Business Strategy: Analyzing Macro Environment, Internal Environment, and Competitive Forces

This report discusses the analysis of macro environment, internal environment, and competitive forces in the context of Tesco plc. It covers the application of appropriate frameworks, evaluation of impacts, and critical analysis of the strategic management decisions. The report also explores strategies to improve competitive edge and market position based on the outcomes. The subject is Business Strategy, and the document type is a report.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................................3
TASK 1..........................................................................................................................................................3
P1 Applying appropriate framework analysis and evaluate impacts of macro environment....................3
M1 Critically analyze the macro environment to analyze the strategic management decisions...............4
TASK 2..........................................................................................................................................................4
P2 Analyze the internal environment and capabilities of an organization................................................4
Tesco’s Strengths....................................................................................................................................5
M2 Critically evaluates the internal environment to assess strengths and weaknesses of an
organization’s internal capabilities, structure and skill set.......................................................................7
TASK 3..........................................................................................................................................................8
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector for
an organization........................................................................................................................................8
M3 Devise appropriate strategies to improve competitive edge and market position based on the
outcomes..................................................................................................................................................9
TASK 4 Covered in PPT.............................................................................................................................9
CONCLUSION...............................................................................................................................................9
REFERENCES..............................................................................................................................................10

INTRODUCTION
Business strategy relates to a collection of strategies and behavior employed by a company
in order to gain more consumers and meet successful corporate goals. It tends to make it
possible for a business to step in a good way. Tesco plc is selected in this report to analyze
both internal and external market conditions. It is a British supermarket that sales a vital
range of products and services to customers of United Kingdom. Throughout this report, the
macro environmental factors and their effect on the approaches and competences of Tesco
plc are addressed. PESTLE analyzes describe the external atmosphere while SWOT and
VRIO are used to evaluate the internal setting. Examine competitive power through Porter's
five-force model and establish a strategic management strategy.
TASK 1
P1 Applying appropriate framework analysis and evaluate impacts of macro environment.
The Ansoff Matrix is used in the advertising planning strategy process. This defines the
general approach to be utilized by the organization and then tells which strategies to be used
throughout the marketing campaign. A company often adopts two approaches for targeting
separate markets.
 Market penetration strategy in Tesco- Tesco has been able to broaden its activities
since its establishment through the help of consumer expansion tactics, i.e. the
distribution of new goods to emerging customers. The approach contributed to
increase the market share of current consumers and the utilization of goods. The
successful execution of Tesco customer growth strategy was beneficial by aggressive
Marketing Policies and marketing promotions. Tesco most frequently provides
exclusive discounts on other items to improve revenue.
 Market development strategy in Tesco- Tesco also established commercial policy,
i.e. the selling of current goods really well to different customers or areas. It has
spread from the United Kingdom to other countries worldwide. In July 2019, it
reported the launch of 750 new companies over Thailand in the coming three years.
In several ways, for example its stores in the United States, China, South Korea and

Japan struggled to fulfill Tesco's business growth strategy; yet Thailand appears to
be a new story.
 Product development strategies of Tesco- Over the years, Tesco have produced so
many of its own branded goods for distribution to its current customers. Tesco has its
own and markets all models in various retail categories, as will other items from
international labels. Tesco is particularly successful in this new growth approach.
Unless the manufacturers of big labels had not produced their own variants of the
goods, there may have been more leverage in the deal. It should be remembered,
though, that innovative technologies are typically expensive to produce.
 Diversification strategies of Tesco- It are normally very challenging to execute
diversification techniques. Potential consumers are not quick to market fresh goods.
Tesco originated as a commodity corporation and diversified into other sectors over
time. Any exceptional sources include credit cards, loans and insurance policies.
 It can, however, be noted that Tesco's diversification policies have struggled. Of
starters, in 2013, the business acquired Giraffe of £ 48.6 million. But it didn't work
out and Tesco sold it at long last in 2016 with a loss. Similarly it bought 80% of
Blink box Entertainment's online video store in 2011.
M1 Critically analyze the macro environment to analyze the strategic management decisions.
Economic dynamics have a significant effect on internal efficiency because macro external
influences lead to the assessment of business conditions. This helps to introduce
management strategies that are better known to a client. Such forces help to develop or
evolve corporate growth strategies and decision taking. That also helps to identify avenues
for a corporation to develop and improve.
TASK 2
P2 Analyze the internal environment and capabilities of an organization.
Tesco plc, a Tesco trade firm, is a British international grocery manufacturer headquartered
in Welwyn Garden City in Hertfordshire, England, UK. Company quickly increased h and
had more than 100 Tesco stores in the nation after starting in year 1939.
Strategic capabilities

It relates to company knowledge, expertise and tools to improve the survival and
profitability of competitive advantages. There have been a range of core capacities, such as
product creation, growth, R&D, marketing and distribution, policy regulations, and
financial management.
SWOT analysis
Tesco’s Strengths
 Biggest grocery retailer in the UK – Tesco is the UK's biggest grocery and organic
manufacturer. In contrast with other retail stores in Britain, it has higher profits and
revenues. The financial study for 2018 reveals. The net profits rose by 28% annually.
 Leading market share - Tesco controls the British consumer retail industry with 27
percent market share of its four major supermarkets. It has officially become Ireland's
best-known store.
Weakness
 Poor operational performance in specific markets- In certain areas, only a few Tesco
shops and grocery stores are not operating well. Experts say that before joining such
markets, Tesco did not perform adequate market research.
 Financial errors- Tesco’s net earnings are deeply affected by its heavy mortgage and
credit card liabilities.
Opportunities
 Strategic alliances with other brands- Tesco will deliver excellent prospects by strategic
collaborations with reputed enterprises. Tesco will sell new items to draw more buyers.
 Online shopping- By growing and upgrading its online market and home delivery
systems, Tesco can take advantage of this opportunity.
Threats

