Strategic Management of Tesco: SWOT Analysis, Strategic Issues, and Recommendations

This report analyzes the strategic management of Tesco, including a SWOT analysis, identification of strategic issues, and recommendations for improvement. The report discusses Tesco's strength, weakness, opportunities, and threats, as well as the competitive strategic issue faced by the company. It provides recommendations for marketing and analysis strategies to overcome these challenges and achieve a competitive advantage.

Business Management

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Contents
Introduction...........................................................................................................................................2
SWOT Analysis.....................................................................................................................................2
Strategic issue........................................................................................................................................4
Recommendation...................................................................................................................................5
Evaluation.............................................................................................................................................7
Conclusion.............................................................................................................................................8
References.............................................................................................................................................9

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Introduction
Strategic management is the process of developing strategies in order to gain the competitive
advantage in the market. It is a continuous planning, monitoring, and analysis of the
organisation environment (Amadeo, 2018). The company has to be analysing the business
environment to develop the strategies. There are different business models which helps the
company in identifying the strength and weaknesses of the company. In this report, Tesco has
been taken into consideration to identify the strength and weakness of the company to
develop the competitive strategies. Tesco is a British multinational groceries and general
merchandise retailer which headquarters in Welwyn, Garden City, Hertfordhire in United
Kingdom. It is the third-largest retailer in the terms of gross revenue and ninth largest
retailers in the world in the terms of revenue. It was established in 1919 with a physical store
after that it expanded by opening the shops in different areas. The company has shops in
seven countries such as Asia, Europe. The company expanded the business with the rapidly
rate across the country. The company operates in many areas to expand the business that is
why it diversified into the areas such as retaining of books, clothing, electronics, furniture,
petrol and many others (Tesco PLC, 2018).
In the beginning of the report, the SWOT analysis has been used to identify the strength and
weakness of the company. After that strategic issue faced by the company will be discussed
and then recommended the solution. The strength and limitation of the company will be
mentioned in the end of the report.

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SWOT Analysis
SWOT analysis is a business model which helps the company to identify the strength,
weaknesses, opportunity and threat. It is an internal analysis of the company which is
classified in the four components.
Strength
It has been seen that the Tesco achieve the many rewards for its retails excellence, customer
services, and the overall shopping experience. The company has high quality of services due
to which the numbers of customers are attracted towards the services. It is one of the largest
profitable supermarkets and high goodwill value in the world which is a biggest strength of
the company. The company has the high cash reserves ration and wide range of property
which evaluate the strong financial position of the company in each and every type of
economic cycles. The financial position of the company helps to expand the business in the
new market or it can attract the large number of customers by increasing the customer
(Hashemi, and Samani, 2017).
Weakness
The company has some areas where it has to improve in order to grab the high market share.
It has been analysed that the consumers are not buying the product as the other many product
items to having the less disposable income. The retailer of the company is highly dependent
on the UK and Europe market for its sales and did not spend the time and resources on
developing the other market. Competition is also a weakness for the company in order to gain
the competitive advantage. The retailer reduces the prices due to competition in the market
but its face the loss (Mind Tools, 2018).
Opportunity

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There are many opportunities for the company due to which the company can earn the high
revenue. There are many areas in which the company has to grow with its online market and
home deliveries services. The company comes under the contract of joint venture with the
local companies. The joint venture with the local companies helps the company to improve
their performance by analysing the market research and market intelligence. The company
has much opportunity in the private label market in the terms of expansion (Hill, and
Westbrook, 1997).
Threat
It has been seen that the competition is the biggest threat for the company in order to achieve
the objective of the company. The competitors of the company came from the global market
and offering the low prices with the greater variety. The economic condition of the country
also a big threat for the business of Tesco because it affects the market share and
profitability. The purchasing power of consumers is relies on the condition of the economy. It
has been seen that the company has high labour threat in the terms of increased wages
because it increases the production cost of the company. The company face the pressure of
prices strategy in the market due to high cost of production (Shaw, 2017).
Strategic issue
Competitive strategic issue
Tesco faced the marketing strategic issue in the terms of fundamental policy choices must be
addressed in order to achieve the objective of the company. The company has high goodwill
value which is a biggest strength of the company but it became an issue. The high
competition is the strategic issue which is face by the company. As per the supermarket
report, the company face the competition the top and lower end of the market. The sale of
non-food is reduces that was the biggest challenge faced by the company. The competition of

