Analyzing Impact of Macro Environment on Business Strategy

This document discusses the impact of the macro environment on business strategy, focusing on the PESTEL analysis and its effect on Tesco. It also analyzes the internal environment and capabilities of Tesco and evaluates competitive forces using Porter's Five Forces model.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
TASK 2............................................................................................................................................6
TASK 3............................................................................................................................................8
TASK 4..........................................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
TASK 1
P1 Applying appropriate frameworks where analysis the impact along with influence of the
macro environment and its strategies
Macro environment is the one which is having its impact highly on the business. There
are different frameworks which are there in the market which are able to analyse the impact
along with influence the macro environment of the business. In relation to this there is PESTEL
analysis which is able to analyse such environment.
PESTLE ANALYSIS
Political factor- This is the one which is there can heave the ability to change the whole
scenario which is there in the business and able to get the high market share and vice versa. In
relation to strategy there is one of the main factor which is there in the business unit and which is
able to get the business run in the smooth manner or get dump. This is the one where there is
directly impact on the business where as the multinational company (Badubi and et. al., 2017).
Tesco is one of those who get highly affected by such factor due to having different political
effect in different countries where they are having the business. Brexit is one of the example
which has effected the multinational company highly in nature. There is need to have some
strategy which can help the Tesco to get minimum effect from it. There is need to make some
strategy which can help in getting over from political effect from each of the country.
Economical Factor- This is the one which is there have the high effect on the buinsess
where each and every country is having different economy and there is directly effect of the
economy on the business where higher economy country is able to get the higher business along
with higher profit where as low economy country is not able to do so. In this present COVID
time, there is need to have some strategy which can help in there to improve the economy
because due to this, there is highly change in the economy of the country and which is directly
affecting the Tesco business. Strategy which is there need to be implemented is the promotional
strategy in which there are many of the discount for different products which can attract the large
customer base. Attracting the large customer base can help in getting more sales resultant high
profit in less time (Becker and et. al., 2018).

Social factor- This is the one which is having its larger effect on the business which is
there can help the business to grow more. In this, Tesco is there involving in different social
work and there are many of them are able to create the good image of the business which is there
can help in getting high level of awareness which is there can help in growing the business and
give the productivity along with high profitability. Social work is the one which is able to give
the positive impact on the business and are there can help in attracting large number of customer
base which is there in the business. Higher authority of Tesco need to apply some strategy which
creates the business awareness along with give some benefits to the society. This can help in
getting better image of the brand along with high positive change in the sales of the products
(Daft and et. al., 2020).
Technological factor- This is one of the best factor which is there having its impact on
the business in the current time where everything is getting highly technical and people are
loving to adopt the technology which is there can help in to get better service. Along with this,
company is there can help in getting high business and is able to get high modification there in
the company. Development in the technology can help in getting development in the business
which is there can help in growing the business. Technology can help in attracting high level of
customer base which is due to use of innovative technology which is having better result there in
the business.
Legal factor- This is the one which is highly affecting the business which is there due to
having different legislation in different country. There is high effect of such legal factor there in
the business in that country. This is the one which is having its high effect on the strategy of the
business (Jiří and et. al., 2017).
Environmental factor- This is the one which is there having the effect on the
environment where the people and the government both are taking initiative which is there in
their own level where protection of the environment is necessary. In context to Tesco, company
is able to get such action which is there in the favour of the environment and having better
impact. In relation to this company has taken many initiatives like using very less plastic there in
the company which is in the process of packaging. Company need to have some of the initiative
business strategies which can help in getting high positive impact on the business and only can
be implement when there is development of better strategy there in the business.

