like social, political, environmental and others which have a
profound impact on the business operations of any firm. This is important because of
the fact that an effective understanding of the macro-environmental factors enables
the firms to formulate the kind of strategies which will be in synchronicity with the
requirements of the business environment in which it is operational (Morden 2016). A
PESTLE analysis of the firm Tesco in the nation of UK would reveal the following
results-

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Figure 2: Components of PESTLE Analysis
Source: (Created by the Author)
2.1.1 Political Factors
Wheelen et al. (2017) are of the viewpoint that one of the most important
requirements of the different contemporary business enterprises is a stable as well
as congenial political condition in which they can conduct their business operations
in an effective manner. As per Meyer, Neck and Meeks (2017), the United Kingdom
has one of the most stable national governments of the world which is being
controlled by the Prime Minister and also the Crown directly. More importantly, it is
seen that the nation is a leader of the Commonwealth nations and also maintains
active trade relations with them (Bettis et al. 2015). Furthermore, the free trade policy
which is being followed by UK and also the percentage of corporate tax that the
different business enterprises of the nation had to pay, that is, 19% makes the
political climate of the nation a particularly suitable one for the conduct of active
trade and commerce (Gov.uk 2019). In addition to this, the national government of
UK gives active patronage to business enterprises and this is perhaps one of the
major reasons for the unprecedented growth of trade and commerce in the nation.
However, the impending Brexit deal is likely to adversely affect the business firms of
UK (Meyer, Neck and Meeks 2017). However, the firm do not have access to the
same kind of political conditions in the other nations like India, Malaysia, Thailand in
which it is operational and this in turn adversely affects the prospects of their
business in the concerned nations.

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2.1.2 Economic Factors
The economy of the United Kingdom is the 5th largest one of the world in
terms of the gross domestic product (GDP) and the 9th largest one in terms of the
purchasing power parity (PPP) (Gov.uk 2019). More importantly, the economy of UK
is the 22nd largest one of the world in terms of the GDP per capita which comprises
more than 3.5% of the entire world economy (Gov.uk 2019). A comparison of the
national economy of UK with the other nations of the world is being offered by the
below given figure-
Figure 3: Comparison of the national economy of UK with the other nations
Source: Hamilton and Webster 2018
As per Gov.uk (2019), the nation has a workforce of more than 32.4 million
and the unemployment rate of the nation is below 4% which ensures the fact that the
organisations have access to the requisite amount of labour. Apart from these, the
borrowing rate that the different business enterprises are required to pay to the
national government is only 0.75% which means that they can have access to the
right amount of funds that are needed for the process of their business operations
(Gov.uk 2019). Furthermore, the high exchange rate of the national currency and
also the low borrowing rate (2% only) makes the economic environment of UK a

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particularly favourable one for Tesco (Gov.uk 2019). The inflation rate of UK is only
2.1% (December, 2018) and the national government had lenient export/important
norms and the people of UK in recent times have shown propensity to purchase
products or services from supermarkets or retail which in turn is a favourable one for
Tesco (Forbes.com 2019). However, the Brexit deal is likely to adversely affect the
economy of the nation and also the different business enterprises of the nation would
no longer have access to the same kinds of business opportunities that they access
to when the nation was a member nation of the European Union (Meyer, Neck and
Meeks 2017). The likely affect of the Brexit deal on the national economy of UK is
being outlined by the below given figure-
Figure 4: Impact of Brexit deal on the national economy of UK
Source: (Meyer, Neck and Meeks 2017)
2.1.3 Social Factors
As opined by Morden (2016), shopping whether it be for groceries and
important products or services or just for leisure forms an important pastime of the
people of UK and people from all age brackets like to indulge in such activities. More
importantly, the people of UK like to buy products or services which are not only
trendy in nature but also cost effective as well (Krahmann 2016). However, it is seen
that the people related to the working class background and also belonging to the
age bracket of 30-55 years of age are the ones who do the maximum amount of

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grocery or retail shopping in the concerned nation (Retaileconomics.co.uk 2019).
This is perhaps one of the major reasons why Tesco is presently targeting this age
bracket for the products or services that they offer.
Figure 5: Growth rate of the UK retail industry in 2018
Source: Retaileconomics.co.uk 2019
Ethiraj, Gambardella and Helfat (2016) are of the viewpoint that one of the
most important trends within the nation of the United Kingdom is the fact that the
people are showing increasing propensity towards the e-commerce model of retail
business. This can be explained on the basis of the fact that because of the busy or
hectic life that the people lead leaves them with very little time to visit the retail stores
and do shopping.

