Impact of External and Internal Factors on Tesco's Business Strategy

This presentation discusses the impact of external and internal factors on Tesco's business strategy, including political, economic, social, technological, environmental, and legal factors. It also explores Porter's Five Forces analysis and strategic planning methods used by Tesco.

BUSINESS STRATEGY

INTRODUCTION
 Business strategy refers to actions and decision that are taken by the firm
to run operation in it successfully and attract customers.
 Tesco is well known name in UK retail industry and offers variety of
product.
 Company faces various kinds of challenges in running business from
macro environment such as political, economical etc. and also from
internal factors.
 Report highlights different factors that impact on strategic planning of
the firm and explain a plan associated with it.

P1. IMPACT ON ORGANISATION AND ITS
STRATEGIES FROM EXTERNAL
ENVIRONMENT
 Tesco is one of rising company in United Kingdom but its operation and strategies
highly impacted from macro environment factors such as political, economical,
social, technological etc.
 For example: elected new parliament member introduce new which company has to
implement. Sometimes it is good for the firm, but few decisions may create chaos in
business planning.

CONTINUE…
 Political-
1. After BREXIT, there are three Prime minister in the United
Kingdom whose position taken by the next one and hence country
politically is unstable.
2. Each one of them introduces new policies and guidelines for
different types of organisation in Britain and because of it firms
has to changes in their working style.
3. Tesco retail stores and online business effected from new
legislation.
4. Company has decided to follow competitive price strategy to
attract large number of customers in country but because of UK’s
exist from European union, increase prices of raw material that
are imported from countries in Europe continent.

CONTINUE…
 Economical
1. Britain is one of rising economical country in the world because of its
revolutionary ideas for industry.
2. BREXIT and COVID have highly effected on economical growth of the
country and during lockdown GDP of the country rapidly falls which
effected on stock market and various kind of business.
3. During lockdown retail company suffered a lot because people avoided
coming to Super market.

CONTINUE…
 Social
1. United Kingdom’s people welcome new market and product which gives
opportunity to expand business.
2. However, it effected on growth of existing firm that are working in the
country from long time and hence decrease their profit share.
3. Tesco strategy for dealing in such situation is to provide range of product
which support one stop shopping habit and hence firm able to maintain
loyalty of old consumers and influence new one.
4. After COVID Pandemic people started more focusing on health life style
hence change their taste and trend towards organic product.

CONTINUE…
 Technological
1. Technology in United Kingdom rapidly changes which help different
kind of industries to introduce various kind of modern system at work
places and hence increase, quality, efficiency and productivity of
work.
2. Tesco is one of financial strong firm in Britain which makes it quick
technological changes in firms which increase productivity of work as
well as increase customer satisfaction level.
3. Strategy of Tesco after COVID is to have effective supply chain
management for that company has invested large amount of money
and hence able to provide services and product delivery timely to
buyers.
4. Tesco also introduce RFID technology as well as PayQwid which
help in accomplish task easily increase consumer’s experience.

CONTINUE…
 Environmental
1. Technology in United Kingdom rapidly changes which help different kind
of industries to introduce various kind of modern system at work places
and hence increase, quality, efficiency and productivity of work.
2. Tesco is one of financial strong firm in Britain which makes it quick
technological changes in firms which increase productivity of work as well
as increase customer satisfaction level.
3. Strategy of Tesco after COVID is to have effective supply chain
management for that company has invested large amount of money and
hence able to provide services and product delivery timely to buyers.
4. Tesco also introduce RFID technology as well as PayQwid which help in
accomplish task easily increase consumer’s experience.

CONTINUE…
 Legal
1. Government has passed various types of acts and laws to protect workers
and consumers from industries in the country.
2. Key Legislation and acts related to work are Employment right, Equal
wages, Anti discrimination etc.
3. Tesco implement laws in organisation which help in gaining loyalty of
workforce and creating friendly environment at workplace.

P2. INTERNAL ENVIRONMENT IMPACT
ON GROWTH OF THE FIRM
 There are number of internal factor that contribute in success of the
organisation as well as become barrier.
 Tesco grocery market has various types of threats and opportunities
according to strength & weakness.
 Strength
1. Tesco share large part of retail sector in United Kingdom as well as one of
financially strong firm.
2. Financial stability is one of the strength that helps for organisation in
expanding business in different part of Britain.
3. Company has long reputation of serving people in the country with range
of product which continuously increasing loyalty of customers.

CONTINUE…
 Weakness
1. There are number of weakness which becomes barrier in growth of the
firm. Online store of the firm is not properly managed by the organisation
which leads to decrease in customer satisfaction level.
2. Supply chain management of the firm is of advance technology but
because of poor management and less active workers, decrease in delivery
time which effect on organisation image.
3. It is failed in many part of part of world because of improper strategy such
as in USA and Japan.
4. Government of Britain determined implemented various kind policy and
laws which continuously effecting financial position of the firm and
organisation is overlooking such kind of negative factors.

CONTINUE..
 Opportunities
1. Company has a strong reputation worldwide which enable the firm to
expand business in different part of world and increase market share.
2. Tesco can expand business in countries where raw material price will be
less and people can easily be attracted such as Turkey, Mexico, Indonesia,
Brazil and South Africa.
3. Diversification of market in different part of globe will increase revenue of
the firm and hence support globalization of world.
4. Company has to look for supply of raw material from Asian countries such
as India, china etc. Cheap raw material can support in providing large
number of product to customer at cheap price.

