Impact and Influence of Macro Environment Factors on Tesco

Business
Strategy
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Table of Contents
Introduction......................................................................................................................................3
TASK 1............................................................................................................................................3
Impact and influence of macro environment factors on the organisation..............................3
TASK 2............................................................................................................................................7
Analysis of internal environment and capabilities of the organisation..................................7
Critical evaluation of internal environment and the capabilities............................................9
TASK 3..........................................................................................................................................10
Analysis of the external competitive environment for a organisation..................................10
Porter’s five forced model:................................................................................................10
Appropriate strategies to improve competitive edge and market position...........................13
TASK 4..........................................................................................................................................13
Theories, concepts, models that can help in strategic planning...........................................13
Strategic business plan.........................................................................................................16
Critical analysis and interpretation of data and information................................................19
CONCLUSION..............................................................................................................................20
REFERENCES..............................................................................................................................21
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Introduction
Business strategy can be defined as different actions said that is used by organisation for
achievement of given objective in a saturated period of time. It is also very helpful for
Organisation in management of their level of performance and attainment of competitive
advantage in the external market. It is very necessary for all organisations to develop some
business strategies in order to survive in the market and deal with all the challenges and negative
factors that are present in overall macro environment. Present report is based on Tesco that is a
retail organisation of UK and was founded by jack Cohen(Lewis, 2017). It is present in different
parts of the world and is affected by many different factors for this there is a requirement to form
strategy based on all the external factors. Such as present report covers,Pestel analysis and
SWOT analysis. Apart from this there are use of certain porters and other different types of
models such as bowman's strategic clock and porter's generic strategy that can help in analysing
the scenario in detail and formation of effective business strategic plan and adopted by
organisation for their long run survival.
TASK 1
Impact and influence of macro environment factors on the organisation
PESTEL Analysis of Tesco
Political factor: Political factor refers to the amount of tax, legislation, rules and
regulation that need to be maintained according to the stability while carrying out operations of
country. To overcome the chances of instability government or local residence makes immense
practice in order to create significant jobs for the domestic population. Existence of Brexit has
immensely affected the whole economy of UK resulting in the fluctuations in the prices of
commodity and affected the food prices.
Positive impact: As Tesco company has large size which operates in the global market.
Large employment opportunity for the local residents often encourages the government of
various countries to make the flexible laws and successfully attract MNCs (Whitelock,
2012).
Negative impact: Existence of Brexit has caused negative implications for the large
retailer like Tesco due to the emergence of various taxes that need to be pay in different
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geographical region of European Union. Along with that devaluation in the currency of pound
sterling also leads to the rise in prices of food items causing low portability for Tesco.
Economic factors: It represent change in the policies of government, change in tax slabs,
purchasing power of people, trade regulations and so on. As Tesco company is growing
internationally but still major part of the market share is gained from its home country that is
United Kingdom. Although existence of Brexit during initial years has affected the market but
recognition of brand has helped them to maintain the interest of wide target market.
Positive impact: Although the profitable margin of Tesco was squeezed due to the
existence of Brexit but implication of appropriate discount strategy cater the requirement of all
income group that assist firm to cater wide demand of customer(Ryu, Lee and Choi, 2014).
Negative impact: Economic consequences associated with Brexit has decline in the
expenditure of company due to emergence of inflation which too affected the wages growth.
This situation leads to the pressure amongst manager of Tesco company in order to encourage
the customer demand as well as satisfy their internal employees.
Social factor: It refers to the people and society who are around the business. The taste
and preference of those affect the business directly so business needs to see all social factors
before taking any decision. The macro environment refers to the change in the lifestyle of the
people and even the trend and fashion.
Positive impact: TESCO is well aware of it and they know that customer is looking for
weekly top up shopping; a new trend which is in line and Tesco is looking to exploit it by
providing people with that top up facility. TESCO is doing complete analyses of people wants
and they are trying to structure there services accordingly which will help them to get heavier
returns.
Negative impact: The company has faced lot of negative impact due to social change.
With the customer turning health conscious, the trend is very alarming for Tesco as the company
keep on their stock lot of processed food and drinks. With the increase in obesity rate the plus
size fashion and demand for such cloth has increased. TESCO need to change their size
composition of cloths which is not favouring plus size right now.
Technology factor: With rapid innovation different supermarket store like Tesco are
making significant practice in order to use the latest technology and enhance service facility. For
instance, automatic delivery and transportation is an emerging driverless technology that
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eliminates the use of delivery person and carry out fast home delivery for the convenience of
consumer (Malerba and et. al., 2015).
Positive impact: Tesco company is the major food retailer that has remain competitive in
terms of technology. Like, it offers fastest delivery facility where the goods are delivered at the
footsteps of consumer within minimum time duration. Along with that company has built the
desirable responses from online platform where all the goods and services are displayed with the
help of catalogue based on which customer can make better choice.
Negative impact: Adoption of innovative technology or technique is a time, energy and
cost consuming process. After certain period of time the existing technology gets obsolete so it is
the continuous expenditure which Tesco needs to bear in order to remain ahead of their rivalries.
Environment factor: Consumer is becoming environmental friendly nowadays and
government is also promoting the same as well. With switch of the customer to environment
friendly approach, company need to change with the time. They need to understand how
important it has become to do sustainable development and do activity in favour of environment
welfare so that lot of eyes catches them. Tesco is focusing on the same line to get more and more
customers.
Positive impact: Tesco is focusing on environmental changes and is operating and are
using recycle items in operation, they are using paper bags. These all things are less costly
resulting in increase in the margin of profit which is good for the company. Company is trying
their best to promote sustainable environment
Negative impact: It is not that easy to implement change in the working environment.
Tesco is facing an issue in changing their old habit to new eco friendly habits. As the scale is big
it is not that easy to change in a night. Some of the factors are taking time to get implemented.
Legal factor: Legal factor are the rules and regulations set by the government of the
country. A company have no choice but to follow the legal policies. If they not, it can result in
high penalty and even ban in some cases(Anwar Shah and Hasnu, 2016). Tesco is well aware of
that and try to do business keeping rules and regulations into their mind.
Positive impact: It may be in Favour of the company sometimes. If following the law
company can get lot of benefits and can stay out of the trouble at the same time. Legal factors
will give the company the guidelines and policy they need to follow and they can form plans
keeping the policy into consideration.
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Negative impact: Tesco has incurred heavy losses in 2014 because of an audit which
shows over stated of profits which severely damaged their reputation. Some of the rules and
regulations introduced by US government on banning high fat drinks advertisement to teenagers
and children may impact promotion and advertisement of company.
Ans off vector matrix of Tesco:
Ansoff matrix is used for the purpose of developing a detailed understanding of different types of
aspects that are part of the matrix:
1) Market penetration:
It is a strategy that is related with the use of low prices for the purpose of entering a market and
getting a leadership position. This strategy can be used by Tesco if they are dealing into existing
products and the market share also exists.
2) Product development:
It is a strategy that is related with developing a product in the existing market but the product is
new. Tesco can make use of the strategy for approaching the existing market share that is having
already high amount of sales.
3) Market development:
It is a strategy in which there is development of existing product but the market is completely
new. It can be used by Tesco in patience when they are willing to approach a new target segment
of market.
4) Diversification:
Strategy in which new products are sold and the market is also new. Best strategy can be used by
Tesco when they are willing to diversify their present share of markets with the help of making
new launches.
From above Discussion it can be said that according to the present scenario of Tesco, there is
requirement of a appropriate marketing plan and some strategies like Diversification
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