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Figure 6: Comparison of the growth rate of online UK retail trade in
comparison with the other European nations
Source: Retaileconomics.co.uk 2019
The emergence as well as the popularity of the online retail trade had
adversely affected the business of the firms which offer only offline services to the
customers. Furthermore, the increasing social mobility of the people and the influx of
people from other nations had not only positively affected the society of the nation
but at the same time acts as a boon for the retail firms (Michael, Storey and Thomas
2017). Moreover, the low death rate and the high birth rate of the nation mean that
the retail firms will have not only adequate customers for the services or products
that they offer but also labour as well (Retaileconomics.co.uk 2019).
2.1.4 Technological Factors
As opined by Morschett, Schramm-Klein and Zentes (2015), technology is
one of the most important factors which affect the business operations of an
organisation and the different processes of the contemporary firms like
manufacturing, operations, marketing, promotion and others are greatly dependent
on technology. In this regard, it needs to be said that the United Kingdom is one of
the most important technologically advanced nations of the world (Daspit et al.
2017). Furthermore, it is seen that this technological advancement of the nation has
positively affected the different business enterprises of the nation and has also

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enabled them to earn a higher amount of revenue as well. The impact of different
kinds of technological advancements of the nation under discussion here is being
represented by the below given figure-
Figure 7: Impact of different technologies on the business enterprises of UK
Source: Daspit et al. 2017
The technologies resources of the nation are being used by the different firms
for their various business processes like marketing, recruitment, operations
management and others. For example, it is seen that the firms like Tesco, Asda and
others are not only using the various platforms of social media like Facebook,
Instagram and others for marketing or promotion of their products or services but
also for the recruitment of new employees as well (Meyer, Neck and Meeks 2017).
More importantly, the firms are increasingly the technologies of robotics, automation,
e-procurement and others for the improvement of the efficiency of their supply chain
system (Walsh and Dodds 2017). These in short are some of the major reasons why
the different retail firms of UK are increasingly resorting to the usage of these
technological developments for the attainment of a higher amount of profit.
2.1.5 Legal Factors
The business firms in UK not only need to abide by the legislative framework
of the UK but at the same time that of the European Union as well

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(Lawontheweb.co.uk 2019). In this regard, it needs to be said that the UK
government has very lenient business or corporate legislations which are intended to
help the business enterprises to conduct their business in an effective manner. More
importantly, the organisations are required to abide by the various employment laws,
consumer laws, competition laws, tax legislations and others of the nation
(Lawontheweb.co.uk 2019). More importantly, the firms are required to follow the
different precepts of the Employment law like minimum wage, zero hours contract,
living wage, gender equality and others in addition to compliance with workplace
health and safety regulations, environmental health and others (Gov.uk 2019). In
addition to this, the UK charges a very nominal amount of export and import tariff
and this is perhaps one of the major reasons for the large number of goods or
services which are being imported and exported from the concerned nation.
Figure 8: Import and export rate of UK
Source: Laszlo and Zhexembayeva 2017
2.1. 6 Environmental Factors
The United Kingdom is a signatory member of the Paris Agreement (2016)
which required the different enterprises of the signatory nations to reduce the
amount of pollution caused by them by more than 2.1% (Gov.uk 2019). More
importantly, the organisations are required to evolve effective waste management
systems for the treatment of the harmful wastes and other kinds of pollutants

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disposed by them in the environment. Along with this, there are other kinds of
environmental legislations like “Environmental Protection Act 1990”, “Control of
Pollution Act 1974”, “Climate Change Act 2008” and others for the process of their
business operations in UK (Lawontheweb.co.uk 2019).
2.2.0 Micro-Environment Analysis
Leonidou, Christodoulides and Thwaites (2016) are of the viewpoint that the
micro-environment refers to the operating environment of a business firm, which has
a direct or immediate impact on the concerned firm. In this regard, the Porter’s Five
Forces Model had emerged as one of the most important ones, which is being used
by the different firms for analyzing the micro-environment in which they are
operational.
2.2.1 Porter’s Five Forces Analysis
As opined by Laszlo and Zhexembayeva (2017), Porter’s Five Forces Models
enables the firms to analyze the business competition that they face within the
business market in the particular context of five forces or factors, namely, bargaining
power of suppliers, bargaining power of buyers, threat from new entrants, threat from
substitutes and industry rivalry.
Figure 9: Porter’s Five Forces Model

