Tesco Business Strategy Analysis

This assignment delves into Tesco's business strategy, examining its strengths, weaknesses, opportunities, and threats (SWOT). It analyzes Tesco's value chain and explores the factors contributing to its competitive advantage in the retail industry. The analysis draws on academic literature and real-world examples, providing insights into Tesco's strategic direction and performance.

BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
TASK 1............................................................................................................................................1
1 and 2 External Environment Analysis.................................................................................1
TASK 2............................................................................................................................................6
3 and 4 Internal Environmental Analysis...............................................................................6
TASK 3............................................................................................................................................8
5 and 6 Competitive advantage..............................................................................................8
TASK 4............................................................................................................................................9
7 and 8 Strategic Recommendation........................................................................................9
PART 2..........................................................................................................................................11
Executive Summary..............................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy is a long term planning of business. It is basically referred to as stating
the business objectives and goals of an organization. It is further subjected to achieve the
desirable targets of increasing profits and revenues of a business. This report is to study the
business strategy of TESCO PLC, UK. TESCO PLC is a global leading company of British
which is effectively dealing in the retail sector of groceries and general activities of merchandise.
Such worldwide companies prefer to enjoy long term success and thus focused towards working
strategically (Bones and Hammersley, 2015). A profound business strategy of TESCO can be
easily judged by investigating the varied visions and missions of a company. TESCO has an aim
to grow its business all over the world and become the most valuable service provider for its
clients. It also focuses on utilizing some effective measures of modern and innovative techniques
to satisfy the present needs and demand of its customers. Along with that, TESCO gives a huge
respect to all its stakeholders and thence it is highly aimed at gaining an equal level of trust from
its customers, employees and shareholders, etc. However, it will be a challenging task for
TESCO to fulfil its above stated mission of performing its CSR activities at a global level with
numerous challenges. Therefore, the below presentation will effectually state the necessary
measures that TESCO need to apply for competently beating those challenges.
PART 1
TASK 1
1 and 2 External Environment Analysis
TESCO PLC is currently handling total 6,814 stores all over the world and at every
corner it is largely involved in managing its corporate social responsibilities. The CSR activity
leads to make a sound business by automatically generating an increasing profits and revenues in
the business. Due to this fact and in terms of its profits and revenues, TESCO PLC has achieved
a third highest position of retailer in the world (Slack, 2015). But operating a business at an
international level is full of challenges and uncertainties and needs a prompt study regarding the
affecting factors. For which, below is an investigation of varied macro and micro environmental
factors, especially affecting the CSR activities of TESCO. It will help the TESCO to further
develop its business policies strategically.
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PESTEL Analysis
PESTEL Analysis is a vital tool to study both internal and external factors affecting the
strategic management of TESCO to formulate the necessary measures for implementing new and
varied ideas towards the overall success of its business. It effectively determines various factors,
that conclude- Political- The political factors mainly defines country's stability in which the TESCO is
operating its business. It reflects the major key factors of tax rates and constitutional
activities, etc. It greatly affects the business performance of TESCO especially where it is
purely into the retail sector. Due to a continuous financial instability in the country,
there's an ongoing pressure on the retailers to generate employment opportunities for
their domestic population (Castelli and Sianesi, 2015). However, it will also diversify the
workforce of TESCO by rising demand for its products and services. Economical- It is a key factor for any organization which clearly defines its financial
position. Thus, it is important for TESCO to be aware of any changing policies of
taxation which states the purchasing costs by determining its demand and profits, etc. It
also states the policy of minimum wage requirement to its employees. International
expansion and diversification is always a reason behind the success of the TESCO.
