Unit 32 Business Strategy Strategic Management Plan

This report analyses Tesco's business strategy using PESTLE, SWOT, and Porter's Five Forces models. It includes critical evaluation of internal and external factors, competitive forces, and strategic management plan.

Unit-32 Business
Strategy
(Strategic Management
Plan)

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
P1. Analyse the impact of macro environment......................................................................4
M1. Critically evaluate different external factors in macro environment..............................6
TASK 2............................................................................................................................................6
P2. Analyse internal and external factors of business environment.......................................6
M2. Critically analyse the strengths and weaknesses of the organisation..............................8
TASK 3............................................................................................................................................9
P3. Evaluate the key competitive forces with the application of Porter's Five Forces...........9
M3. Devise suitable strategies to enhance competitive edge and market position..............10
TASK 4..........................................................................................................................................10
P4. Application of theory, models or concepts.....................................................................10
M4. Produce a strategic management plan that has tactical and tangible priorities and targets.
..............................................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERNCES:................................................................................................................................14
Books and Journals:..............................................................................................................14

INTRODUCTION
Business strategy delineates as the course of action or group of decisions which aid
companies to attain its aims and targets of business. It is used as a master plan that the business
management implements to defend its competitive edge in the potential marketplace, target
customers, carry on its business operations, and attain the intended results of the organisation. It
is important to analyse the faults in the master plan so that the business would not lost in the
crowd of vicious competition (Alanzi, 2018). In this report, the chosen company is Tesco Plc. It
is a global retail organisation which is known for various products and services such as financial
services, furniture, clothing, books, internet services, teleocom services and so forth. The launch
year of the company was 1919. It has spread its business all around the world. The current report
will consider several frameworks and models which is useful for making strategic decision for
the business. It will include PESTLE for analysing macro environment, SWOT for examining
micro environment, Porter's five forces for industry analysis. At last, this report will also outline
Bowman's strategy clock for devise strategic plan.
TASK 1
P1. Analyse the impact of macro environment.
The concept of PESTLE analysis defines the analysis of several external factors that can
influence the company and its operations in both positive and negative ways. It involves
political, economic, social, technological, legal and environmental factors. These factors can
create various opportunities and threats of the Tesco Company. The application of PESTLE
analysis has been done underneath: Political factors: It include political stability, tax policies, trade restrictions and many
more. In respect of Tesco, as the company has its business operations in twelve countries,
involving Europe and Asia, it is fundamental for them to understand the impact of
political factors so that better decisions can be made for the growth of business. Import
duties on products can influence the chosen company as it trade some inventory from
cross-borders such as East Asia and China. On the other hand, Brexit has imposed new
rules and regulations due to which many of the citizens think that it helps in creating
employment opportunities.

 Economic factors: Economic growth rates, exchange rates, wage rates, working hours,
minimum wage, cost of living, unemployment, credit availability and many more
(Bellamy and et.al., 2019). In context to Tesco, the organisation needs to keep their eye
on the economic influences that arise in the nations, as it can affect its business sales,
revenue, profit and distribution. Also, it is beneficial for the organisation to focus on the
boosted borrowing costs in UK, gradually, it will rise its prices and fall in profits. It can
influence the brand reputation, together with cost leadership tactic. Social factors: It involve factors such as health consciousness, career attitudes, cultural
norms and expectations, health and safety and many more. Due to the changing needs and
expectations, customers like to buy things in one go, and based trends of bulk shopping,
Tesco has make decisions to fulfil these needs. It has changed its strategy towards food
cum non-food model. Hence, with the customers' attitude, the business changes towards
organic products to seize its consumer base. Technological factors: It contains emerging changes in technological development such
as use of robotics, artificial intelligence and much more. The development and
advancement of technological development have brought several new opportunities for
the chosen company. With the help of technology, the company has introduced two most
distinct ones such as self-service check-out points, and online shopping which creates an
ease for customers. Legal factors: It contains changes in laws and legislations influencing employment,
resources, taxation, imports and exports and many more. Due to the lack of
understanding, the chosen company has faced bad consequences as they discriminated
their employees on the basis of gender and age. Moreover, it also faced some accounting
frauds due to which they lost their brand name and image in the market.
 Environmental factors: It include global pandemic emergencies, global warming,
sustainable resources and many more (Dawes, 2018). In case of Tesco, due to the rising
pressure on organisations to resolve environmental challenges and to adopt ways of
operation which would help the community. The chosen retailing brand is clearly
committed to limiting its carbon footprint by around 50%. Additionally, they also commit
to reduce their wastage comes in their stores by promoting social conscience in buyers.