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Source: (Created by the Author)
2.2.1.1 Bargaining Power of Suppliers
As opined by Herrera (2015), if the bargaining power of the suppliers is high
then this is likely to adversely affect the business prospects of the firms and might
even cause delay in the supply of products or services, procurement of raw materials
and others. In the particular context of Tesco, it needs to be said that the firm had
evolved its own supplier system in addition to the effective relationship which it
shares with the different retailers through the usage of the Platform strategy
(Forbes.com 2019). In addition to this, the firm takes the help of the time-based
competition so as to reduce their product development cycle and also to enhance the
speed of delivery (Tesco.com 2019). Thus, it can be said that the firm faces a very
limited amount of threat in the particular index of ‘bargaining power of the suppliers’.
2.2.1.2 Bargaining Power of Buyers
Hamilton and Webster (2018) are of the opinion that if the bargaining power of
the buyers or the customers then this is likely to adversely affect the prospects of a
firm. In this particular context of the UK retail industry it is seen that the number of
options or the choices which are available to the buyers in terms of the products or
services is very high. In addition to this, firms are increasingly embracing the e-
commerce model of business to satisfaction the need of the customers in a much
better manner (Erasmus, Strydom and Rudansky-Kloppers 2016). More importantly,
the cost of brand change or switch is very low which in turn had enhanced the
tendency on the part of the customers to switch brands. On the basis of these facts,
it can be said that the bargaining power of the buyers is high in the retail sector of
UK.
2.2.1.3 Threat from new entrants
Tesco had been operational in the retail sector of UK for almost a century and
enjoys a positive brand image. More importantly, the diversity of products or services
that it offers to the buyers are in synchronicity with their needs or their demands and
also cost effective as well. In addition to these, the omni-channel business model
that the firm is presently using enables it to offer both online and offline services to
the customers (Doz 2017). Thus, it can be said that the new firms are likely to find it
very difficult to pose a significant amount of threat to Tesco.

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2.2.1.4 Threat from substitutes
The cost of brand switch in the retail industry is very low and also there are
large number of retail firms in UK which offer almost similar kinds of products or
services to the customers (Retaileconomics.co.uk 2019). More importantly, the
usage of different kinds of innovative marketing and other strategies by these firms
have also intensified the rivalry within the retail sector. Thus, it can be said that
Tesco faces a high threat from the different substitutes within the retail sector of UK.
2.2.1.4 Industry Rivalry
There exists a high rivalry within the retail sector of UK on the score of the
large number of firms which are operational in the nation like Asda, John Lewis,
Tesco and others (Retaileconomics.co.uk 2019). In addition to this, the emergence
as well as the extensive usage of the e-commerce model of business by the different
retail firms had intensified the business competition and also enhanced the industry
rivalry among the different retail firms.
2.3 Summary
The macro-environment analysis reveals the fact that the majority of the
factors are congenial for the business operations in the nation of UK which in turn
had greatly contributed towards the success attained by Tesco in the concerned
nation. However, when it comes to the micro-environment, Tesco faces a high level
of business competition within the retail industry of UK.

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3.0 Internal Analysis
Bettis et al. (2015) are of the viewpoint that the framework of internal analysis
can be seen as an exploration of a firm’s competency, competitive viability and
competitive position within a given business market. This is important because it
reveals insightful details regarding a firm’s competencies and thereby in a succinct
manner suggests the kind of strategies that it needs to use to attain competitive
advantage and sustainability.
3.1 Strategic Capabilities
As opined by Herrera (2015), the major focus of the contemporary business
enterprises is on the attainment of competitive advantage which in turn is related to
the mitigation of business competition and thereby the attainment of a higher amount
of revenue. In this regard, the framework of Resource Based view is an important
one which not only offers an insight regarding the strategic capabilities of an
organization but at the same time highlights the manner in which the organizations
can attain competitive advantage (Schulz and Flanigan 2016). An analysis of the
organization Tecso on the basis of Barney’s VRIO framework would reveal insight
details regarding the capabilities of the concerned organization-