Likewise, due to diminishing levels of income, TESCO has started focusing more upon
advertising its brand value products rather than its luxurious items. Social- It defines indulging into the changing trends and latest demands of consumers in
recent operating market. These factors are then affected by the cultural values and
thoughts of their residents or localities. Therefore, considering the required changes and
working accordingly also comes under the CSR activity of TESCO. More approach
towards building organic food is useful to satisfy and address the health concern of
today's audience. Technological- Technical advancement is a common term for today's consumers and all
are well aware of it. It has equally bought numerous opportunities for the TESCO. It has
approached two distinct methods of development by facilitating online supply of its
goods and services to the consumers and secondly by reducing its labour costs by
introducing self check-out points for its customers (Cuthbertson, Furseth and Ezell,
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2015). TESCO has also invested a prominent amount on few projects of building energy
coherence to limit the utilization of carbon footprint by 50% till the year, 2020. Environmental- These factors are highly pressurising the companies to build a serious
concern towards maintaining a healthy and prompt environment. Thus, the TESCO is too
involved in adopting numerous ways of fulfilling its corporate social responsibilities
(CSR) towards society's benefit. M&S is one of the biggest contenders of TESCO which
is duly following its policies of CSR activities which mainly includes donating foods and
minimizing the production of wastage in their stores by building a sense of morality
among the customers. Legal- It involves various legislative factors of government's policies which then directly
affects the business practices. In context to the same, the FRC in 2004 introduced a code
of practice to implement a ban on changing the product price with an undue information
and cost petition from the suppliers, etc. (Haddock-Millar and Rigby, 2015). As a result
to which, TESCO benefited its customers with various promotional offers by lowering
the range of the products purchased from their stores. Along with that, TESCO equally
holds the applicability of EU laws and minimum wage rates for its workers by together
contributing towards varied CSR activities.
Structure of the market or industry
The market structure is of different type with an effective description to its characteristic
which differs according to the place of business operation. It emphasizes mainly on the nature of
competition and pricing of goods and services. A presentable structure defines few main
elements to consider while studying the structure of a market. It includes the total number of
firms and the market shares of the largest firms, the costing nature and customer's turnover, etc.
Therefore, before operating at an international level it is important for a firm to effectively
determine the present structure of its market area. Likewise, TESCO PLC in UK is facing the
structure of a perfect competition which duly affects its CSR activities as well (Hommel, 2015).
A perfectly competitive market bounds to provide a perfect information and knowledge. It
however consists of numerous firms by offering and producing a homogeneous or identical
product. There is a free entry and exit into the market with a low economical cost and perfectly
elastic demand curve which effectively dictates the price taking nature of the firms. Therefore, it
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is an advantage to the TESCO to steady their CSR activities to beat its competitors and
increasing the CSR activities.
PORTER'S Five Forces Analysis
This analysis is mainly carried out to detect the present industrial position of TESCO
which is crucial enough to determine the overall existing market competencies (James, 2015). It
is mainly carried out to investigate the five major forces that includes- Threat of new market entrants- It is amongst the biggest barrier to the ongoing market
shares of TESCO with a high risk of new entrant in market. However, TESCO PLC is
always cautious towards any new competent into the market. Few examples of the
existing competitors to the TESCO are ASDA Group Ltd and Sainsbury Plc, who are
gradually acquiring the present market shares. Threat of substitute products- The risk of substitute product is minimal for the TESCO
because of a conditional attempt by TESCO to become the price leader of the market and
providing its goods at the lowest possible rates. Bargaining power of suppliers- The already existing markets aids the suppliers to obtain
a high power to bargain. It is mainly due to a perfect competition market structure of UK
that is opened for all supermarkets. However, to compete with the present scenario of
bargaining power of suppliers, TESCO is pioneering its own brand of products to
rationalize this risk. Bargaining power of buyers- Buyers are together considered as an essential stakeholder
of the organization and thereby holds a high bargaining power due to the rising level of
competition with the existing supermarkets. However, this power will be based upon
consumer's awareness towards the market. Therefore, TESCO should provide a
personalised service of 24/7 to its customers and aware them about the same. Existing competent rivalry- The major competitors of TESCO with a high rivalry are
ASDA and Sainsbury who owes an equal number of market shares. It is because they are
also producing similar kind of products into the market. Thus, the TESCO needs to apply
a Strategic Business Unit at all its levels to effectively beat this factor (Klaiber,
Hermanus and Mason, 2015). It will help out to balance its marketplace by gradually
increasing its competitiveness. SBU can exclusively help the firm to detect its major level
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of competitions and take a lead by attaining a dynamic form of changing its norms to act
as per the recent trends and demand of its service users.
Key Success Factors
By carrying the above analysis, the key arenas of major successful factors has been
determined for TESCO PLC to enhance its CSR activities by beating the competencies. These
are divided into the below mentioned points-
1. Innovative services- Market innovation is a primary tool to become the leader of a
market. It will attract numerous customers if the TESCO starts a door to door service to
its customers by satisfying their needs and desires. Additionally, TESCO can also make a
prompt utilization of its fastest online and telecom services to meet this objective of
approaching many people at a time. It can together work on its CSR activity of donating
food to the needy people.