M1. Critically evaluate different external factors in macro environment.
It has been evaluated that it is important for the organisation to analyse different macro
environmental factors that can affect the company and its business decisions. For the purpose of
making strategic decisions, the business managers need examine factors such as political,
economical, social, legal, technological, along with environmental factors. All such factors
contain both opportunities and threats to the business (Eklund and et.al., 2018). In case of Tesco,
the company gradually make decisions to snatch available opportunities such as they can grow
their business where the country's political condition is stable, they can also meet customer's
changing needs and expectations by serving products according and much more. On the other
side, the company can make plans and strategies to overcome their fears such as fulfilling legal
requirements so that they can function their business progressively.
TASK 2
P2. Analyse internal and external factors of business environment.
SWOT analysis can be understood as a model utilised to examine the key competitive
edge of business and to make strategic planning. It also helps in examining internal and external
factors, along with current and future potential (Ginindza and Tichaawa, 2019). It is a proven
management approach that helps brand such as Tesco to benchmark its organisational
performance in contrast with its rivalries. The application of SWOT analysis within the context
of Tesco are mentioned below:
Strengths: Biggest grocery store in Britain: Within UK, the company has gained a huge market
share in terms of revenue. Even so, it is the top retail merchandise and retail store in UK.
It has earned a yearly revenue with 63,911 pounds in the year 2018/19. Diversification of business in several countries: Ever since, the Tesco has established
their business, it has acquired market share in many countries across Europe and Asia. In
world-wide context, the selected retail brand has obtained 6800 grocery retail stores and
supermarkets. Largest private employer in Europe: Tesco also has gained the popularity due to the
reason of developing more and more emplacement opportunities for local citizen. It has
created jobs approximately 5,00,000 globally and it has given 743k employment

opportunities so far. Hence, this can prove that Tesco is known as the largest private
employer in the country (Jungeblodt, 2021). Diverse retail stores: It has acquainted several stores to cover more demographics of the
whole marketplace. For example, Tesco Metro, One stop, Jack's business, Tesco
Superstores, Tesco Extra and many more.
Weaknesses: Failure in the US and Japanese Market: It is studied that the chosen retail brand has
expanded its business in US, together with Japan, but Tesco has to wind up all of its
stores years later. Due to the failure in export activities and implementation of plan, the
organisation could not able to succeed in such market areas. Accounting Fraud Scandal: The legislative bodies found the chosen organisation guilty
of exhibiting less profit in its balance sheet so that they could not pay taxes to the
government (Kamran, Fazal and Mudassar, 2020). Such news and information damage
the brand image and reputation in the market. Less operational profit: The impact of Brexit has been influencing the business
performance, and the selected organisation is generating less profit because of it. Thus,
the share price of the market has decreased by around 9%. It is a terrible news as it would
not attract the new lenders. Weak operating performance: The operational performance of the few outlets of Tesco
in some international places has always been devalued which signifies that the marketing
domain is insufficient in the conduct of research before opening up any new outlet in any
country.
Opportunities: New emerging markets: Although, Tesco has increased their market share by opening
various retailing stores in different countries around the world, but there are many other
developing markets such as South Korea, Indonesia or even Turkey (Kudryavtsev and
Gavrilova, 2017). Therefore, the company can open and expand their outlets in such
emerging markets. Strategic alliance with other brands: The respective company can partner up with other
companies in search of growth and development. The main reason is that they can come
up with better services and commodities to provide better customer experience.