BUSINESS MANAGEMENT
Resources
or
Capabilities
Valuable Rare Imperfectly
Imitable
Organization
Specific
Competitive
Advantage
Economic
Implications
Distribution
Network
Yes- The unique
distribution that
the firm had
developed
through the
development of
its distribution
system and also
through the usage
of different
strategies like
platform strategy,
time-based
strategy and
others are
valuable for the
firm
No- There are
other firms in
the nation of
UK and in
different other
nations which
are taking the
help of the
same
strategies
No-The
distributive
system
developed
by the firm
can easily
be imitated
Yes-This is
specific to
Tesco and in
synchronicity
with the
requirements of
its business
The use of this
distribution network
had enabled the
firm to not only
attain a higher level
of profitability but
also competitive
advantage within
the business
market of UK
The effective
usage of this
distribution
network had
enabled the firm
to enhance their
profit through
timely delivery of
products or
services to the
customers

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Consumer
Marketing
Skills
Yes- The focus of
the firm on the
usage of effective
digital marketing
strategies like
social media
marketing, SEO,
content marketing
and others have
enabled it to
promote as well
as market the
products or
services offered
by them in an
effective manner
Yes- This is
not rare since
there are other
business firms
like Asda,
John Lewis
and others in
UK which are
taking the help
of same digital
marketing
strategies
No-These
strategies
or
marketing
skills have
been
imitated by
the other
business
firms of UK
as well
No-Firms like
Asda, John
Lewis and
others are also
taking the help
of these
strategies to
reach out to a
larger customer
base
The effective usage
of these strategies
had enabled the
firm to significantly
mitigate the
adverse effects of
the high business
competition faced
by it in the retail
business market of
UK and thereby
attain competitive
advantage in the
UK market
The effective
usage of these
strategies had not
only enabled the
firm to enhance
their customer
base but also to
significantly
increase the
amount of
revenue earned
by them as well
IT
Integration
Yes- Tesco is
currently trying to
integrate the
‘internet of things’
disruptive
technology to
No- These are
not rare since
there are firms
like Amazon,
Asda and
others which
No-The
effectivenes
s with which
the other
firms are
using these
No- This is not
specific to the
firm since
others are also
using it
The improvement
that the firm had
made through the
usage of these
technologies had
helped it to satisfy
The increase in
customer base
had enabled the
firm to increase
its profitability

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offer unique
shopping
experience to the
customers. In
addition to this, it
is also using
automation to
improve the
efficiency of its
supply chain
system. The use
of innovative
technologies is
also being for
recruitment of
employees,
marketing and
others
have been
using these
technologies
way before
Tesco even
started to use
them
technologie
s and also
the success
that they
have
achieved
through the
usage of
them clearly
points that
these are
easily
imitable
their existing
customers and also
attract new
customers. This in
turn had enabled
them to attain
competitive
advantage within
the UK retail market
Human
Resource
Management
Yes-The firm
follows a unique
HRM strategy
wherein the
Yes-These are
rare since
there are not
many firms
Yes-The
focus of the
firms is on
profitability
Yes-The
unique
approach that
Tesco follows
The improvement in
the individual
employee
performance had
The improvement
in performance
had enabled the
firm to earn a

23BUSINESS MANAGEMENT
needs of the
employees are
not only taken
into effective
consideration but
also they are
given various
perks or benefits
for the
enhancement of
their performance
which take
into
consideration
the
perspective of
the employees
and thus
they
completely
relegate the
perspective
of the
employees
to the
background
for the
management of
human
resources is
not being
followed by
other firms
enabled the firm to
improve its
organizational
performance which
in turn had enabled
it to gain
competitive
advantage through
better performance
higher amount of
profitability
Branding
and
Reputation
Yes- Tesco had
been able to
develop a unique
brand image
because of its
past history and
also the quality of
products or
services that it
offers to the
Yes-There are
not many firms
who enjoy the
same brand
image or
reputation
Yes- This is
inimitable
Yes-This is
completely
specific to the
firm
This had enabled
the firm to attain
competitive
advantage within
the retail industry of
UK
This had
enhanced the
profitability of the
firm in a
significant
manner

