Business Strategy for TESCO Plc

This report analyses the business strategy of TESCO Plc through frameworks like PEST, SWOT, VRIO, Porter's Five Forces, Ansoff Matrix, and Bowman's Strategic Clock. It also includes strategic planning for the company.

BUSINESS
STRATEGY
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Applying proper frameworks evaluating the impact & influence of the macro environment....3
TASK 2............................................................................................................................................5
Analysing the internal environment & capabilities using appropriate frameworks....................5
TASK 3............................................................................................................................................7
Applying Porter’s Five Forces model to analyse the competitive forces....................................7
TASK 4............................................................................................................................................8
Applying a range of theories, concepts & models, interpret & devise strategic planning for a
given organization.......................................................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
The business strategy is denoted as the concept of different organisational plans, goals or
actions that outlines the business competition within the market. The strategy of a business
depends upon various factors such as internal, external as well as market competition based upon
which the companies makes their decision or plans (Demartini and Taticchi, 2021). The present
report comprises of different organisational strategies and analysis such as external or internal
analysis through PEST, stakeholders analysis, SWOT and VRIO. Also, with this the various
theories are applied in context to determine the competitive market or strategic plans. The
company which is considered for the present report is TESCO Plc.
TASK 1
Applying proper frameworks evaluating the impact & influence of the macro environment
Vision
The vision of TESCO Plc is to enhance the business scope with an aim to enable for
having long term strong sustainability through customer expansion at both national and
international level.
Mission
TESCO Plc creates the value for its customer's in order to generate their loyalty for
lifetime.
Objective
The core objective of TESCO Plc is to provide a little more to the customer's by each day
with indulging greater values and quality to the product.
PEST analysis
The PEST framework assists businesses in having a proper understanding related to the
dynamics of market along with the continuous improvement of business. The PEST analysis of
TESCO Plc is conducted below:
 Political: The political factor is concerned with different regulations and rules of each
nation. In relation to TESCO Plc, the company is required to follow the regulations of
each nation within which it operates to so assure the proper safety and compliance of
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their products. TESCO Plc is needed to keep high focus upon the dynamic political
conditions of every country in which they carries their business (Sheehan, 2020).
 Economic: The economic factor is concerned with the demand, purchasing power,
inflation and many other factors that are related with the country's economy. In relation to
TESCO Plc, the business is required to keep a complete track upon the changing
economic situations of countries. The constant fluctuation in the international exchange
rates affects the profit margin of company because of dynamic market performances. On
the other hand, TESCO Plc is needed to consider upon the prices of its products which
can influence its sales like at the time of inflation the should be prices of essentials
accordingly.
 Social: With the changing lifestyle trend now a days each individual wishes to have their
purchases on the basis of trend or on of their perceptions. TESCO Plc needs to be focused
upon the culture, influence and the society trend so that can offer much which allows
customer's to make their decisions. The company is successfully able to offer organic
items which are most preferred by the customer's now-a-days (Michaud and et. al., 2021). Technological: The regular changes within the existing technology forces the company
to offer such products which involves latest technique within it. TESCO Plc can has a
favourable support from the forces of technological environment as the company is able
to influence its customer's through offering products via online and social media
platforms.
Stakeholders Analysis
The stakeholders comprises of all those connections of a business through which the
company is able to run its business and maintains its sustainability. The stakeholders for TESCO
Plc are its customer's, employee's, suppliers, investors, management team, shareholders, etc. The
analysis of such stakeholders with relation to TESCO Plc is conducted below:
 High power and low interest: In case of TESCO Plc, the stakeholders which makes a
great impact upon the company's performance through their power but has a low interest
in its affairs includes its shareholder's and the employee's. It is highly essential for
TESCO Plc to keep them satisfied as they have high powers in the business (Jafari and
Othman Soleiman, 2020).
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 Low power and low interest: These types of stakeholders for TESCO Plc includes the
customers as well as the small level of suppliers. Such form of stakeholders puts their
minimum efforts upon the business development.
 High interest and low power: These includes such stakeholders which holds high
interest within the affairs of company or in its actions but has low power to influence the
decision making of a business.
 High power and high power: This kind of shareholders for TESCO Plc includes its
shareholders, management team and other key personnels of the business. This type of
stakeholders keeps a close manage upon the business actions as well as upon the decision
makings which requires a full engagement of such people (Fiore and et. al., 2020).