2. Prioritizing customer's need- After a successful implementation of the first step, next is
giving a high priority to the latest demand of the consumers. It can be achieved by
communicating to the customer on a regular basis. TESCO operates a special unit of
customer care to quickly resolve the issues of its service users (Krzyżanowska and
Tkaczyk, 2015). It also provides work opportunity to the young people for handling this
call centre of special care unit by attending customer's call.
3. Extension of products- It also serves TESCO'S CSR activity of providing opportunities to
the young people by offering jobs to them at the place of expansion and other diversified
areas. The TESCO always opt for new talent at newer places.
SWOT Analysis
It is another effectual tool to carry an investigation towards both internal and external
environmental factors affecting the business operations. The phrase SWOT is composed of four
major elements to determine the strengths, weaknesses, opportunities and threats for TESCO
PLC. It is segregated as stated below- Strengths- The biggest strength of TESCO is its present market position and its effective
marketing strategy which has tended to a concrete cash reserve and increased sales
(Mason and Evans, 2015). By utilizing this factor, it can highly increase varied CSR
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activities of donations to the educational sectors and constructing roads to determine its
presence into the world. Weaknesses- The biggest weaknesses of TESCO are identified as a major dependency on
its domestic market of UK and few major competitors like ASDA. Another major
weakness has been determined as there is too much influence on non-food unit with
various uncertainties on the part of its management that can easily hamper its future
scope of enhancement. Therefore, these factors of TESCO are strictly needed to be
improved with a requisite consideration of eliminating such immense failure. Opportunities- A remarkable opportunity to TESCO is its scope of expanding
internationally and diversifies its products. Therefore, the TESCO can utilize it as
broadcasting its variation of using organic products to improve health all over the world
(Sharma, 2015).
 Threats- Declining sales due to any crisis in UK and increasing cost of operating business
with an equal level of competition from the developing countries is seen as a threat to the
TESCO. It can highly affect the TESCO by shattering its procedures of handling and
managing its CSR activities.
TASK 2
3 and 4 Internal Environmental Analysis
The internal environmental factors of an organization directly impact the strategic
position of the firm together with its varied activities of conducting corporate social
responsibilities (Slack, 2015). Strategic capability effectively defines the resources and
competencies of an organization for its prosperous future and growth. The strategic capabilities
of TESCO mainly comprise organization's resources, capabilities, value chain and functional
analysis.
Resources:
◦ Tangible resources- These are the physical resources of the TESCO which defines its
infrastructure and machineries for the production capacity. However, the age and
condition of these resources states its usefulness towards the business and CSR
activities of TESCO which involves initiating new stores to reach out maximum
number of customers.
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◦ Intangible resources- It refers to the intellectual resources and defines the status or
brand name of the TESCO by donating funds and making charities, etc. It determines
the goodwill of a firm which also concludes its effective measures of managing
business systems and customer's by using effective communication methods, etc
(Wood, Wrigley and Coe, 2016).
◦ Human resources- Human resources of TESCO consists of its people and their
demographic profiles into which they are working in the organization. It states the
skills and knowledge of employees and their networks which together has a direct
impact on varied business activities.
Capabilities:
The strategic capability of TESCO can be effectively carried out by analysing its value
chain method and procedures. Value chain is a prominent strategic tool which helps the firm to
build a product which aids in enhancing its overall organizational value. It consists of few
primary actions in merge with certain support activities to perform the required activities. Below
is the following fig to state the value chain analysis of TESCO PLC-
The primary activities are-
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Figure1: Value chain

 Inbound logistics- This factor defines the relationship between the TESCO and its
suppliers with a strong bargaining power. Therefore, it is critically important for the firm
to effectively deal with a proper recognition of its product at an appropriate time, price
and quality. It is one of the major competitive advantages to TESCO. Operations- It defines the strong supply chain management system of the TESCO for
effectively manufacturing its product. It will also lead the company to reduce its varied
cost by using advanced technical systems (Zailani and et.al., 2015) . Outbound logistics- It states the outside operations of firm where the TESCO is liable to
maintain a great relationship with its customer's. It has differently designed the format of
its store with a separate section of query management to quickly resolve customer issues. Marketing and Sales- TESCO has different marketing strategies to increase the sales of
its goods and services. The TESCO has introduced its unique club-card with the help of
advance technology to fetch more customers from its competitors.
 Service- The TESCO works on two different strategies of constructing distinguished
product and being a price leader in the market (Grant, 2015). Therefore, the firm is
handling a prompt value stream with an aim of effectively serving its users from all
possible means.