In relation to this, there are some of the analysis which is there have the positive impact
on the business can be measured by the SWOT analysis which is for creating the better strategy
after the analysis of the business in the market (Jones, Harrison, 2018).
Strength
 Tesco is having large market share in different country where they are having large
customer base.
 They are having innovation in their business which is there can help in getting more
modification and are able to get more business which is there can have the larger effect
on the profit of the organisation.
Weaknesses
 In this, company is having different shortage of products which is there on the regular
basis which is one of the main weak point in the business.
 Inventory management is also weak there in the company which creates the shortage of
the product there in the market which effects the productivity along with profit of the
company (Kasim, Ekinci, 2018).
Opportunity
 Creating the online store which can be one of the best strategy which can help in getting
high level of customer base where deliver process should be better enough to highly
satisfy the customers. This can help in decreasing the inventory issues which is by
increase in the demand where there can help in getting high level of inventory there for
the business.
 Social supermarket which is able to stockpile unsold inventory which is there can use
within limited period of time. In which supermarket is able to sell the inventory which is
there at the reasonable rates for preventing the wastage of food.
Threat
 Economic recession is one of the threat for the business of Tesco which si there can have
the negative impact and having the ability to create loss in the business along with
profitability.
 Covid- 19 pandemic is one of the threat which is there can get the high negative impact
on the economy of the country which is there can decrease the business.

 Big giant company are also the threat which are there can be create the high competition
with can come with high level of business strategy (Kraewing, 2017).
TASK 2
P2 Analysing internal environment and capabilities in the organisation
INTERNAL ANALYSIS
This is the methodology which is there for the businesses where there is evaluation of the
key which are there can have the impact on the internal feature of the Tesco. This the one which
is there can analysis recognises along with assesses resources, core competence and capabilities
there. Internal analysis includes the current vision, mission, strategy along with strategic
objectives. For creating the effective strategy there is need to exploit along with expansion in the
strengths and need to reduce the weakness which can help in getting the promotion of the
competitive advantage to gain the cost effectiveness. Fro the internal analysis there are some of
the major areas which need to be considered (McKenny, Allison, 2017). The organisation
capabilities and their resources. Structure, feature and culture of the organisation. In this, the
performance of the organisation is measure by the strength of its product which is there in the
businesses.
For the framework there is need to have the VRIO analysis there of the Tesco which can
help in getting the better strategy for the growth and development of the organisation there in the
market.
Valuable- Financial resource are said to be very valuable in the Tesco because to run any
business there is need of finance without such there are no any business can survive. Patents are
also the valuable resource which helps the Tesco to sell their product without any competitors
interference. Resultant gives greater revenue to the company.
Rare- Financial resources is rare in the organisation in the Tesco which is hard to copy
by their competitors there. Strong financial resources are very rare and are adopted by very less
organisation there in the market which can help in getting better business due to having better
resources there (Mishra, Dimri and Chaubey, 2017). Employee of the Tesco are are one of the
important resource of the company which are highly trained and having better skill where better
compensation along with work environment is the one which creates the motivation in the
employee which leads to not leaving the company. Patents are also the rare resource of the

company which are not easily available by the other competitive firms which make them to run
the business without the interference of the competitors.
Inimitable- Financial resources are the one which are there very inimitable in nature
which are there by company through prolonged profit over years. Such resources which are there
required by the competitors there which is not possible to get that in just few years. Local food
are inimitable and can easily acquired by the competitors easily by some investment in the
research and development. They also don't require many years and can give some temporary
advantage to the Tesco (O'Hara, Nophale, 2017).
Organisation- Financial resources are very organised in the Tesco and are invested
in the right place, such are able to give the competitive advantages to the company there.
Patents are not well organised and are not used properly which is there in the market
where it can sell its patent which can help in change into competitive advantages, company
should sell its patent before the expiration of the patent. Distribution network is organised
which helps in reaching the product on their all of the outlets.
Resources Valuable Rare Inimitable Organisation Competitive
advantages
Financial
source
YES YES YES YES High
competitive
advantage
Patent YES YES YES NO Moderate
competitive
advantage
Distribution
channel or
inventory
YES NO NO YES Low
competitive
advantage
CAPABILITIES
Capabilities refers to the firm capacity which is there in the company which is having the
purpose of integrated for desired end state. Company is having the capability to achieve higher
than present which is by using their resource like its patent, finance etc. which can have the

