Business Strategy for Tesco: Impact of Macro Environment, Internal Analysis, and Porter's Five Forces Model

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Analyse the impact and influence of the macro environment on the Tesco....................3
TASK 2............................................................................................................................................5
P2. Analyse the internal environment and capabilities of Tesco............................................5
TASK 3............................................................................................................................................8
P3. Evaluate the competitive forces with the use of Porter's Five Forces model...................8
TASK 4..........................................................................................................................................10
P4. Application of theories, concepts or models, devise and interpret the strategic planning for
Tesco.....................................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERNCES:................................................................................................................................13
Books and Journals:..............................................................................................................13

INTRODUCTION
Business Strategy can be understood as a set of decisions or course of actions which help
businessman to accomplish specific business objectives. It can be recommended as a master plan
which is implemented by the management of company to gain competitive benefits in the
marketplace, managing business operations, satisfy the customers and get the desired ends of the
company (Cahyo, 2019). Tesco is a British multinational company which is headquartered in
Welwyn Garden City, London. This is a general merchandise retailer founded by Jack Cohen in
1919. It has allocated their operations in more than five countries and becomes the market leader
of groceries in UK. It has expanded their business into many areas such as retailing of toys,
clothing, books, internet services, telecom and many more (Varadarajan, R., 2018). The report is
consisting different frameworks such as PESTLE, SWOT, VRIO. Porter's Five Forces model and
theories to assist company to make successful strategic decision.
TASK 1
P1. Analyse the impact and influence of the macro environment on the Tesco.
According to Rahman (2020), Pestle framework of any company helps to analyses the
brand on its business tactics. Pestle analysis of Tesco aims to explore various factors such as
political, economic, social, technological, legal and environmental factors that affect the business
today. It also supports to understand the market dynamics and enhance the business day by day.
Political factors:
Tesco is a British multinational retailer that operates their business in different countries
including Ireland, Poland, China, Malaysia, Hungary and many more. The home market of the
Tesco is UK where political factors are stable but after Brexit, the company face lots of
uncertainty (PESTEL analysis of Tesco, 2020). Like the UK country, the respective brand
operates in other countries as well where markets are politically stable. Hence, it can be analysed
that Tesco is capable to respond the present and future legislations and able to modify the
business and market strategies accordingly.
Economic factors:
Due to the Covid-19 pandemic, the global economies have been badly affected. It is
assumed that due to the pandemic many people's income has been go down and may lose their
jobs. This may affect the economy as people go for cheaper brands and spending less than usual.

In context of Tesco, this severely affect the business operations and income (Bates, N., 2020).
Besides, high labour cost specifically in Ireland and UK where Tesco spends millions of pound
every year.
Social factors:
In the past few years, Tesco has taken a range of initiatives to react social changes and
demands. For example, due to high demands, the brand sells kosher products to Jewish
customers (Ganeshan, Shadangi and Mohanty, 2018). As the demands of particular products like
meat or chicken rising, demand for vegan or vegetarian foods is also increasing in European
markets which provide the Tesco with better opportunities to grow.
Technological factors:
In the past recent years, Tesco has been greatly benefited due to the technological up-
gradations and advancements. In 1995, the Clubcard has been founded by the brand which
improves the sales and profits of the Tesco. Clubcard is a loyalty card which is used by millions
of customers in UK and other countries. Apart from this, the check points or self service support
customers with ease and helps Tesco with reducing costs.
Environmental factors:
Tesco operating business in UK, EU and other countries facing immense pressure from
governments to address issues regarding environment. Local public also put pressure who are
concerned about environment. In Tesco's context, it has taken a number of initiatives as it
pledged to remove 1 billion pieces of plastic packaging by the end of 2020.
Legal factors:
Government legislations and norms directly affect the companies. It is found that UK
government prohibit the anti- competitive activities (Garfoot, Cervantes and Knoll, 2019).
Therefore, Tesco has bound to merge with another company or cannot purchase another
supermarket of its size in UK as the country's competition watchdog can block such decisions.
Also, employees of Tesco must be paid with minimum wages, the company cannot sell alcohol
to the underage people. Earlier the company was sued to misleading the customers.
It has been analysed that Tesco is one of the market leader in UK which gives hard
competition to other brands such as Aldi or Sainsbury's. While analysing the macro environment
factors, the strengths and weaknesses of Tesco also has been found. When considering the
political, social, economic and legal factors of Tesco, these all are assist by external strengths