TASK 2
Analysing the internal environment & capabilities using appropriate frameworks
The internal environmental analysis of a company evaluates the present capabilities as
well as the development areas which has a direct impact upon the business organisation & on its
profitability. The internal analysis can be done by applying SWOT and VRIO framework into
the organisational context. The internal environment analysis of TESCO Plc is conducted below:
SWOT Analysis
The analysis of TESCO internal strength, weakness, opportunities and threats is being
done below:
Strengths Being a sound multinational company
TESCO Plc is having a million of
yearly turnover which is its highest
strength as through this it can be able to
expand its business and can acquire
potential resources (Vodovozov and et.
al., 2021).
Weaknesses
 The business of TESCO Plc sometimes
fails in maintaining its inventory thus
experiences a shortage in the outputs
due to which the company needs to
compromise with the quality of its
offerings.
Opportunities Threats
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 The company is having an opportunity
of expansing its business to the online
platform especially for its grocery and
clothing section through which it can
cater more and more customer's.
 The biggest threat for TESCO Plc is to
maintain and comply with the relations
of UK as well as of EU which got worst
after the Brexit.
VRIO Analysis
The analysis of internal capabilities of a business can be done by the application of VRIO
framework which mentions about the value of resources, its rarity, chances of imitation and the
organisation of internal resources which are concerned with the smooth running of a business.
The VRIO analysis with respect to TESCO Plc is below:
Resources Valuable Rare Imitable Organisation Competitive
Advantage
Leadership ✓ ✓ X ✓ Strong
Customer
ratings
✓ ✓ ✓ ✓ Realized
Brand Image ✓ ✓ X ✓ Sustainable
Human
Resource
✓ X ✓ ✓ Sustainable
 Valuable: For TESCO Plc its internal resources like leadership, customers rating, brand
image and the human resource is extremely valued which adds worth or adds high quality
in the product. This helps company in having strong competitive advantage.
 Rare: For TESCO Plc the leadership quality, the ratings from customer's which the
company gets in against of its services as well as the brand image are rare to the
company as cannot be substituted with anything. But the human resources of TESCO Plc
is not rare and can be changed at anytime (Fazli and Eftekhari, 2021).
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 Imitable: This comprises of resources which can be copied or not by the rival firm. In
case of TESCO Plc the firm's leadership and the brand image could not be copied as this
is unique to the company but the human resources as well as the ratings of the customers
can be copied. This can be done through offering better remuneration to employees or
providing high quality to the customers.
 Organisation: TESCO Plc has a organised structure for its resources so that can produce
better results and have efficient use of each. All the resources such as leadership,
customer rating, brand image as well as the human resources are used efficiently as well
as with full potential (Brylina and et. al., 2020).
TASK 3
Applying Porter’s Five Forces model to analyse the competitive forces
Porter' Five Forces
The main aim of porter's five force analysis is to analyse the impact of suppliers power,
threat of substitute, buyers power, competitors rivalry as well as threat from new entrants. The
analysis in relation to TESCO Plc is being conducted below:
 Bargaining power of customer's: The bargaining power in the hands of customer's is
very high as there are numerous customer's as well as presence of large competitors
which force TESCO Plc in keeping minimal prices because of high influence upon retail
industry.
 Bargaining power of supplier's: The bargaining power in the hands of suppliers is
found to be low with respect to TESCO Plc because there is a presence of huge amount
of suppliers within the industry due to which they are having less impact upon the
company (Bruijl, 2018).
 Threat of new entry: There is a tough competition in the retail industry and it is
extremely tough to be in competition with such big giants since it requires huge
investment. For TESCO Plc there is a very low threat from new comers as no firm can
make such investment in their establishing phase or can have high brand image as
compared to TESCO.
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 Competitive rivalry: The retail industry is having numerous multinational retail
businesses such as Sainsbury, Aldi, etc. which gives a tough tight competition to TESCO.
The firms invest huge amount in their marketing and technological field which gives rise
to a lavish competition. Threat of Substitute: TESCO Plc faces a very less threat from the substitutions as in
case of retail industry there is no or very minute substitute present due to which the
company does not faces any risk (Grebenshchikova and Yakushev, 2017).
Ansoff Matrix
The Ansoff Matrix includes an analysis of company's business expansion strategy in the
competitive world. The application of matrix in context to TESCO Plc is below:
 Market Penetration: TESCO Plc through a strategy of market penetration is able to
minimise the selling cost in its existing market which assists them in expanding business
through increase in its market share as well as usage of the items by their customer's.
