Business Strategy: Analyzing PEST and SWOT, Porter's Five Forces Model

This document discusses business strategy, including the analysis of PEST and SWOT, the use of Porter's Five Forces model to define the competitive environment, and different types of strategic direction. It also provides recommendations for growth strategies.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
Description on analyse of PEST and SWOT analysis of the organisation capabilities...............3
Define competitive environment with use of Porter's five forces model.....................................5
PART B............................................................................................................................................7
Description of differ type of strategic direction avail to organisation. .......................................7
Justification and recommend appropriate growth platform and strategies..................................8
Strategic management plan with strategies, objective and tactics. .............................................9
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Business strategy defined as set of actions and competitive moves that uses by firms to
attract customers, enhancing performance and aids to accomplish organisational goals (Hsieh,
Ma and Novoselov, 2019). This aids to outlines that how an entity should carried out to achieve
desire ends. This is defined as backbone of firm and a roadmap that defines vision, mission and
competing successfully by optimizing financial performance.
The present study related with business activities of Tesco, It is a multinational groceries
and general merchandise retailer that deals in product and services of supermarket. This entity
operates business activities at global market.
Furthermore, report will cover the things as PESTLE and SWOT that aids to analyse the
organisational capabilities to analyse competitive environment. Lastly, report will provide
suggestive measures to enhance growth strategies to enhance performance within the enterprise.
PART A
Description on analyse of PEST and SWOT.
Pestle analysis is one of comprehensive tools that aids to define the external components
that has huge impact on the firm operating within retail industry. In order to identify the
organisation capabilities, the Pestle analysis will be conducted in the following manner as are-
Political factor- This is the retailing firm that operates at the worldwide and there are number of
the global factors that highly influence the performance of quoted enterprise (Mahat, 2019) It is
inclusive of tax rates, varied legislation and stability of operation in business functions operates
in. Therefore, Tesco plays crucial part in term to create varied job opportunities to people.
Hence, supermarkets like Walmart and Tesco has influenced the legal authorities for reduction in
taxes and expansion permission. Stability of the marketing also affects the working of the
enterprise and this also aids to enhance the growth of the enterprise at the huge level.
Economic factors- It is one of the main point of the concern for the Tesco. It is most likely to
leverage cost, profits and prices and demand of the products. Thus, inflation rate, tax rate etc
influence the working conditions of the enterprise and this also affects the growth of business.
Additionally, entity must be aware of the variation in politics such as changes in taxation and
other components that impacts the accessibility of finance. Tesco has the market share of the
30%. In the current scenario, quoted entity has shifted their varied focus on advertisement and

enhance brand value. Thus, there are number of the components that affects the operational
activities of Tesco that is cost, price and profits.
Social factors- There are number of the social changes, trends, changes and preferences affects
operational activities of enterprise. Thus, quoted enterprise enhanced the number of non-food
items offered for sale (Garcia-Swartz and Campbell-Kelly, 2019.). Thus, quoted entity adapt to
changes with help of accommodating the demand for the organic commodities. Therefore,
consumer shopping trends are changing constantly and this affects the profitability and
productivity scale of the entity. They needs to put their consideration on changing behaviour and
demand for the organic commodities. Additionally, change in taste and preferences affects the
people in the huge context and this also leads to have impact on the growth of the enterprise.
Technological factor- This has bought the varied number of new opportunities in terms to regin
the trust of the customers. Additionally, Tesco has invested in the significant amount of energy
within the long term objectives in order to have reduction in the carbon footprint. Additionally,
Tesco has embraced the technology as RFID to enhance the in store experience for the
customers. This kin of things affects capabilities of the organisation and this leads to improve the
performance and brand image of the enterprise.
Environment issues- There are number of the firms that has immense pressure from legal
authorities to address the issues of environment. Thus, firms are liable to respond this kind of
issues to benefit the society. Additionally, Tesco is minimising the waste produced within the
store by enhancing the social conscience within the customers.
Legal- There are number of the government policies and legislation that has direct affect on the
performance of Tesco. It is the entity that has faced the legal action in terms to fraud of
accounting and misleading the investor that agreed to pay GBP 12 millions to set out legal
actions. In order to facilitates these kind of policies, the quoted entity has face reduction within
the fuel they purchase.
SWOT Analysis-
This has been defined in the following context manner as are-
Strengths- Tesco is biggest and also the popular supermarket within the United kingdom. This is
considered to be one of the top 10 most valuable brand in UK. Additionally,. The market share of
the Tesco is 60% as compare to its rivalries as ASDA and Sainsbury's etc. Hence, this entity also
looks over the innovation at the continual basis so that productivity and performance of the