24BUSINESS MANAGEMENT
customers
Pricing and
Product
Policy
Yes-The cost
leadership
strategy and the
product
diversification
strategy followed
by the firm had
enabled it to
satisfy the
customers in an
effective manner
No-Asda,
John Lewis
and others are
also following
these
strategies
No-The
effectivenes
s with which
other firms
are using
these
strategies
clearly
shows that
these are
not
inimitable
Yes- Tesco
had been
following these
strategies for
almost a
century
The effective usage
of these strategies
had enabled the
firm to outrival their
competitors and
thereby attain
competitive
advantage
This in turn had
enabled the firm
to increase its
profitability in a
significant
manner

BUSINESS MANAGEMENT
3.2 McKinsey 7S Framework
Structure Tesco follows a Hierarchical Structure wherein the Board of Directors
and CEO have the maximum amount of power and the other
employees report to their immediate seniors
Systems Tesco had different systems like marketing, HRM, operations and
others which are interlinked together through the usage of different
strategies like strategic human resource management and others
Style Dave Lewis, the present Group CEO of the firm follows transformation
leadership for the purpose of leading the different employees of the
firm
Staff General Managers, CEO, marketing managers, frontline employees
and others
Skills Employees are being offered both hard skills and soft skills so that
they can complete their job roles in an adequate manner
Strategy Cost leadership, product differentiation and others
Shared
Vision
The effective synchronicity of all the above attributes had enabled the
firm to gain a shared vision.

26BUSINESS MANAGEMENT
4.0 SWOT Analysis
As opined by Adekola and Sergi (2016), the framework of SWOT analysis
enables the firms to understand the key strengths as well as the weaknesses of their
own firm. This is important because of the fact that an effective working knowledge
regarding the same would enable the firms to use their strengths and also overcome
the weaknesses in an adequate manner.
Strength  Increasing market share
 Insurance, financial and other similar kinds of services which
are not being offered by other firms of UK
 Tesco Online for the customers who prefer e-commerce
 Unique as well as positive brand image
 UK retail market leadership
Weakness  Sole reliance on the UK retail industry
 Large amount of debts
 Narrow customer base
Opportunity  Non-food retail products or services
 Health and beauty
 Full-fledged usage of e-commerce business model
 International expansion
Threat  Fierce competition within the UK retail sector
 Brexit deal
 Volatility of the overseas market in which the firm is operational

27BUSINESS MANAGEMENT
5.0 Strategic Analysis
Wheelen et al. (2017) are of the viewpoint that the tool of strategic analysis offers
the opportunity to the firms to analyze the strategies which they are using and
depending on the results amend or modify them as per the requirements of the firm.
5.1 Ansoff Matrix
Hansen, Loftus and Loader (2018) are of the viewpoint that the business
prospects of an organization depends greatly on the kind of business strategies
which it is following for the process of its business operations. As opined by Bures
and Carrapico (2018), the business strategies which a particular organization is
following needs to be in synchronicity with the requirements of the external business
environment in which it is operational and also with the key competencies or the
capabilities of the concerned organization as well. In this regard, it needs to be said
that Tesco takes the help of the business strategy of product differentiation for the
delivery of services to the individual customers and also to the different business
enterprises (Retaileconomics.co.uk 2019). More importantly, the active use of this
strategy enables Tesco, in UK and the other nations in which it is operational like
India, Thailand and others, to offer the kind of services to the customers which are
not only different from the ones offered by the other similar retail firms but also better
in quality as well (Butler, Stephens and Swed 2019). Thus, taking the help of this
strategy the firm not only grocery products to the customers but also financial,
telecom, internet and other services to the customers as well. However, it needs to
be mentioned it was only in the initial part of the 21st century that the firm embraced
this strategy in the light of the increasing business competition faced from the other
retail firms of UK.
5.2 Business Level Strategy
Tesco follows the cost leadership strategy for the pricing plethora of products
or services which it offers to the customers (Retaileconomics.co.uk 2019). Tesco,
following the precepts of the cost leadership strategy offers high quality services or
products to the customers and that too at a price range which is lower than the ones
offered by its competitor (Fitzgibbon and Lea 2017). It is pertinent to note that one of
the major reasons for the unprecedented success gained by Tesco in UK and the

28BUSINESS MANAGEMENT
other nations in which it is operational like India, Thailand and others can be
attributed to the effective usage of this strategy and also the product differentiation
strategy. These two strategies have not only enabled the firm to increase their
customer base but also to attract new customers and thereby to increase their
profitability in a significant manner. The firm had been following this strategy right
from the year of its foundation to offer cost effective products or services to the
customers.