CONTINUE..
 Threats
1. There are number of challenges that organisation in changing business.
2. Government decided to give higher relaxation to entrepreneurs in the
country which can decrease market share of the firm by cutting price
strategy.
3. Company also faces cyber attack which can leak information of the
company and effect on its strategy.
4. Aldi and Lidl are one the two competitor of the firm and they are continue
in price war which decrease loyalty of old customer and also decreasing
interest of other’s for firm’s product.

P3. PORTER’S FIVE FORCES FOR
ANALYSING MARKET
 Porter’s five forces help firm in understanding situation of market and
accordingly strategy are implemented by Tesco.
 It helps in analysis micro environment of the organisation as well as critical
factor that can impact on growth of the firm.
 Bargaining Power of consumers
1. Bargaining power of the United Kingdom consumer is low as they believe
in one stop shopping.
2. Tesco provides large number of product in stores which help in choosing
firm’s supermarket as compare to other.
3. Company always provides product as per changing taste and trend of
customer so able to increase loyalty and mindset of the firm.

CONTINUE…
 Group room sales:- It includes the process in which Alfredo once to get the
maximum of group booking data and want to increase the group booking
pace. anticipating of group business helps in more revenue for the company
an increase a lot of business and profit.
 Transit or fit room sale :- The booking pace and the time should be
dragged for highest occupancy rate. transient room other rooms which are
sold to free individual travellers it is the business usually booked closer to
the date of arrival then group business.

CONTINUE.
 Bargaining power of the suppliers of Tesco
1. Tesco has number of suppliers in the country as well as world but power of
them is medium.
2. Company has to manipulate price of raw material and hence able to
maintain price strategy in changing market but for that time consume.
3. Company negotiate with this people in order to increase profit margin in
changing business.
4. Many of the supplier blame for cutting price in wrong order and call the
firm as mafia.

CONTINUE..
 Threat of new entrants affecting Tesco
 Threat of new entrant in retail market is very low and hence Tesco able to
maintain market share and expand business.
 Reason behind that large number of finance required for competition in
retail sector which many of people are not interested to invest.
 Big firm in the retail industry form a lobby and hence follow competitive
price strategy to block the entry of new organisation in the business.
 Tesco is financial strong which help firm in expanding business in different
part of globe and it manipulate supplier easily which rise the price of raw
material for new entrants.

CONTINUE..
 Rivalry amongst Tesco’s existing competitors
 Tesco’s faces challenges from existing rival companies such as Asda,
Sainsbury etc. which continuously effecting market share and hence power
of them is high.
 Competitors of the firm highly invest in promotion of their brand on digital
platform, it attract customer for organisation’s product and increase market
share in changing business.
 Aldi and Lidl and continuously standing in price war and hence effecting
profit share of the firm.
 However, firm has open new venture Jack’s (discount chain) which help in
maintain this force and overcoming from challenges in market.

P5. STRATEGIC PLANNING
 For changing business, it becomes necessary for the firm to form effective
strategy to overcome from challenges and raise market share in Britain.
 Tesco use number of ways to expand business.
 Mission: Company mission is to attract large number of customers
around the world by delivering better quality of product with variety.
 Objective
1. To attract large number of customer in United Kingdom
2. Increase profit of the firm by 4%
3. To effective use of supply chain management system to increase customer
satisfaction level.
 Ansoff Matrix of Tesco
 It explains the way in which organisation can expand business and
increase market share. It has four elements namely Tesco use this tool to
frame strategy for market growth.

CONTINUE..
 Market Penetration
1. In this firm expand business in existing market with same products
that firm is offering.
2. Company can expand business by following strategy such as
competitive price strategy, social media market etc.
 Market development
1. Market development refers to offering existing product in new market.
This is one the way in which firm can generate higher revenue.
2. For this image of the firm must be strong in new market and require
high publicity.
3. This can only possible in the places where customers welcome new
market. However, if customer loyalty is high in new market then it
will become difficult for firm to expand business.

CONTINUE..
 Product Development
1. In this market remain same but firm introduce new product which can
attract large number of customers.
2. This is profitable on the places where people follow one stop shopping
and hence variety of product at same place can attract them.
 Diversification
1. In diversification market and product both will be new and hence a
proper planning will be requiring for it.
2. Tesco can choose market development strategy as firm has long
reputation in different part of globe and also it is financially strong.
3. There are number of places where customers want purchase its
product but firm is not present in that area.

CONTINUE..
 Bowman’s Strategic Clock
 It helps in strategic position of goods to gain competitive advantage in
changing business.
1. Low Price and Low Value Added (Position 1):In this price of product
is cut in such as way that no one can take over business of the firm but
it is not a right option competitive positioning and decrease profit of
the firm.
2. Low Price (Position 2):In this prices of product will be low so that
quantity of product can be selling and hence increase financial
capacity of the firm. However, cutting price strategy remains very
high among competitors.
 Tesco can use Hybrid strategy as company offer variety of quality
product at low prices and hence able to attract large number of British
customers.

CONTINUE..
 Monitoring and Controlling
 Company use number of tools to evaluate performance of the strategy
such as Key performance indicator (KPI) use by the firm which help in
analysing the way in which work is processed.
 Tesco also take Feedback, suggestion and opinion of stakeholder in
making changes in quality of product and hence able to attract large
number of customers.

CONCLUSION
 It can be understand from the above report there are number of factors
that has positive and negative impact on strategic planning of the firm.
 Tesco share large market of retail industry in Britain by effective
strategic planning.
 There are number of internal and external factor that affect growth of
the firm For example: technological changes increase financial burden
on the firm whereas variety in product can attract large number of
customers.
 Report discussed porter’s five forces such as new entrant threat are low
because it require large amount of money. In the end strategic planning
of Tesco explain

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