enterprise can get improved. It is the enterprise that has strong firm performance and this helps to
retain the customer at the huge level.
Weakness- Tesco has number of global success stories to share and this has also witnessed some
failures over the years. Previously, Tesco failed within the USA and Japan. This entity has also
fines for misrepresenting profitability. The one of the main weakness of this entity is that this has
high price of premium products so poor section of the society cannot afford their product and
services.
Opportunities- This are defined in following manner as are-
 The quoted enterprise has announced the introduction of jacks at the low cost that is
rivalries to Aldi and Lidi.
 The prices of the premium range products has continually increased.
 It is the entity that has varied opportunities to grow business at the low level.
 It is the enterprise has varied level of the opportunities to expand into overseas market
that are growing.
 Tesco put their focus on the innovation and this aids to enhance the customer retention
rate and also provide opportunities to expand their business profitability and productivity.
Threats- These as are-
 The market share of the quoted enterprise gains from the low cost rivals such as Aldi and
Lidi.
 This firm has lot of rivalries and this impacts the working of the enterprise.
Define competitive environment with use of Porter's five forces model.
Porter's five forces termed out as holistic strategy that aids to undertake strategic decision
to analyse the existing competition within the market. This kind of competitive forces helps to
analyse the competitive environment within the market. It is tool that aids to build competitive
advancement within the retail sector. These are defined in the following manner as are-
Threats of new entrants- The one of the major things is that the economy of the scale is very
difficult to achieve in this industry. It is the things that makes to producing the large capacities to
have the advantage of cost. This makes the entire production system costlier for the new entrants.
Thus, new entrants can affects the business profitability and productivity. The product
differentiation is very strong within this industry as there are number of the firms that sell
differentiated commodities rather than standardised commodities (Theoharakis, Bicakcioglu and

Tanyeri, 2019). Hence, policies of legal authorities within this industry requires the licensing and
legal requirements that needs to be fulfilled and this is very difficult for the new entrants to
joining the industry and this make the weaker force for the new entrants. It is the enterprise that
take the advantage of the economy of the scale within the industry, this leads to fighting off the
new entrants through the cost advantage.
Bargaining power of suppliers- There are number of the suppliers within Tesco as compared to
the buyers. It means that suppliers has less control over the price and also makes the supplier a
weaker force. Thus, the industry in which Tesco operates is one of the important customer for its
suppliers. It means that there are no substitute for the commodity other than ones that provided
by the suppliers. It makes the bargaining power of the supplier a most stronger force within the
industry.
Bargaining power for buyers- Thee differentiation within the commodities are very high and
this make the buyer not able to find out any other alternatives for producing the commodities. It
is the reason that makes the buyer force uncomfortable within the industry. There is no threat
that integrates the backwards and this leads to bargaining threat of buyer weaker. Additionally,
Tesco can put their major focus on innovation and differentiation to attract the buyers. By
brining up new and innovative product can also enhance the customer retention rate and this will
also helps in regain the trust and brand image of the enterprise.
Illustration 1: Porter five forces

Threats of substitute product and service- There are number of the substitute available for the
commodities that are produce within the industry in which Tesco undertaken its operations
activities. There are very less substitute that are avail within and are also produced by the low
profit earning industry. Additionally, there are very less substitutes that is available and that is of
high quality and are way more expensive. Thus, it is stated that this is the entity that needs to put
core focus on providing greater quality within the commodities.
Rivalries among the existing firms- There are number of the competitors within the industry
that operates at the low level. Most of the entity are also large in size. Additionally, the fixed cost
are high within the enterprise in which Tesco undergoing its operational activities. It makes the
rivalries force weaker force within the industry. Henceforth, Quoted enterprise needs to put their
major focus differentiating the commodities so that action of competitors will have the leass
impact on the customer that takes the initiatives to seek the unique commodities.
PART B
Description of differ type of strategic direction avail to organisation.
This is the process that defined as steps in which manager takes the initiatives to create
the complete plan of action and also execute the strategy to be successful within the enterprise.
There are number of the strategies that needed to be taken in order to undertake the
organisational performance in more effective manner. Thus, the strategic direction avail to
enterprise are defined in the following manner as are-
Strategic plans- It is mainly designed with the whole organisation in mind with pitting the
organisational focus on the top mission (Shende and Panneerselvam, 2019). This plan will be
formulated by the top level of managers of the entity such as presidents, CEO etc. This are
provided by the top level of the managers and serve as framework for the lower level of the
planning. Additionally, strategic plans are mainly formulated for accomplishing the growth, to
bring improvement in the commodity and profitability.