29BUSINESS MANAGEMENT
6.0 Issues and Business Models
Michael, Storey and Thomas (2017) have articulated the viewpoint that
sustainability can be defined as the ability of a firm to maintain a certain level of
growth without causing the over-utilization or the exploitation of the resources which
it uses to offer the services or products to the customers. However, it is seen that
there are various issues that the firms like Tesco for the attainment of sustainability
like politics, business competition, climate change and others. One of the major
threats that Tesco is facing currently is on the score of the international politics as
well as the recent developments in the field of politics (Morden 2016). For example,
the national government of UK and other international authorities in order to curb the
unethical business practices used by the firms to attain a higher level of profit had
issued various kinds of regulatory measures which the firms need to abide by. This is
likely to affect not only the profitability of Tesco but also its long-term growth and
thereby sustainability as well. Another important issue that is likely to significantly
affect the long-term growth and thereby sustainability of Tesco is climate change. It
is pertinent to note that firms like Tesco and others cause a significant amount of
environmental damage on the score of their business operations (Mugurel-Alin
2018). Thus, in order to mitigate the issue of climate change UK is following the
precepts of Paris Agreement of 2017 and others which Tesco needs to follow. This is
likely to require Tesco to make significant amendments in their existing practices
which in turn is likely to affect their sustainability.
The firm is currently following the Platform Strategy for the effective delivery of
services to the customers. Michael, Storey and Thomas (2017) are of the viewpoint
that an effective utilization of the platform strategy requires a firm to “connect
different groups and derive benefits from others participating in the platform”. Tesco
taking the help of this strategy maintains an effective relationship with the different
vendors and service providers which in turn help the concerned firm to offer the best
quality products or services to the customers. This is important because of the fact
that it enables the firm to deliver products or services to the customers in a timely
manner which in turn had enabled the firm to gain the satisfaction of the customers.
This in turn had helped the firm to not only gain competitive advantage within the
retail business market of UK but also to earn a higher level of profit as well.

30BUSINESS MANAGEMENT
7.0 Conclusion and Recommendations
To summarize, the contemporary world of business is starkly different from
the ones of the earlier times and there are a plethora of factors that the
contemporary organizations need to take into effective consideration for the conduct
of their business operations. For example, in the contemporary times it has become
imperative for the different business enterprises to take into effective consideration
the threats as well as the opportunities posed by the external business environment
in which they are operational. This is important since it offers the right kind of
information to the organizations which in turn help them to formulate the right kind of
business strategies that are going to help them to perform in a better manner. More
importantly, the focus of the contemporary business enterprises is on the attainment
of sustainability as well as competitive advantage which in turn enable them to earn
amount of revenue. Furthermore, for the effective attainment of competitive
advantage and also sustainability the contemporary organizations also need to take
into consideration the resources as well as the competencies of their organization.
These aspects of the contemporary business world become apparent from the above
analysis of the organization Tesco.
The recommendations that the firm Tesco can use to attain a higher level of
growth through the mitigation of the threats that it is facing and also to effectively
take the help of the business opportunities presented by the retail industry are listed
below-
 Use of e-commerce business model: Tesco is presently focusing entirely
on the ‘brick and mortar’ model of business and it is only recently that it had
launched its “Tesco Online” plan. However, as the retail industry trend shows
firms like Amazon, Asda and others have been able to gain a significant
amount of success through the usage of e-commerce model of business and
also the customers have shown high propensity towards the same. Thus, it
can be said that through the effective usage of the e-commerce business
model the firm would be able to gain in a significant manner and also mitigate
the adverse effects of the fierce competition that it is presently facing in the
UK retail industry.

31BUSINESS MANAGEMENT
 Product Diversified: Tesco in order to earn a higher amount of profit can
also offer health and beauty products to the customers. This will not only
further diversify the product portfolio of the firm but will also lessen the
business risks faced by it as well. This is important from the perspective of
the long-term growth and sustainability of the firm.
 International Expansion: Expansion into the different emerging nations like
Bangladesh, China and others is another option which Tesco can use to
increase its profitability. It is pertinent to note that the people of these nations
like to purchase products or services from supermarkets and thus it is likely
that the services offered by the concerned firm will be appreciated by them.

32BUSINESS MANAGEMENT
8.0 References
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