Analyzing the Impact of Macro Environment on TESCO's Strategies

Business Strategy

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Applying appropriate frameworks to analyse the impact and influence of the macro
environment on a given organisation and its strategies...............................................................1
TASK 2............................................................................................................................................4
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks..................................................................................................................................4
TASK 3............................................................................................................................................5
P3 Applying Porter’s Five Forces and other models to evaluate the competitive forces of a
given market sector for an organisation.......................................................................................5
TASK 4............................................................................................................................................7
P4 Applying a range of theories, concepts and models, interpretation and devise of strategic
planning for a given organisation................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy refers to a plan to achieve the organisational goals and objectives
(Samantara and Sharma, 2014). In this report, a case study of TESCO is being done to analyse
the impact of macro environment on the operation of the company. This report aims at analysing
the company’s internal systems and capabilities with the help of appropriate models and
frameworks. An attempt is being made to evaluate the competitive position of the company in
the industry with the help of various models. At last, the report aims to provide a strategy and a
plan for the management which helps the company to achieve organisational goals and
objectives.
TASK 1
P1 Applying appropriate frameworks to analyse the impact and influence of the macro
environment on a given organisation and its strategies.
Business strategy refers to the planning or developing a long-term plan for carrying the
business operations and activities with an aim of achieving the long-term goals of the company
in the uncertain business conditions. Every organisation and its management try to formulate
strategies which helps the company to stick to the organisation’s mission and vision and achieve
the organisational interest. TESCO plc is one of the most largest and biggest retailer in
supermarket items and groceries across the UK with around 60% of the total revenue of the
company arriving out of domestic markets. It is imperative for the company to have a long-term
vision for the organisation and develop strategy for its attainment. Tesco mission statement is
“We make what matters better, together.” It shows that the company’s core values include
making consumer goods of high quality with the help of each and every member of the
organisation. Tesco vision statement is “to be the most highly valued business by: the customers
we serve, the communities in which we operate, our loyal and committed colleagues and of
course, our shareholders.” This shows that the company aims to be the highest valued business
and be flexible for every person out there (Rothaermel, 2016). The two main strategies devised
by the management for achievement and realisation of this mission and vision are: To grow the
UK core and to be a creator of high valued brands. Under the first strategy, the management aims
at growth in sales of stores which have been existent for over a year now and under the second
strategy management aims at offering more and more of high quality brands to gain customer
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loyalty. The strategy developed by the business managers of the company is in line with both the
long-term objectives and the mission of the organisation. However, with respect to changes in
business environment and conditions, these strategies need an element of flexibility and quick-
adaptability to change.
PESTLE analysis of TESCO plc ltd:
PESTLE analysis is one of the most important business tool for management of any
organisation which helps in evaluation of changes in the macro-environment of any business
organisation to identify the underlying opportunities and threats (Ravanfar, 2015). The factors
affecting the decision-making of the company are – political, social, economic, legal etcetera.
Here is a PESTLE analysis of TESCO plc:
Political factors: Political stability and instability in a business territory affect the
operations and decision-making by the management. With Brexit, there have been a lot of
changes in the political atmosphere in and around UK which has created some problems for the
management of TESCO. Companies are being pushed to procure materials from local suppliers
even if the prices are a bit higher which has resulted in an increased cost. The management of
TESCO should focus on making plan to prevent any hazardous effect of these political changes
on the organisation and at such a time, the company TESCO should focus more on earning
revenue from its international markets with a much better political environment.
Economic factors: Economic factors refer to factors such as interest rate, tax rates,
disposable income of people. import-export duty etcetera. Over the years, the disposable income
and purchasing power of people has increased significantly which has raised the demand for
goods of high quality (Rachapila and Jansirisak, 2013). This is a great opportunity for TESCO to
offer more products of high quality in the market which is also aligned with the company’s
vision of becoming the highest valued brand. The spectrum of customers has potential customers
has increased for TESCO with the rise in income of people and the management should take full
advantage of this opportunity by using tools to attract these potential customers,
Social factors: Social factors refer to the trends and preferences of customers which
affect the demand in a marketplace. The recent years have witness a trend for increasing
awareness about health and fitness which has increased the demand for food items with high
nutritional content. TESCO has already been offering products with organic contents and health
benefits which is a great opportunity for TESCO to take leverage of. One-stop shopping has also
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