Business Strategy

BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy is predominately the series of decisions which the organizations
undertake and perform the various actions in order to accomplish the gaols of business and attain
competitive advantage. TESCO is the British groceries as well as general merchandise being
established in 1919 by Jack Cohen and headquartered in England, UK. It mainly deals in
superstores, petrol stations, banks, telecoms etc.
This report gives a brief about influence of macro environment on organization, Analysis of
internal environment and capabilities of organization, Porter five forces and strategic
management plan.
MAIN BODY
Influence of macro environment on organisation
PESTEL analysis
Political factors
The political generally encompasses the political stability, tax rate, Government policy,
foreign trade policy etc that have a huge impact on the functioning of TESCO.
Negative impact- As per the view of Johnson, G (2016), the most negative impact which these
political factors have posed on the profitability and revenues of TESCO is the impact of Brexit in
UK. Due to this Brexit, there has been an increase in the price of food along with the devaluation
of pound. This has eventually made the import of food items much expensive for various food
retailers. Due to the decrease in the pound rate, the supermarkets in UK like TESCOI has been
pressurized to employ the expensive food retailers which are based in UK and this has eventually
affected the company operation and their strategic direction.
Positive impact- Although, these factors have impacted TESCO in negative way but somewhere
has also affected the company and has helped in expanding. The European Union generally
allows the free movement and flow of various goods and services between the countries who are
members and this has helped TESCO to expand and thus has provided them with a wide platform
to expand and thus trade in the wide geographies.
Economic factors
According to Thompson, Strickland and Gamble (2015), the Major economic factors
which has affected TESCO to a great extent are employment rates, economic growth, interest
rate, inflation, exchange rate etc.

Negative impact- Due to the devaluation of pound, the foreign exchange rate in UK has
decreased from past few years and thus the value of currency has fallen down. This has affected
the business of TESCO in great way. The export of various food items and other products has
become cheap and this has somewhat decreased the revenue and profitability of TESCO.
Positive impact- Since 2015, there has been an increase in the employment rate from 47.2% to
61.3% in UK. This has posed a positive impact on TESCO and thus has provided them with the
talented employees. This has eliminated the need of TESCO to outsource the skilled employees
from other countries. This increase in employment rate has also enabled to attract more and more
candidates from across the country. Besides this, the impact of Brexit has cut their interest rate in
banks to 0.75%. This has enabled TESCO to grant loans for the expansion at much less rate and
h thus has reduced their most of the expenses.
Social factors
The most important social factors encompasses health consciousness, population growth,
cultures, attitudes, lifestyle etc.
Negative impact- As illustrated by Akter and et.al (2016), UK constitute numerous retired
people in comparison to the young people and thus the population mostly consists of the aging
people. This has bought disadvantage to TESCO as the aged people are likely to eat less and
does not travel to the supermarkets more often. This has somewhat affected the revenue and
profitability ratio of TESCO. Besides this, the changing beliefs and values of the people has also
affected TESCO in negative way. As TESCO operates in large number of countries thus they
remain exposed to different types of people which have varying values and ethics and company
need to adapt to this.
Positive impact- As more and more consumers now have become health conscious and this
increasing awareness for organic food has posed a positive impact on TESCO. This has enabled
TESCO to focus on food containing less sugar and thus having plant-based ingredients. The
growing demand of the consumers for products which are fat free has eventually increased the
revenue and thus has enhanced the overall performance of TESCO. Besides this, the shopping
trends of the consumers in UK has changed and wants the superstore where they can easily find
everything. This has also impacted TESCO in positive way and has provided the consumers with
one-stop shop.