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the company is reached at the higher level due to increasing the online competition. The
online competitors of the company attack on the sales of non-food items by reducing the
prices of the products (Marketing week, 2013). The company faced the heavy loss due to
decreasing the sale of non-food items. From the above analysis, it is also founded that the
competitors are the biggest threat for the company. It is observed that the competitors of the
company became the obstacle in the way of achieving the success. Nowadays, the consumers
are more active on the online websites for shopping instead of visiting the shop here and
there (Madsen, and Walker, 2015). Each and every company expand their business in the
online market to attract the large number of customers. The competition of the company
arises in the market. Due to high goodwill value of the company it set their prices slightly
high as compare to the other companies. As per the reports, it has been seen that the company
fall in UK with the sale of 1pc. The company suffered with the profit of £120m last year due
to decrease in the sale, and loss the £1bn to quit he business in UK and £804m write down
the value of land in the UK (The guardian, 2014). The competitive strategy of the company
is not good in the terms of prices due to which the company suffered with the heavy loss. The
reason behind that the company is unable to understand the marketing threats.
Marketing Strategy
The company faced the issue of marketing strategy because the company did not set the right
target at the right time. Tesco is still generating the revenue and it is the greatest retailer in
the world but now it suffered with the declining profit from last two years. It is founded that
the strategy develop by Clarke is not working because it provides more discount and offers to
attracts the customer. In the festive season, the company provides the many offers to attract
the customer but it becomes an issue for the company because the profit margin of the
company is declining. Clarke did not set the specific margin of trading in the UK and will

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move with the consumer’s trends which are a reason for the company to suffering from loss
(The telegraph, 2018).
Recommendation
Marketing
It has been seen that the company faces the issue of competitiveness due to high competition
in the market. The company faced the heavy loss in the online market just because of high
competition. To recover this loss, the company has to open the new stores as it has strong
financial position. The large number of physical stores of the company reaches at the large
number of consumers. The company can target the physical stores instead of online market to
recover the loss (Rugman, and Verbeke, 2017). The company has to set the budget for the
proper use of the prices and to earn the high revenue.
It is founded that the company failed in the online market so the company has to focus on the
online market. The company has to develop its own websites and makes it creative from
which the large number of consumers can easily attracts. As per the above discussion, it is
observed that the company is financial strong due to its high property. The company has to
invest in the technologies to create the websites more creative so that the large number of
consumers attracts towards the goods and services of the company (Baker, 2014).
Analysis
The company faced the issue of strategic competition in the market. The reason founded
behind the failing is that the company is not able to understand the market threat. It is
necessary for the company to analyse the strength, weaknesses, threat and opportunity. The
company also has to invest in the research and development process to analyse the market
trends. It is also beneficial for the company to analyse the market threat and opportunity.

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Competitors of the company are the biggest threat which is founded by the analysis. The
competitive strategy developed by the company is not good just because of lack of
understanding of the market threats. It is necessary for the company to invest in the analysis
to know about the market situation to develop the market strategies in order to achieve the
competitive advantage (Solberg, 2017).
Evaluation
Strength
 The model helps to identify the strength and weakness of the company which is
necessary to evaluate in order to achieve the competitive advantage.
 It is also beneficial to identifying the issues which affects the business.
 The company is more able to understand the business better by using this model.
 The company can take the advantage of its strength by analysing the strength.
 The company can easily develop the business goals and strategies to achieve the
competitive advantage.
 By analysing the threat and weaknesses, the company can improve those areas by
investing (Business Queensland, 2018).
Limitation
There are some limitations of this model due to which the company can face the issues and
these are:
 The model did not determine the priorities issues so that the company can take step
accordingly.
 It does not provide solutions or offer alternative decision of the problems to the
company.