 Market Development: TESCO Plc through this strategy is able to expand its business in
various countries from its offerings like by taking over some supermarkets or having
stakes. This has provided a successful stories to TESCO and helped in generating higher
revenues (Khajezadeh and et. al., 2019).
 Product Development: When the company analysed the scope of growth TESCO Plc
then has produced various types of products or services which the company follows with
highest focus. TESCO Plc in this context has offered loan services, mortgages, credit card
facility, etc. to its customer's in order to attract them.
 Diversification: The company TESCO Plc use to deal in groceries in its initial time but
later on has diversified its operations and started selling various other items. This made
TESCO a renowned company in market and offers its services to millions of customers.
Also the strategy of diversification helped company in reducing its risk along with
operational costs (Dawes, 2018).
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TASK 4
Applying a range of theories, concepts & models, interpret & devise strategic planning for a
given organization
Porter's Generic Strategies
The porter's generic strategy includes three main elements such as leadership, focus and
the differentiation based on which firm takes its decision to have its strong position in market.
 Cost Leadership: The strategy of cost leadership talks about producing items at very low
cost with good quality in the industry. This can be done by TESCO through enhancing its
process, acquiring raw materials at low cost. Outsourcing certain work or items, etc.
 Differentiation: This talks about having a development in company's offerings which is
manufactured with some unique feature or attributes that can be valued by the buyers.
TESCO Plc can have innovation in its offerings or can offer groceries with some new
attribute in it which will attract more customer's (Kalokola, 2019). Focus: The notion for focus strategy is related with a narrow segment in which aims at
attaining either differentiation or cost advantage. This helps in having a higher customer
loyalty ratio. Through this TESCO Plc can focus upon a particular market and can have
low cost product with greater specifications (Pádraig, 2017).
Bowman's Strategic Clock
The clock framework evaluates the capabilities of competition by the company within the
industry. The application of strategy in context to TESCO PLC is done below:
 Low price and low value: The company TESCO Plc, offers its items at lower price in
order to attract more customer's but does not possess low quality. The company's
products are known for its values which they offers in their products and services.
 Low Price: This strategy aims at offering products and services at the lowest possible
price which can only be happened in case of mass production. TESCO Plc can set its
prices low when producing in large quantity so that economies of scale can be achieved
(Shamsuddin, 2018).
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 Hybrid: TESCO Plc in this category has a potential to harmonize its expenses through
utilising a strategy of reinvesting which can be done in the industry. Through this TESCO
would attain high market share as well as diversification.
 Differentiation: This involves offering of items with some differentiation within it which
brings something unique from it. In relation to TESCO Plc the core unique element that
the company involves in its offerings is its operational techniques upon various retail
market platforms (Kavanagh, 2021).
 Focused Differentiation: This strategy is used in case of exclusive or luxury products by
paying high focus upon it as these kind of products are backed by high price & quality.
TESCO Plc, can have this strategy through by distribution or segmentation aspect which
would bring greater profits to the firm.
 Risky high margins: This strategy is being applied in case of charging high prices to the
product but is of low or average quality. TESCO Plc can offer its low quality products at
high prices in order to gain profit but this would not be successful for the long
term(Argus and Samson, 2021). Monopoly Pricing: The company within this industry makes their position in a form of
market leader and offers particular product. TESCO Plc, in this can manufacture unique
item which is not offered by other company and can act as a monopoly firm for such
product.
Strategic Plan
Strategic planning of any organisation is being developed in order to identify over activities,
priorities, focus, resources, operations etc. This helps in ensuring organization working over
common goals. The strategic plan for TESCO Plc has been given as follows:
Vision: To be the most powerful retail company by offering new and high quality items
to customer's every day.
Mission: The mission of the company is to intensify the world by retail offerings.
Strategies: The strategy which has to be followed by TESCO Plc is Market Development
making core competencies improved. Targetted customers makes sufficient support over offering
environment friendly product.
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Objectives: The objective of the firm is to enhance the customer segment by 15 percent
by through entering into business expansion which would enhance their revenue by 12 percent
within 1.5 years.
Tactics: Tactics are short terms efforts that allows business in achieving objectives. In
this business like TESCO Plc sells its products to customers via its own stores as well as online.
Product The product which is been offered by TESCO Plc is clothings, groceries, etc.
Price As the firm has greater market value. The strategy of high pricing is applied by
them that allows to attain higher values.
Place TESCO Plc has its own outlets as well as online platforms through which it sales
its offerings.