TASK 3
5 and 6 Competitive advantage
Competitive advantage also showcases the CSR activities of TESCO by playing a crucial
role in enhancing its overall efficiency of operations. It together works upon the capabilities and
performance of the company and leads to their emergence. However, it can be done only when
the TESCO's ability is superior to its competitors. Here, TESCO PLC also uses few major
strategies to hit the competitors and those are its scheming of low priced products with an
introduction of differentiated products into the market (Slack, 2015). Competitive advantages
will automatically higher market shares of the TESCO which will be the resultant of its
increasing profits and revenues. Another approach of the TESCO to attract and fetch numerous
customers is achieved by its innovative and advanced techniques of serving the users. Below are
the segregated points in which TESCO is presently focusing to deal its competitors in their
varied business and CSR activities-
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 Price leader- The TESCO has incorporated this strategy by using effective measures of
its CSR activity in supply chain management. It has largely invested in designing these
approaches by using various online techniques of managing its worldwide supply of its
goods and services (Grant, 2015). The team of supply chain management has experienced
and skill based workers to improve its chain of supply who regularly visit the suppliers at
different places. It together supports the localities by building low range products. Along
with it, TESCO is eased up in being the price leader of its market by allocating low cost
products to its suppliers. Product differentiation- It is yet another strategy to deal in various distinguished areas to
beat the rivalry of competitors. TESCO is specialized in all ranges of products from finer
to cheaper products. This helps the firm to attract numerous customers towards its
product. For example, one can easily get a wine bottle from 5 pounds to 50 pounds from
the TESCO.
 Innovative approaches with the help of advance technologies- TESCO always opt for
varied approaches to serve its customers by different and innovative means of technique.
It includes its fastest service by utilizing both online and offline services to its users
(Kolowich, 2015). Another remarkable factor of the TESCO is to attract numerous
customers by offering discounts and other promotional offers to the service users by an
effective mean of its newly introduced club card. Along with it, the TESCO is fully
concentrated into its own built database system with the latest technological system in it
to effectively deal its trading responsibility.
TASK 4
7 and 8 Strategic Recommendation
The strategic recommendation for TESCO PLC is to effectively carry out its various
activities of corporate social responsibility which mainly includes- Generating opportunities for young people- It is amongst the most effective arenas of
generating a possibility of employment in society (Gladding, 2016). The TESCO can
simply utilize this factor at the time of making diversification or expansion of its business
activities. It will include providing newer opportunities to the youngsters and protecting
them from an uncertain future. M&S is also following the similar path where it is
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generating an equal level of opportunities for people by internationally expanding and
diversifying its business. It has specially designed an action plan to determine the major
areas of concerns to effectively work upon its fulfilment. Conducting health check-ups- The TESCO can conduct health check-ups of the visitors
to attract millions of customers. It will together serve its CSR activity by informing
people about the campaign and building a positive image in the society. M&S also
conducts regular health check-ups at its place to attract large number of communities to
acknowledge about its strong existence. Donating foods- It is yet another approach of the firm to help the needy people and
committing to improve their health by providing them the extra vegetable and fruits left
in their stores (Moulds, 2015). This measure can also be utilized at the time of floods or
other similar uncertainty in the countries. On another hand, M&S too attempts the similar
approach of reducing wastage of its leftover food at the stores and helping the needy
people for their consumption. Preventing wastage- It is a long term project of the TESCO with greater transparency. It
effectively recognizes and eliminates the wastage of certain products at the time of
production. It can be done by effectively build a hotspot of the areas with a major
decrement of goods. M&S has also framed major developments in the arenas of
transmuting a responsible use of its resources to eliminate any such kind of wastage.
Through this way it has mentioned a prominent utilization of recent technologies. Building a healthy project- This certifies the healthy measures of TESCO to aim
customer's healthy preferences. In this particular project, the TESCO can effectively
manufacture low sugar products to address the health issues of its consumers. The firm in
this case can effectively utilize a demographic segmentation of its goods which comprises
person's age, income, gender and preferences, etc. This involves manufacturing
distinguish products for children, youngsters and old age people. Here, the TESCO can
build low calorie products after diagnosing high diabetic diseases in adults of 30 years
and above (Bones and Hammersley, 2015). On the other hand, it can create high
energised products with good amount of carbohydrate in it, especially for children and
youngsters who are fully indulged into various activities. M&S too attempts an inclusion
of more organic food in its products by eliminating any use of artificial products with
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certain harmful contents of colouring and dyeing substance in it. It has made a strict
policy of not selling the products with unhealthy derivatives in it.