better effect on the company and able to give better. Company can growth better by using such
resources which are there having better competitive advantage there over their competitors
(Pervan, Curak, 2018).
TASK 3
P3 Evaluating competitive forces of market sector which is by applying Porter's Five Forces
model
Day to day increase of competition in business environment makes it difficult for it's
management to operate it's respective business activities. It becomes important for higher
authorities of a firm to make a proper analysis of their competitors strategies and approaches.
Management of the workforce while formulation of their plans and policies have to considers
their competitors price, product and distribution policies. For making proper competitor analysis
of a business firm Porter's Five Force model is been taken into consideration. This tool was
created and published in Harvard Business School in 1979 by Michael Porter. It is a very simple
but also powerful tool for analysing competitiveness of the business firm and for driving
activities being conducted in an organisation towards achievement of desired organisational
goals and objectives. It becomes easier to an enterprise to formulate proper planning structures
after making detailed analysis of their competitors, it helps management in extracting quality
information about strategies of business rivals. It focuses on various aspects such as bargaining
powers of companies suppliers and customers, threat to a company for substitution of it's
respective product or services and also considers threat of a new entry firm or product in a given
marketplace (Rubino, Vitolla and Garzoni, 2017). With context to chosen organisation i.e. Tesco,
it's higher authorities uses this tool to make a detailed analyses of it's competitive business
environment that helps in establishing better goodwill of the firm in market full of demanding
customers and also helps in increasing brand loyalty and trust of business customers towards
companies brand.
PORTER'S FIVE FORCES MODEL
Competitive Rivalry:- Porter's first theory explain that when company cut their prices
and impact the high market campaign they can attract the customer to buy the product. There is
two things that will attract or you will lose in market. The first thing when there is minimum
competitor in market and you are alone to sell that product in market. The second thing is that

when there are number of competitor, your company buyers and supplier will go to another
company. There are many rival company of Tesco and according to the survey they are reducing
their prices in the grocery products and the customer is shifting to their store.
Supplier power:- It explain that supplier can drive the input cost and it depends on the
goods and services and the supplier cost to sell the products. They have the power to the inputs
and company cost to their goods, can switch to other supplier. If the supplier are few the
organisation is depend on them and if there are lot of supplier the organisation keep their product
price low and earn profit. In context to Tesco, they work their supplier and keep prices low and
protect their customers (Rutigliano, 2017).
Threat of new entrance: It refers to any entry of new business organisation in an
existing market full of demanding customers. It is been analysed that threat of entrance of any
new business organisation in UK is been low. It is due to existence of well built and reputed
companies already in the markets of UK. In respect to chosen organisation, it's management
doesn't need to worry about any new entrance as it enjoys it's high market presence with
companies products and services also it have good brand image in minds of respective
companies customers. It can be said that threat of new entrance to the respective firm is low.
Threat of substitution: It refers to a threat which is caused on availability of same
product with similar quality and prices. In relation to Tesco, it can be said that the firm offers
wide range of products and services to their valuable customers. To add with the company has
already captured market with it's wide product range and is planning for increasing it's market
presence in future. Therefore it can be said that threat of product substitution is low to the firm
because of well established trust of companies customers towards it's brand (Teece, 2018).
Bargaining power of customer- In the retail sector, bargaining power of buyers are
there ascertained which is there high owning to the fact which is there customer render the
opportunities within a company for providing the products to ensure the long term productivity
and sustainability of the enterprise. This refers to the act of threat for Tesco. There are numbers
of famous retailers who offers different substitute products in the company. Tesco is able to sell
their product at affordable prices in the market.
Strategies which can enhance the competitive advantage and market position
As per the analysis, it can be find out that different market activities along with different
plans of the company which are there to be find more effective to create a better connection with