 Online shopping store: The respective company has launched a mobile app for their
online customers, it should advance up their mobile app and introduce new features such
as home delivery so that they would be able to attract more customers towards their retail
brand. Joint venture: There are certain outlets in some international places that are not
performing well but if the respective retail brand partners up with other local
organisations and acquire knowledge about the local market then it can be able to
perform better (Lin, Wang and Sheng, 2020). Thus, the company should take it as an
opportunity and grow their business with local organisations.
Threats: National economic crisis: National economic factors such as rules and regulations of
government, tax rates, credit rates and many more are a biggest threat to the performance
and growth of company in some areas of country. It is fundamental for the company to be
creative enough to address such threats. Brexit Deal: The separation of British from Europe is also a threat for the organisation
because it has an impact on the business operations and activity. The chosen organisation
has been operating their business activities in several European countries so there always
be a threat of trading smoothly. Supermarket competitors: Aldi, Walmart, Asda, Morrison’s and so on are vicious
competitors of Tesco as they are also growing.
M2. Critically analyse the strengths and weaknesses of the organisation.
From the above section, it has been critically analysed that the global retail brand that is
Tesco aims to succeed in the market by making different plans and strategies to beat competition
and acquiring customers for the business (Liu, and Kong, 2021). Also, it is clearly found that the
internal capabilities of the company is quite high as they have more strengths and opportunities
than its weaknesses and fears. With the help of strengths and making informed business
decisions can help in overcoming threats such as competitors. Also, the business needs to make
and identify different available opportunities so that they can expand their business and meeting
new challenges and changes as well.

TASK 3
P3. Evaluate the key competitive forces with the application of Porter's Five Forces.
Porter' five forces analysis involves the competitive landscape organisation and factors
affecting its industry. The analysis concentrates on tracking the business position based on forces
such as bargaining power of customers, bargaining power of suppliers, threats of substitutes,
threats of new entrance and competitive rivalry. The following framework will help Tesco to
analyse its current position in the market based on several external and internal factors. Porter’s
five forces has been explained below in company’s context: Bargaining power of customers or buyers: The respective company serves millions of
buyers every seven days in its online and offline stores. The bargaining power of
customers in UK is low as they are unorganised and not likely that they can be better off
if they move to other companies in retail market. In respect of Tesco, this factor makes
the industry attractive for business. On the other side, some of the researchers argue that
the bargaining power of customers is high in UK as in current times there are many other
competing retail companies opposing for the same buyers and provide goods and services
at cheap rates in comparison with Tesco. Bargaining power of suppliers: The respective company deals with 2500 suppliers in UK
and many other at international places. Whatsoever, these vendors cannot exert their
bargaining power on the company as there as many other suppliers who can provide
similar raw materials to the company (Ukko and et.al.,2019). The following brand can
easily negotiate with the suppliers to increase their profitability. Thus, the bargaining
power of suppliers is low to company. Threat of new entrants: In UK supermarket industry, the threat of new entrance is very
low because of the requirements of capital. The chosen retail brand does not need to
worry about new entrance as it has their own competencies while enjoying economies of
scale. Also, would be competitors may not have enough investment, expertise to explore
retail industry access to distribution network in the UK. Threat of substitutes: The chosen retail brand serves a broad range of goods and services.
Also, it covers substitutes in majority such as it merchandises both butter and margarine,
powder milk, condensed milk and fresh milk. Hence, it can be said that the threat of
substitute is irrelevant for the company.

 Rivalry amongst existing competitors: The retail industry involves number of
competitors such as Lidl, Aldi, Sainsbury and many more. All such companies invest
lavish amount on advertising and other marketing strategies which develops high
competition for brands like Tesco.
M3. Devise suitable strategies to enhance competitive edge and market position.
Ansoff Matrix:
It is a strategic framework that is used to develop growth strategy. In context of Tesco,
the following is the explanation of different growth strategies: Market penetration: It intends to boost the sales of current products and services on the
current marketplace, and, thus, for the purpose of increasing current market share. Market development: It aims to promoting sales of current products and services on
unexplored market segments. Product development: The key purpose is to boost up the business sales by introducing
new products and services on the current marketplace. Diversification: It involves the most risk by launching new goods and services on
completely new and untouched markets (Wardoyo, Iriani and Kautsar, 2018).
By analysing all the above strategy, the company can make their strategic decision by
using market development strategy as the company gains its achievement on its current goods
and services, it will also help in gaining new customer base in new marketplace. All they need to
use the advices of researchers so that they find the place where they can expand to grow.
TASK 4
P4. Application of theory, models or concepts.
Bowman's Strategy Clock:
The Bowman's Strategy Clock was founded by two main scholars Cliff Bowman, along
with David Faulkner. The key purpose of this framework is to make the business firms aware of
their position in the target market as compared to their competitors. It is a marketing approach
that supports the organisations to assess their position in the market. The Bowman's strategy
clock also outlines the aspects on how an organisation can position its goods and services in the
market depend on the two dimensions. The first one is about the “price”, while other one is about

