Strategic Analysis of Tesco Organization: A Case Study

Running Head: BUSINESS STRATEGY 0
BUSINESS STRATEGY
(STUDENT NAME)
12-24-2018

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Executive summary
Strategic management includes planning, monitoring, and assessing an organization
strategy and everything that is necessary for the company. For the discussion of
strategic analysis, Tesco organization case will be taken in the report. Jack Cohen
founded Tesco organization in 1919, headquartered in UK, within the retail industry. For
effective strategic analysis, initially the external analysis will done, for which PESTLE
analysis tool will be used. Political environment of the company was an essential factor,
as the company operates in more than twelve countries, and different political factors
are to be considered. Some of the major political factor effects on operations of the
company are where EU referendum was creating a great risk element for investors.
Moreover, for external analysis, Porters five-force model was also used. Analysis the
industry of the company included, high competition, due to which price needs to be
minimum by the company.
Another aspect of strategic analysis was internal analysis, for which value chain
analysis and BCG matrix was used, and company primary activities, secondary
activities were assessed. Moreover, Tesco’s strengths, weakness, opportunities, and
threats were observed and analyzed through SWOT analysis, for analyzing internal
factors of the company.
Further, for critical analysis of strategic analysis of TESCO, various tools and theories
were conducted. Ansoff’s Matrix was taken for this purpose, where the marketing
strategies were created and risk attached to each strategy was analyzed, to select the
most suitable strategy for the company. Considering international strategy of Tesco, for
entering into the international market, the company adopted the Strategic alliance and
Joint development strategy. Moreover, considering the integration and outsourcing
strategy, Tesco under its strategic decision, outsource knowledge management system
and knowledge to ICT, for a more effective information system use in the company.

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Contents
Executive summary..........................................................................................................1
Introduction...................................................................................................................... 3
Tesco limited................................................................................................................ 3
External Analysis..............................................................................................................5
I. PESTLE Analysis...................................................................................................5
II. Porters five force model......................................................................................7
Internal analysis............................................................................................................. 10
I. Value chain analysis.............................................................................................10
II. BCG matrix....................................................................................................... 11
SWOT analysis.............................................................................................................. 14
Strategic analysis...........................................................................................................17
I. Ansoff’s Matrix......................................................................................................17
II. Tesco international strategy..............................................................................19
III. Integration and outsourcing strategy.................................................................20
IV. Business level strategies...................................................................................20
Recommendations and Conclusion................................................................................21
References.....................................................................................................................22

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Introduction
In this report, the major focus will be on Strategic management. Strategic management
could be introduced as a plan, which includes rapid planning activity, the act of
monitoring, analyzing the strategies, and assessing everything that is essential for a
company to accomplish its objectives and goals. Some of the dynamic environment and
need for innovation, customer expectations, and emerging technologies influence
companies to think and decide strategically for successful retention. This process is
helpful for the organization leader to analyze an organization’s current situation, and
existing strategies, deploy those strategies and check for the implemented strategies
effectiveness. Moreover, the decision related to cross functions is also analyzed under
this process prior to implementing (Petersen, 2015).
Considering the strategic management, the initial and important aspect is to analyze the
company’s internal condition, for which SWOT analysis plays an important role. It
consists as one of the crucial element because it is better to identify the weakness,
threats, strengths, and opportunities for analyzing external environment and various
more factors, which could be responsible for the change in strategic decisions. For
example, to create competitive strategies, it becomes essential to analyses major
aspects of the environment of the organization.
For a detailed study of business strategy in strategic management, an organizational
case will be considered. The selected organization for the same is Tesco. For this, the
organization strategies would be identified and for critically analyzing the study, creative
problem solving would be considered in the report. Moreover, the drivers of strategic
management include business environment, the purpose of the organization, strategic
capabilities, and cultural importance, which will be further discussed in the report. There
are many levels of strategy, among which business level strategy of Tesco would be
further discuss in the report.
Tesco limited
Tesco is one of the multinational general merchandise and groceries retailers’
headquartered in England, United Kingdom. It is considered as third largest retailer

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worldwide according to gross revenue and it is at ninth potion globally when revenue is
considered. Jack Cohen founded the organization in 1919. The products offered by the
company include diversifies area of clothing, retailing of books, furniture, electronics,
toys, software, petrol, telecoms, internet services, and financial services. The company
is operating in many countries, among the group, operation in the United Kingdom is
largest, serving around 3400 stores in the country, and around 300,000 employees are
part of the company for better customer service. The company has tried to strengthen
UK business foundations, and that had made a more competitive offer to the customers
with enhanced quality, better service, shared prices, and stronger ranges (tescoplc,
2018).

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External Analysis
To develop strategies for the company, the most important step is to analyze the
environment in which the company is working and to analyze the external environment
of Tesco, two models, or theories will be used that is PESTLE analysis to study the
macro environment, and Porters five-force model to analyze industry analysis.
I. PESTLE Analysis
1. Political factors
Tesco is operating in twelve nations including Europe and Asia. There are
various political factors, which may affect the operations and the strategic
decision of the company in various nations. The factors are tax rates, political
instability, economic condition, legislation, and the unemployment rate of the
nation in which the company is operating. For example, the company imports
some of its stock from East Asia and China to the UK, for which import duty plays
an important role in this factor, as this can increase the price of the product in the
UK (CultureWizard, 2018).
Some of the major political factor effects on operations of the company are where
EU referendum was creating a great risk element for investors. Moreover, the
economy of the British was having hard times. Moreover, a Tesco Tax, which
was a tax on huge supermarkets, was proposed by the local council, which was
nevertheless refused by the UK government in order to avoid the price hike.
Similarly, such intuitive could have a negative influence on Tesco (Doole & Lowe,
2008).
2. Economic factors
One of the major economic factors is Labor cost, which influences the company’s
operations, and decisions in a particular nation. To illustrate, Minimum wage of
UK in 2018 is incremented by 4.4 percent for people above the age of 25. This is
the major reason for the increase in cost for the company in the United Kingdom.
More such factors for influence are prices, cost, and profits. Due to increment in
borrowing cost in the United Kingdom, the overall price of the products has to be
increased by the company; which has affected its cost leadership strategy and