the customer which can help in influencing the buying behaviour. Tesco is able to possess the
potential which can help in the effective marketing strategies such as digital marketing,
campaigns, social media marketing, promotional activities etc (Trigeorgis, and Reuer, 2017).
This can help in creating awareness about the products of organisation. Such strategy is able to
provide assistance the company to increasing the sales along with profitability of the company.
TASK 4
P4 Applying range of theories, concepts along with models to interpret and devise the strategic
planning in organisation
Strategic management planning is used for formulating & designing effective strategies
through use of Ansoff matrix ensuring development of chosen business firm. The matrix consist
of four strategic dimensions required to construct a strategic plan for growth of business.
Market Penetration: This strategy is adopted by TESCO to aim at the existing goods and
services available in market economy. In context of chosen firm, focuses on rising its market
shares & value by serving its potential customers within UK. The products offered by concerned
organisation make sure are not replaceable or substituted by any other competitor firm making
all consumers in market loyal to their effective services only. This can help the business to get
the large customer base where Tesco creates large sales of the product. This can help in getting
more business (Yunis, Tarhini and Kassar, 2018).
Expansion of market: The growth of business requires development in current
performance of firm offering existing products. When current products are introduced in new
market sectors, it help the chosen organisation gain generate new leads leading to more sales &
profitability. New locations also come with new opportunities for company to start with new
product-line with a wide range of goods & services. In this, there is enlargement of the market
which create the large demand of product where increase in sales of the product is main focus.
This can help in getting large market share and increase the revenue of the company.
Expansion of products: New locations also come with new opportunities for company to
start with new product-line with a wide range of goods & services. Therefore, this strategy
focuses on production of new goods into existing market or among established loyal customers.
In context with TESCO, managers have done market analysis as well as researched on current

demanding trends wanted by consumers in market. According to consumer perspective &
preferences, innovation takes place leading chosen company to launch new product.
Diversification: This strategy adopted by TESCO explains about the new products
launch in new market sectors. This form of strategy comes with a lot of risk that may affect
growth of business too. On the other hand, if the new product introduced among target customers
find its way to success may give huge return of profit to chosen enterprise. The strategy prove to
be more expensive than others if take good investment on marketing campaigns, plans and other
promotional activities (Zaumane and et. al., 2018).
Strategic management plan
TESCO has constructed a resourceful strategic plan fro managing business operations &
expanding into new markets with growing opportunities that enhance the profitability & market
share of company.
Aim: To expand into new market sectors domestically and internationally.
Goal & objective: Improving quality of new products & services launched within
affordable prices and maintaining customer loyalty regarding existing services or goods is the
short-term goal of TESCO. Also long term objective of company is to get explore into new
market sectors emerging.
Vision: To improve company's rank by becoming one of the leading merchandising
retailers globally.
Mission statement: To provide effective after sale services with quality products leading
to customer satisfaction.
Strategies: TESCO has been using market penetration and diversification to research &
broaden the supply chain globally resulting in higher profits & increase sales.
Tactics: The chosen enterprise will soon be launching new products & services with
good value addition. Also will be establishing good relationship with new suppliers making
goods affordable to consumers from all income levels in marketplace.

Illustration;- 10 retailers based on sales in the United Kingdom (UK) in 2017/18
According to above graph, it can interpret that Tesco is one of the leading brand which is
there in the retail industry in UK. According to this, sales generation which is there in the
country during year 2017-18 was about $38.7 billion. It can also be interpreted that Tesco is on
the 1st position in the retail sector. Thus, the strategy which is the market penetration, for Tesco
is justified and also able to assist the organisation for enhancing for profitability and sales in
domestic market. This can help in to improve its position in business sector with enhancing the
profitability. Tesco is also able to introducing new products which is an tactic of value addition.
This can also gain the customer attention in the domestic market. This can help the company to
become the leader in the global market.
CONCLUSION
From the above report, it can be identified that there are different appropriate frameworks
are there for the analysing the impact and their influences of the macro environment and the
strategies which are there to be implemented. Along with this, there is analysis of internal
environment and the capabilities which is there in the organisation and there is also use of
porter's five forces model to evaluate the competitive force in the global market. Models, theories
and their concept are mentioned which can help in getting better understanding and interpretation

of strategic direction is there in the organisation. These can help in getting better strategy which
can help the business to get more benefit after implementing such strategy in their firm.

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