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 The model provides the too many ideas and opportunities but did not helps the
company to select the best one among the many options.
 The model can produce the lot of information but it is not necessary that all of its
useful for the company. It is difficult for the company to select the useful information
among the whole information.
Conclusion
From the above analysis, it has been concluded that the company expanding the business
with rapid rate. The company develop the competitive strategies to gain the competitive
advantage in the market. SWOT model is used to identify the strength, weakness, threat and
opportunity of the company. It has been seen that the high goodwill value is the biggest
strength of the company but due this company face the competition. The company faced the
issue of competitive strategies due to lack of understanding of the market threats. The
company suffered with the heavy loss in the online market due to high prices as compare to
the others. It is recommended that the company has to adopt the new technologies to develop
the creative website to attract the customer and invest in the research and development
department to know about the market situations. The model is beneficial for the company to
determine the strength and weakness. It also helps the company to understand the business
better but it has some limitations too. The model does not prioritise the issues and also does
not provide the solutions which solve the issue of the company. It has been concluded that
the models helps to analyse the market which is beneficial for the company in order to gain
the competitive advantage.

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References
Amadeo, K. (2018) What Is Competitive Advantage? Three Strategies That Work
[online]. Available from https://www.thebalance.com/what-is-competitive-advantage-3-
strategies-that-work-3305828 [Accessed 20/12/18].
Baker, M.J. (2014) Marketing strategy and management. Macmillan International Higher
Education.
Business Queensland. (2018) Benefits and limitations of SWOT. [online]. Available from:
analysis.analysis/benefits-limitations [Accessed 20/12/18].
Hashemi, S.M., and Samani, F.S. (2017) Strengths, Weaknesses, Opportunities and
Threats (SWOT) Analysis and Strategic Planning for Iranian Language Institutions
Development. Journal of Applied Linguistics and Language Research, 4(2), 139-149.
Hill, T. and Westbrook, R. (1997) ‘SWOT Analysis: It’s Time for a Product Recall’,
Long Range Planning, 30(1): 46-52.
Madsen, T.L. and Walker, G. (2015) Modern competitive strategy. McGraw Hill.
Marketing week. (2013) ‘Tesco can destroy competition by cutting prices’. [online]
Available from: https://www.marketingweek.com/2013/12/02/tesco-can-destroy-
competition-by-cutting-prices/ [Accessed 20/12/18].
Mind Tools. (2018) SWOT Analysis. [online] Available from:
https://www.mindtools.com/pages/article/newTMC_05.htm [Accessed 20/12/18].
Rugman, A. and Verbeke, A. (2017) Global corporate strategy and trade policy.
Routledge.

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Shaw, J. (2017) How to Complete a Personal SWOT Analysis [online]. Available from
https://medium.com/thrive-global/how-to-complete-a-personal-swot-analysis-
2f8769aebd5e [Accessed 20/12/18].
Solberg, C. A. (2017) International Marketing: Strategy development and
implementation. Oxon: Routledge.
Tesco PLC. (2018) About us. [online] Available from: https://www.tescoplc.com/about-
us/ [Accessed 20/12/18].
The guardian. (2014) Tesco in crisis: where’s the strategy?. [online] Available from:
https://www.theguardian.com/business/nils-pratley-on-finance/2014/oct/23/tesco-wheres-
the-strategy-cash-call [Accessed 20/12/18].
The telegraph. (2018) Tesco faces challenge as non-food sales fall prey to online rivals.
[online] Available from:
https://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10093765/Tesco-
faces-challenge-as-non-food-sales-fall-prey-to-online-rivals.html [Accessed 20/12/18].