Promotion The promotional mix being applied by the TESCO Plc is direct marketing that
allows firm in attracting higher customer ratio along with market share.
Implementation : In order to implement the different market policies or tactics the
company has developed a financial budget plan which would list the major expenses for the
promotion and launch of company's offerings.
Evaluation : Evaluation is being concerned with gathering of information & making the
follow up related to the effectiveness of plan so to determine what are the hurdles that affects
their performance. While developing the market TESCO Plc would analyse & compare its actual
performance of marketing team with the standards of performance required in such plan (Kaur,
2021).
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CONCLUSION
From the above report it can be concluded that the business develops numerous strategies
in order to make its business a successful one. In order to have best strategy it is needed to
analyse the macro and micro environmental factors such as PEST analysis, stakeholders analysis,
SWOT analysis and the VRIO frameworks. To analyse the market competitors performance it is
needed to scan the industry through by Ansoff matrix or even can be done by porter's five forces.
There are various theories which can be considered by the firm while developing its strategic
plan such as Porter's generic strategy and the Bowman's strategic clock which gives a whole
analysis related to the company and its offerings. It is essential to make a strategic plan in order
to determine its suitability as well as identify the required budget and necessary actions.
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REFERENCES
Books and Journals
Demartini, M. and Taticchi, P., 2021. How Environmental and Social Issues Affect Business
Strategy. Corporate Sustainability in Practice, pp.3-20.
Sheehan, N.T., 2020. SWOT to the 6Ps of Business Strategy. Teaching Strategic Management: A
Hands-on Guide to Teaching Success, p.164.
Michaud and et. al., 2021. " In The Final Analysis": The Utilization of PESTLE Analysis in the
Nuclear Medicine Workplace.
Jafari, H. and Othman Soleiman, K., 2020. Assessment of effective environmental factors in oil
and gas industry policies using PESTLE & SWOT analysis (case study: Kurdistan,
Iraq). Environmental Sciences, 18(3), pp.134-151.
Fiore and et. al., 2020. Stakeholders' involvement in establishing sustainable business models:
The case of Polish dairy cooperatives. British Food Journal.
Vodovozov and et. al., 2021. Peculiarities and directions of interaction of stakeholders at
transport enterprises. Studies of Applied Economics, 39(6).
Fazli, N. and Eftekhari, A., 2021. the Analysis of Stakeholders Perception of ecolodges Social
Responsibility. Journal of Tourism and Development, 10(1), pp.33-44.
Brylina and et. al., 2020. Swot-Analysis As A Perspective Cognitive Strategy Of Management.
In European Proceedings of Social and Behavioural Sciences EpSBS (pp. 1486-1491).
Bruijl, G.H.T., 2018. The relevance of Porter's five forces in today's innovative and changing
business environment. Available at SSRN 3192207.
Grebenshchikova, L.S. and Yakushev, N.M., 2017. Definition of Competitiveness of the
Enterprise Using the Five Forces of M. Porter. Vestnik IzhGTU imeni MT Kalashnikova,
20(3), pp.51-53.
Khajezadeh and et. al., 2019. Application of Neural Network in Portfolio Product Companies:
Integration of Boston Consulting Group Matrix and Ansoff Matrix. International
Journal of Economics and Management Engineering, 13(6), pp.809-813.
Dawes, J., 2018. The Ansoff matrix: A legendary tool, but with two logical problems. But with
Two Logical Problems (February 27, 2018).
Kalokola, A.I., 2019. The applicability of porter’s generic strategies to network marketing in
Tanzania (Doctoral dissertation, University of Dar es Salaam).
Pádraig, B., 2017. An Analysis of Michael E. Porter’s Competitive Strategy: Techniques for
Analyzing Industries and Competitors. Macat Library.
Shamsuddin, A., 2018. Intellectual capital and company performance: the moderating effects of
business strategy in the context of resource-based and knowledge-based theories.
Kavanagh, B.D., 2021. Approaching Strategic Planning. In Career Development in Academic
Radiation Oncology (pp. 373-378). Springer, Cham.
Argus, D. and Samson, D., 2021. Organisational (Business) Strategy. In Strategic Leadership for
Business Value Creation (pp. 47-88). Palgrave Macmillan, Singapore.
Kaur, G., 2021. A Study on the Use of Business Intelligence Tools for Strategic Financial
Analysis. In Using Strategy Analytics to Measure Corporate Performance and Business
Value Creation (pp. 105-127). IGI Global.
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