Tactical plans- This are defined as those actions that needs to be taken to support the plan of
action. Hence, in this firm needs to look over the strategic goals such as product, pricing,
marketing, operational and financial strategies.
Operational actions- In order to efficiently manage the actions that are assigned to group, across
multiple applications etc. Thus, firm need to undertake the operations with help of effective plan
of actions that aids to accomplish the organisation goals.
Henceforth, this can be stated that course of action that leads to accomplish the goals by
managing the organisational strategy. On the daily basis, managers needs to take actions that
takes steps towards to long term vision of the organisational goals.
Strategic direction defined as set of foundational ideas that provide tendency to strategy over
time. There are some common kind of strategic direction that are defined in following manner as
are-
 Mission- It defined the purpose of the enterprise. This aids to look over the desired goals
of the enterprise and also support to prioritize the quality.
 Vision- This is defined as basis way to provide strategic direction to the organisational
goals of the enterprise, this also help to attend the business objectives.
 Culture- It is defined as set of behaviours, norms and expectation that evolve in the result
of the share experience. Henceforth, culture is typical to change but this act as the strong
form of strategic directions.
Justification and recommend appropriate growth platform and strategies.
There are number of key growth plan that aids to fuel to business and this helps to
accomplish the organisational goals. Strategy derived the action plan that aids to accomplish the
long term organisation goals and also helps to bring effective performance. Strategic
management defined as continuous process and activates and controls the organisation in which
involved. Additionally, implementation of the strategic aids to conduct the business activities in
effective and efficiently. Thus, the following recommendation are given in the following manner
as are-
 Social media aids to gather the attraction of the people, as the lot of people are depends
on the social media as snap-chat, Twitter etc. With help of the post of the product on
online aids to gain the attraction. This aids to maximise the business profitability.

 One of the most effective way to attract the people is to make video tutorials. This aids to
maximise the sale ratio of the enterprise. By creating videos of the product this can be
possible to visibility and boost the growth of the enterprise.
 In order to enhance the growth the business entity needs to give some discounts and offer
that helps to attract the people. This kind of the things helps to accomplish the
organisational objectives.
 The quoted enterprise should adopt transformation strategy that helps to accomplish
effective human resource, better organisational performance and this also brings
development within the enterprise.
 This is the enterprise that needs to have customer focus strategy as this streamlines the
business operation and bring better and effective advancement. It is one of the effective
things that helps to accomplish the business goals and objectives. Thus, employer of the
enterprise needs to hear the complaints of the staff so that customer retention rate can be
maintained. This can also help the organisation to accomplish organisation objectives.
 In order to growth business, the firm can also look over the diversification strategy this
allows entity to enhance profitability and productivity through grater sales volume from
the new products and new markets.
Henceforth, this can be stated that strategic growth platform are the long term initiatives
for gaining the high scale profitability to increase firm market share. In order to growth business
profits the needs to choose the better strategies so that goals of the entity can be accomplished.
Mnagment plan with strategies, objective and tactics.
SMP defined as the course of action that helps to develop the operational functions of the
enterprise and also supports to bring improve in the performance. Hence, the strategic
management plan defined in the following manner as are-
Strategies Objective Tactics
Diversification To expand the business within
the new market so that long
term growth can be
accomplished.
It can be done with help of
brining innovation in the new
market and by selecting the
proper market in which entity

can get success.
New product development To bring new innovative
product into the market to
attract the large number of
customers.
It can be done with help of
undertaking the innovation and
this also aids to accomplish the
organisational performance by
looking over the profitability
rate of the enterprise.
Customer focus strategy To enhance the customer
retention rate and
organisational profitability.
By listening their complaints
and provide them timely
assistance can aids to build
effective customer focus
strategy.
Range of theories that devise the strategic planning.
Strategic planning can be termed out as process of organisation that helps to define goals,
direction and decision making processes towards to effect the allocation of the resources.
Additionally, strategic theories will be defined in following manner as are-
 Cost and price leadership strategy- The quoted enterprise is leading organisation within
the UK. In order to attract the customer and facilitates the effective strategic workforce
this is crucial to adopt the effective pricing strategic that helps to undertake better
workforce. Thus, Tesco needs to offer the relatively low price to their customers that
helps to stimulate demand of customer also leads to gain the market share.
 Differentiation strategy- It is defined as approach that can be taken by the enterprise to
develop the unique product and services. In the current scenario, the most of the
customers are health conscious so that they wants to take healthy diet. In this way, Tesco
needs to produce organic commodities that can assist to attract customers. This will be
one of the effective way as this leads to enhance the market share of the enterprise.
CONCLUSION
From above report it can be aforementioned that business strategy termed out as set of
actions that uses by the firms to compete successfully and aids to strengthening the performance

of the enterprise. This is defined as backbone to the enterprise and this also aids to accomplish
the objective of the enterprise to secure the competitive position within the market.
The present study is based on Tesco. Furthermore, study will cover the number of
activities to undertake the strategic analysis with help of tools as Pestle, SWOT and Porter's five
forces to undertake the operational capabilities. Also, report has covered different kinds of
strategic directions that is available to enterprise. Lastly, suggestive measures has been given that
in terms to growth and performance of the industry.

REFERENCES
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