 Supply chain management- It is the next factor in which both are making efficient
strategies to meet the desired level of success. In which TESCO is emerging with more
numbers of suppliers by making ease to contact them from all over the globe, M&S on
another hand is making special approaches of training and development programs for its
suppliers to update them about the recent market trends and scenario where they are also
gaining knowledge by learning new and varied languages.
Therefore, both TESCO and M&S is giving a high competition to each other with almost
similar level of corporate responsibilities towards their society.
PART 2
Executive Summary
Stakeholder mapping has been considered as a preliminary approach to determine the key
list of existing stakeholders in the firm. There are various stakeholders of TESCO such as its
customers, employees, suppliers and shareholders. TESCO gives high respect to all its
stakeholders and hence, it is highly aimed at gaining an equal level of trust from its stakeholders.
Therefore, it is essential for TESCO to identify their varied needs in order to satisfy them for
maximum attainment of the desired results. However, it will be a challenging task for TESCO to
fulfill its above stated mission of performing its CSR activities at a global level with numerous
challenges (Cuthbertson, Furseth and Ezell, 2015). Thus, the below presentation of its power
matrix will effectually state necessary measures to be applied by TESCO to competently beat
those challenges. Certain strategic priorities of TESCO include improving their strength of
competitiveness by developing a trustworthy relationship with all its stakeholders. It is essential
for TESCO to give a foremost focus towards fulfilling the needs of its customers and suppliers
who are mainly the local communities. The suppliers should be recommended to undertake the
feedback from their customers for reviewing the attainment of best results. It can be done by
organizing meeting for discussion with suppliers to help in developing their rapport.
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Figure 2: Power/Interest matrix
Through the above matrix analysis can be assessed as a tool to plan an effective
communication with each of its stakeholder in order to build the best decision for them
(Hammad, 2015). Stakeholder mapping for TESCO involves following steps- Identifying the stakeholders- It is the first step, that involves identifying the stakeholder
that influence the power and interest matrix and thus analyze the different stakeholders
such as customers, employees, suppliers and shareholders. The suppliers are the position
in which they need a close supervision of management due to their incredibility and
attainment in both high ranges of power and interest. For example, TESCO has
implemented a new strategic approach to deal with a mutual understanding among them
with a common goal of gaining profits. Prioritizing the stakeholders- It is the next step in which the business prioritizes the
individual who are essential and thus affect the work of firm (James, 2015). Stakeholders
are divided into different forms such as keep satisfied, manage closely, keep informed
and monitor. Therefore, TESCO too works on a similar concept of prioritizing varied
needs of stakeholders with a clear aim to design its products as per the recent trends and
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demands of its consumers and together with a prior attention towards its suppliers to
make timely payments to them.
 Understanding the key stakeholders- TESCO, here is required to analyze the needs of
individual stakeholders so that management can engage themselves by communicating
with stakeholders and providing them the best quality products and services. It is with
regard to all its stakeholders like customers, employees and suppliers for using a clear
and effective medium of communication for resolving their varied issues (Krzyżanowska
and Tkaczyk, 2015).
Thus, all these implications influence the stakeholders in order to purchase the products
from TESCO and to improve its brand image in the market.
CONCLUSION
The above report effectively showcases the various environmental factors affecting the
organization both internally and externally. It gives a brief conclusion of implementing a
strategic approach towards planning the required measures for dealing into the major arenas of
operating a business and its varied activities of performing the corporate social responsibilities of
the firm. It further helps the TESCO to build an effective marketing strategy for its products and
services together by building and enhancing a positive outlook in social terms. It basically
consists of a consultancy report on TESCO PLC to effectively determine its major macro and
micro environmental factors which directly impacts its CSR activities. It comprises four major
parts to conclude different strategic tools of PESTLE, PORTER'S FIVE FORCES and SWOT
analysis by determining the structure of its operating market. It also defines the resources and
capabilities of value chain analysis. Lastly, there is a comprehension of competitive advantage to
the firm with a recommendation of strategic implementation to the firm.
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Gladding, N., 2016. WHAT'S NEXT FOR TESCO IN 2016? [Online]. Available through:
<http://www.igd.com/Research/Retail/Whats-next-for-Tesco-in-2016/>. [Accessed on 7th
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