 ‘Fake Farm’ legal threat - Tesco has been charged with confusing consumers with fake
farmed names and selling its agricultural goods under the fictitious name of Woodside
Farms.
 Economic crisis and credit crunches - The operating efficiency and profitability of Tesco
shops in crucial regions may be influenced negatively by policy legislation, legal and tax
issues, credit reductions and economic turbulence.
Resource based view
It is described as an analytical instrument used to analyze the potential of tangible and
non-tangible organizational capital to turn their competitive short-term edge into stable
competitive advantages. Tangible resources include cash, physical and technical capital while
Tesco's intangible capital involves talent, employees, reputation and organization.
VRIO model:
VRIO analysis is the one of most important kind of tool that helps to organisation in
evaluation of their capabilities and areas that needed to work in order to gain the desirable
outcomes (Chaffey, Hemphill and Edmundson-Bird, 2019). Here are the VRIO analysis of
Tesco:
Resource valuable Rare Inimitable Organized
High consumer
rating
Yes - - -
Awareness of
brand
Yes Yes - -
Leadership team Yes Yes Yes -
Positive market
position
Yes Yes Yes Yes
Valuable: In context of Tesco they provide one of best services in terms of their products and
services that are as follows:

High consumer rating: Products and services are very much demanding within the consumers
as they always work on technological advancement.
Awareness of brand: People are very much aware about quality of their products so that they
can take best decision regarding purchase of their products (Chen and Liu, 2019).
Leadership team: By providing best training they gain the most talented personnel in their
department.
Positive market position: They position their products in market place in very much right way
that is helps in build product as per consumers.
Rare: In context of Tesco in their rare products and services consist of the factors are as follows:
Awareness of brand that is rare in nature in between the other organization as it takes too much
time and efforts to build within the people. The other factors are leadership team and strong
positioning in market that not easily copy by others (Fairooz, 2019).
Imitable: Imitable factor denote about the attributes that are not copy by competitors as it is very
important for organisation in gaining competitive advantage. In context of tesco the leadership
team plays very potential role and other factor is positioning in market place.
Organize: In respective factor consist of positioning of Tesco in marketplace they by using STP
able to accumulate necessary knowledge about consumers taste and preferences potentially.
M2 Critically evaluates the internal environment to assess strengths and weaknesses of an
organization’s internal capabilities, structure and skill set.
It has been evaluated that for an organization it is very much important to build
distinctive image in the market place that helps to attract large no. of consumers. In context of
Tesco they possess strong brand image in market as they position their market in right way by
accessing consumers needs and demand in proper manner (Jabbour and et.al, 2019). They by
adopting the organizational structure which assist in sharing the potential knowledge and
information to the others.

TASK 3
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organization.
For an organization it is very much potential to access the strength of their competitors in
order to build strategies and tactics in potential manner. in context of Tesco here are the Porter’s
five force model to evolve the effect of respective competitors:
Bargaining power of suppliers: Power of suppliers is very much important factor that directly
influence work s and activities of business in both positive and negative manner (Koh, Singer
and Edmondson, 2019). in context of Tesco there are large no. of suppliers available in the
marketplace so it reduces the bargaining power of them. In that regards it assist in gaining higher
level of profitability.
Bargaining power of buyers: Buyers plays very much important role in the organisational
development and growth. In context of Tesco there have no. of options to purchase the products
and services as small retailers in very convenience manner provides products to their consumers.
So in regards the bargaining power of buyers is high.
Threat of new entry and exit: Respective factor is very significant for organization, in context
of Tesco that operates in the UK marketplace (Kalia, 2015). in respective economy it is very
much convenient to enter in market with products and services in order to satisfy consumers
needs and demand. So in that regards the respective threat is high for Tesco.
Threat of substitute and complementarities: It has been evaluated that there are large no. of
products are available in marketplace and organization provide new products to attract
consumers. In that regards consumers can be easily switch to another products or organizations
where they get at effective price range. So in that regards it can be said that respective
competitor factor is high for Tesco.
Balance scorecard: Balance score card is one of most important tool that use for track the
execution of activities by the personnel within control situations and to monitor the
consequences that arise due to actions (Knezevic and et. al., 2016). In context of Tesco they

using differ kinds of strategies in that regards respective tool proved beneficial for them to
measure their success potentially.
M3 Devise appropriate strategies to improve competitive edge and market position based on the
outcomes.
To remain always competitive in marketplace it is very much potential for an
organization to build strategies and tactics to attain best outcomes. It has been analyze that there
are different competitors exist in market and they affect the business performance in adverse
manner. in that regards it is very much potential to focus on building strategies and tactics that
ultimately attract large no. of consumers (Koh, Singer and Edmondson, 2019). In context of
Tesco to lessen down the competitors affect they need to focus on innovation and
commercialization of their products and services so that best outcomes should be achieved by
them. By taking help from the research team organization can be able to find out one of best
tools and techniques in order to gain desirable outcomes.
TASK 4 Covered in PPT
CONCLUSION
From the above report it has been concluded that for an organization it is very important
to mould their strategies and tactics on the regular interval to remain always competitive in
marketplace. Before building strategies and tactics it is crucial to access the competitors strength
and way they deal with consumers. By using the competitors analysis, SWOT analysis and other
factors organization can be able to gain potential outcomes from it.

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