Business Strategy Contents
Added on 2020-10-05
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BUSINESSSTRATEGY
ContentsINTRODUCTION...........................................................................................................................1INTRODUCTION TO COMPANY................................................................................................1P1. Analysis of impact and influence of macro environment on organisation and its strategies3P2. Internal environment and capabilities of a firm.....................................................................9P3. Evaluation of competitive forces of retail industry.............................................................12P4. Devising a strategic plan for company................................................................................15CONCLUSION..............................................................................................................................18REFERENCES..............................................................................................................................19
INTRODUCTIONBusiness strategy can be referred to as the course of actions as well as decisions thatare undertaken by an enterprise in order to gain a competitive advantage in market. The mainobjective of adopting and implementing a business strategy is to ensure achievement oforganisational goals and objectives within the stipulated time in a desirable manner (Cavusgiland et. al., 2014). The major focus here is to gain the attention of the largest quantum ofpopulation to enhance the sales and profitability of company. The following report is based upon the strategic analysis of Tesco PLC which is aBritish multinational retailer dealing in general merchandise and grocery items as well asrenders financial services. This assignment consists of 4Ps. P1 gains an insight into theinfluence and impact of macro environment upon company and its strategies. P2 analyses theinternal environment of organisation as well as the capabilities of firm using Porter ValueChain and McKinsey 7S model. P3 explores the practical application of Porter Five ForceModel to evaluate the competition within retail industry. Lastly, a strategic plan will bedevised for the company in P4.INTRODUCTION TO COMPANYTesco Plc is a multinational company headquartered in England, United Kingdom.This organisation provides products associated with daily needs such as grocery, generalmerchandise, electronics, clothing, books etc. This entity also offers financial, telecom andinternet services to its clients spread across the globe.Background: This company was found by Jack Cohen in 1919. Tesco originallyoperated as a grocer in UK. Since 1960, this organisation carried out massive diversificationand entered product segments such as clothing, toys, books, petroleum, financial services,internet, telecom etc. They started carrying out expansion in 11 countries since 1990s andrepositioned themselves as a multinational corporation which was capable of attracting a largesegment of population with “Tesco Value” items as well as “Tesco Finest” product range.This company is listed on LSE (London Stock Exchange) and is a part of FTSE 100 Index(From vision, mission and values to KPIs at Tesco, 2018).1
Mission: The mission statement given by Tesco is “To make what matters the mostto people, together” (From vision, mission and values to KPIs at Tesco, 2018).Vision: The vision statement given by Tesco is “To become the most valued companyin the eyes of customers, community and stakeholders”.Objectives: The objectives of Tesco to ensure sustainability in market are givenbelow:-To become a leading retailer within the global market.To enhance the core business within UK to facilitate growth of operations in domesticcountry.To engage in social initiatives so as to act in the interest of community andenvironment.Sales and Profitability: This organisation is continuously growing over years owing toits high quality products and its diversification strategy to gain a high stake in globalmarketplace. The social, economic and marketing initiatives that are undertaken by thisorganisation at regular intervals is the major reason behind this company being the thirdlargest retailer across the globe. As can be seen in the graph below, the profit earned by thisentity in last year (2018) was £1208m. This clearly indicates the edge of Tesco over rivalswithin retail industry such as Marks & Spencer, ALDI, Sainsbury's, ASDA, LIDL etc. and thecapabilities that this organisation possess to continue to operate in the same manner in futurecourse of time. 2
(Source: Income Statement of Tesco, 2019)P1. Analysis of impact and influence of macro environment on organisation and its strategiesThis section of report will take into account the definitions of strategy. Also, it willPESTLE and Stakeholder analysis of company together with advantages and disadvantages ofconducting PESTLE analysis for company.StrategyStrategy refers to the course of action that is undertaken to achieve the long termgoals and objectives (Brewster, 2017).It can also be said that Strategy is the direction of people as well as their behaviouralcharacteristics towards achievement of a desirable state in future context.Similarity between the definitions: Both the definitions propose that strategy is futureoriented and assists in the attainment of long term goals.3Illustration 1: Income Statement of Tesco
Difference between the definitions: While the first definition proposes strategy to be acourse of action, the latter indicates that it is the alignment of behavioural characteristics ofindividuals towards the long term goal.PESTLE AnalysisThe manager of Tesco has conducted PESTLE analysis so as to gain knowledge of theexternal business environment factors which influence and impact upon the company and itsbusiness strategies.Political Factors: The elements belonging to this determine the extent of governmentintervention in the operations of company. These include factors such as trade tariffs, taxpolicies, fiscal regulations etc. (Jeston, 2014). The management of Tesco has to take intoaccount these factors to successfully sustain in market for a long time.Positive:The government of United Kingdom is stable which reflects that the laws andlegislations made by the political system of country remains consistent from year toyear. This fosters Tesco to gain knowledge about the legal rules and regulations andsurvive in UK market at a leading position.Negative:As company tries to expand into newer countries where the political systemis not legal, it may issues in relation to ensuring its sustainability in marketplace. Toprevent this, organisation is capable of devising a strategy wherein only such marketsare selected where the government is stable.Economic Factors: These comprise of those factors which are associated with theeconomy of a country such as inflation, economic growth, interest rate, foreign exchange ratesetc. (Goffee and Scase, 2015). Tesco considers these aspects to maintain its top position inUK.Positive:Tesco takes into account the policies of UK that may significantly affect theprice, expenses, demand and revenues of company so as to smoothly run its operationswithin the nation.Negative: The market share of Tesco in UK is 30% which indicates that an adversechange within any of the economic policies of country will hamper the sales andprofitability of company (PESTLE Analysis for Tesco discusses its Business4
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