the perceived value of the commodity, service as well as the overall brand. In context of Tesco,
the following is the explanation of eight positions of the Bowman's strategy clock: Low price and low added value: In this position, the organisation put their prices low in
order to remain competitive in the potential market (Wood and et.al., 2021). In this
category, the product is not discriminated from other products in the market and the
buyer perceives remain very low value. Low price: In this position, the company create bulk quantities of the items which
perceives value in the target market. The goods and services are often retail at a degraded
price leading to the low-profit margins on the individual goods, but the high value of the
good can still make the good amount of profits for the enterprise. Hybrid: It focuses on the product differentiation which develops the company's offerings
highly valued in the market and in the customer's perceptions, whereas the organisation's
concentrate is on the low prices. Therefore, the company try to convince their customers
that the good worth can be attained even at low price from which they can gain benefits
genuinely. Differentiation: At this position, the company tries to use differentiation strategy in order
to provide their products or services with some uniqueness so that their customers will
get high value and worth from their spending. Also, in this category, the customers are
ready to spend even high amount as the organisation provide differentiated product with
high quality. Focused differentiation: In this position, the company provide exclusive and expensive
products or services that are high on quality and are retails at a high end prices. Through
segmentation, promotional techniques and distribution tactics, the organisation can target
their customers in the market. Risky high margins: In this segment, the company tries to charge high value for the
items and services that are sensed as inferior in value by the buyers. It involves risk to go
for such plan or tactic as it might fail in long range. Monopoly pricing: In this position, the company's position itself as the monopoly in the
potential market as they are the only ones giving the particular form of product in the
target market. In contains no threat of competition and they can ascertain the prices by
themselves.

 Loss of market share: It is not the delectable one for any business firm as it shows that
the firm is unable to indulge the commodities that the buyers value (Xuan and et.al.,
2021). Through this position, the organisation goes for standard prices of their good
offerings to stay emulous and relevant in the potential market and in buyer's mind.
M4. Produce a strategic management plan that has tactical and tangible priorities and targets.
Strategic management plan- Vision: The vision is to be the customer’s first choice and priority. Mission: To provide better customer experiences all around the world. Objectives: To improve the well-being of customers, employees and community. Strategies: Tesco can use market development strategies by exploring untouched
marketplaces and to gain new customer base.
 Tactics: It is also important to have clear understanding of marketing mix. In case of
Tesco, it is mentioned below:
Product Place Price Promotion
Clothing, telecom
services, financial
services, food and
much more.
It has global business
operations and provide
goods in both online
and offline ways.
Provide goods and
services at affordable
range.
It uses promotional
discounts, uses point
of sale, sponsors
charitable events and
so forth.
 Implementation: It is very important for the organization to execute plan for which they
necessitate a certain amount of financial resources (Samad, 2020). Tesco can plan and
distribute their funds with the help of financial department of their business. Also, to
track the business performance, KPI is suggested to Tesco so that can fill out the needs, if
required.

 Evaluation: This step helps in examining the collection of data and follow the strategic
plan. It supports in acknowledging the problems occurred in implementing plan
Verhoeven and Johnson, 2017). Tesco need to assess and compare the actual results with
the intended results.
CONCLUSION
It has been concluded that business strategy contains a collection of decisions for the
business through which they can accomplish their overall goals. For the purpose of making
strategic decision, a company need to analyse several factors, including internal and external
factors so that they understand their capabilities to achieve goals. A business is also affected by
the competitive forces of an industry, so it is essential for the organization to know and identify
the impact of each and every force.

REFERNCES:
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Alanzi, S., 2018. PESTLE Analysis. Project Management.
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