Influence of Macro Environment on Business Strategy

Business Strategy
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Contents
INTRODUCTION...........................................................................................................................3
Activity 1.........................................................................................................................................3
Analyse the influence of macro environment on the organisation and its strategies.............3
1.1 PESTLE analysis..............................................................................................................3
1.2 SWOT analysis.................................................................................................................5
Critical evaluation of macro environment in order to inform and determine strategic
decision...................................................................................................................................6
Activity 2.........................................................................................................................................6
Analysis of internal capabilities and environment of organisation by using appropriate
strategies.................................................................................................................................6
2.1 VRIO analysis..................................................................................................................6
2.2 Mckinsey 7s Framework..................................................................................................8
Critical evaluation of internal environment and the capabilities........................................9
Activity 3.........................................................................................................................................9
Use Porter Five force model in relevance with organisation.................................................9
3.1 Porter five force models...................................................................................................9
Appropriate strategies to improve competitive edge and market position.........................11
Activity 4.......................................................................................................................................11
Apply range of theories and concepts to devise and interpret strategic planning................11
4.1 Porter’s generic strategies...............................................................................................12
BOWMAN’S strategy clock.................................................................................................12
4.2 Strategic management plan.............................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16
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INTRODUCTION
Business strategy is termed as a combination of all the actions and decisions that is
performed by an entity in order to accomplish objectives and to attain competitive position at
marketplace. It is determine as backbone of a business that consist of a roadmap and help in
achieving desired objective and goals. In addition to this, it include vision, mission, values and
objectives associated with the company (Zucchella and Previtali, 2019). It is important for an
entity to develop an effective strategy in order to gain higher growth and success as well. For the
present report, TESCO has been chosen as a base company. The company was founded in the
year 1919 and its head office is situated at Shire park, England. TESCO offer high quality
grocery as well as home essentials in order to make customers satisfied and develop value for
them. The company has high market share as it offer its product as well as services in more than
12 countries. The present report discuss about macro environment factors and its influence on
business activities and performance as well. In addition to this, VRIO analysis is applied for
gaining an insight about the internal performance and capabilities of an entity. Furthermore,
Porter’s five forces is discuss in context to respective company as it help in analysing the level of
competition prevailing at marketplace. Later, a strategic plan is develop that help an entity to
achieve objectives within in a given time period.
Activity 1
Analyse the influence of macro environment on the organisation and its strategies
It is essential for an entity to determine the impact of macro environment factors on
business performance. It help an organisation to decline level of risk and by developing an
effective strategy. The managers of TESCO is using PESTLE framework in order to analyse
factors that has impact on its performance and activities as well.
1.1 PESTLE analysis
It is a tool or framework that is used to identify as well as monitor macro-environmental
factors which may have direct impact on the overall performance and activities of an
organisation. It is determine that, PESELE tool is mainly used when an entity enter into foreign
market or starting a new business as well. In addition to this, it involve factors such as political,
social, technological, economical, legal and environmental as well. This factor is described
below in relation to chosen company:
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Political factor: It involve factors like political stability, unemployment rate, tax rate and
so on. It is determine that political factors has direct influence on the overall activities and
performance of company. In context to TESCO, it is analysed that political stability of UK is
strong and thus it support companies to expand business that has positive influence on growth
and development of economy. Moreover, it is determine that there is increase in tax rate of
supermarkets that has negative influence on overall revenue of organisation.
Economical factor: It include factors such as economic conditions, income level, inflation
rate and many more. It is determine that purchasing power of people living in United Kingdom is
high and they are ready to pay amount in order to gain quality of products as well as services.
The labour cost in UK is high and is consider as negative impact on the overall performance of
an organisation.
Social factor: One of the essential factor that impact on the overall business activities and
involve elements such as norms, values, perception and opinions of people prevailing within the
society. It is determine that choice and attitude of people towards brand is getting change as per
market trends so it is important for managers of TESCO to undertaken all this factors in order
satisfy customers and retain them for longer time period (Xie and Cooke, 2019). In addition to
this, it help company to develop positive mind set towards brand and strengthen its market
position as well.
Technological factor: In today’s world, one of the dynamic factor that has high impact on
activities and operations as well is technology. It is analysed that technology is changing rapidly
& it has direct impact on buying behaviour of people as they only prefer to consume those goods
and service that is innovative and unique in market. With reference to TESCO, its management
team make use of digital marketing tools such as social media that help in reaching large number
of people within short period of time. In addition to this, it help company to enhance its customer
base level that leads to increase in sales and profit of company.
Legal factor: It is important for an organisation to follow all the rules develop by
government in order to smoothly and properly carried out activities and operations as well. With
reference to TESCO, its managers ensure that all the policies is followed in an effective manner
as it help in developing positive image at marketplace. In addition to this, it is determine that
laws of UK government is so strict as the penalties are so high for any mistakes that has negative
impact on the oragnisation.
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