Influence of Macro Environment on Business Strategy

Business Strategy
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Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Analyse the influence of macro environment on the organisation & its strategies...........3
M1. Critical evaluation of macro environment in order to inform and determine strategic
decision...................................................................................................................................7
TASK 2............................................................................................................................................8
P2 Analysis of internal capabilities and environment of organisation by using appropriate
strategies.................................................................................................................................8
M2. Critical evaluation of internal environment to assess weaknesses and strength of a
company’s internal structure capabilities & skill set............................................................11
TASK 3..........................................................................................................................................11
P3 Porter’s five forces and evaluation of competitive forces of the give market sector of
company...............................................................................................................................11
Ansoff Matrix.......................................................................................................................12
M3 Analysis of appropriate strategies in order to improve market position and attain
competitive advantage..........................................................................................................13
TASK 4..........................................................................................................................................13
P4 Apply range of theories and concepts to devise and interpret strategic planning...........13
M4 Strategic management plan............................................................................................15
D1 Critique and interpret information applying environmental & competitive analysis to
produce a set of valid strategic directions, tactical actions and objectives..........................18
CONCLUSION..............................................................................................................................19
REFERENCES..............................................................................................................................20
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INTRODUCTION
Business strategy is define as a set of actions that helps an entity to achieve overall objective
in an effective manner. It is basically a master plan that is develop by the higher authorities of an
organisation in order to attain competitive advantage at marketplace and to achieve higher
position in the particular industry. It is important for an entity to consider the mission, core
values and vision of company while developing business strategy (Dodgson, 2018). An effective
strategy is one that help companies to attain higher growth and development that directly leads to
success. Moreover, an effective strategy aid organisation to sustain in market for longer period
and enhance their productivity level. For the present report, TESCO is taken into consideration.
The company mainly offers high quality home essentials and groceries, which is the main reason
of its success. The company was established in the year 1919 and its headquarter is located at
Shire park, England. TESCO serve its product through supermarkets, superstore, hypermarket
and by convenience shop. It offered products in more than 12 countries and consist of around
4,70,000 employees. One of the main reason of its success talented and effective employees who
performed all the activities as well as operations in an effective manner. The report covers
analysis of macro and micro environmental factors that has an influence on the overall
performance and business activities. Along with this, VRIO analysis is applied in order to gain
knowledge about the internal capabilities. Moreover, Porter’s five force model is describe in the
report that help an entity to identify level of competition in a proper manner. Furthermore, there
is discussion about Bowman’s strategy clock that allow an entity to develop an effective strategy.
In the last, a strategic plan is developed that help in attaining objectives within stipulated time
period.
TASK 1
P1 Analyse the influence of macro environment on the organisation & its strategies
Every organisation has an influence of macro environmental factors and it is important for
an entity to analyse the impact of all this factors on the business performance as well as
strategies. This assist an entity to develop an effective strategy and decline the level of risk
associated with the factors. In addition to this, it also help in gaining knowledge about factors
that has high impact so that best and suitable actions is planned. In order to analyse the impact,
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the higher authorities of TESCO adopt Pestle analysis and Swot analysis. Both the frameworks is
described below in relation to the company.
PESTLE analysis
It is defined as a framework that help companies to analyse the factors, which impact on
their overall performance. In addition to this, it consist of factors such as social, political,
economical, environmental, legal and technological factors as well. All this factors are dynamic
in nature and affect on the business activities. It is determine that all this factors has both positive
as well as negative impact on the organisational performance. The factors is described below in
relation to the chosen company:
Political factor: This factor include unemployment rate, tax rate, political instability, tax
rates, impending and current legislation and many more. The political factors impact on the
overall business performance as well as activities of the company (Chelliah and Swamy, 2018).
In relation to TESCO, the company is operating in more than 13 countries, which include Europe
as well as Asia. It is determine that political condition of United Kingdom is quite well and its
government supports business organisations to expand its operation all over the world as it leads
to the growth of the economy. This is the advantage or an opportunity for the TESCO to earn
higher profits and enhance its market share as well. This factor has also negative impact, for
instance, if the import duty on products or goods is increase the there is decline in the level of
revenue level as it import goods from china, East Asia and many more. Moreover, the Europeans
referendum is undertaken as a risk factor for its major investors and for the British Economy as
well. It is determine that Tax on supermarkets is going to increase by the government that effect
on its performance in a negative manner.
Economical factor: This factor include labour cost, income level, economic conditions,
inflation rate and many more. It is a dynamic factor that has high influence on the productivity as
well as growth of an organisation. In context to TESCO, there are various factors that impact are
price, cost and profit as well. The labour cost is one of the essential economic factor, which
impact the supermarkets. It is important for company to focus on the raise in borrowing cost of
United Kingdom as it will enhance cost and price of products offered by the company that
directly leads to decline in the profit level of the company. In addition to this, it decline the
market image or reputation of company at marketplace. Moreover, it has positive impact also as
it is determine that people living in UK has high buying power that directly leads to increase in
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profits and revenue level of company. TESCO have the advantage to attract large number of
people and earn higher profit that has a positive influence on its overall growth and development
as well.
Social factor: This factor include values, norms, consumer trends, opinions, perception of
people living in the society. In order to gain success, it is important for an organisation to analyse
market trends as well as customer needs before offering products and service in market. The
behaviour and attitude of customers towards shopping is keep on changing with the trends as
they like to consume those things that is trendy in market. The people of UK has their own and
busy schedules and prefer to purchase from the organisation that provides fast and quick deliver
without compromising the quality (Macarthy, 2018). With reference to TESCO, its higher
authorities focuses on fulfilling the requirements of customer that help in retaining the for longer
time period. On addition to this it also aid company to attract more number of people and earn
higher profits. The company is planning to offer organic food as the demand for health product
us increased. It is determine that obesity is one of the major issues in society as people are more
concern towards their health, offering of organic and healthy food help organisation to enhance
their customer base level that leads to increase in sales as well as profit of Tesco.
Technological factor: One of the most important factor that impact on the performance as
well as strategies of organisation is technology. Technology is changing rapidly and affect on the
purchasing behaviour and attitude of customers as people are so trendy and like to purchase
innovative and new product coming in market. with reference to TESCO, it has the advantage to
make use of innovative technology and grab the opportunity. By the adoption of advanced
technology, it is able to provide on time and quality service to customer that develop a positive
mind set of customers towards the brand. In addition to this, TESCO make use of social media
applications as a new way of promoting goods and services. The applications such as Facebook,
Instagram, YouTube is used by company in order to reach maximum number of people and
enhance their customer base level that has positive influence on the overall sales and profit level
of the organisation. It has negative impact also as change in the technology occurs cost to
company, which sometimes decline the profitability and revenue level of TESCO.
Legal factor: It is essential for an entity to follow all the rules and legislation that is made
by government as it help in implementing out all the activities as well as operations in a smooth
and effective manner. In context to TESCO, its manger ensure that all the laws is followed so
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that there is no interruptions and delay of activities and operations. After the case of workplace
discrimination in 2017 by its employees, the reputation of company is declined and affect on its
market position. In order to deal with this, its managers develop effective strategies that is allow
employees to participate in decision making, providing equal opportunity to the staff members in
order to maintain cultural and diversity at workplace. The company follow all the legislation
associated with the benefits of employees as well as customers, it help company to build up their
high position at marketplace and increase their market share level.
Environmental factor: There are many companies facing issues due to environmental
factors. Most of the people like to prefer those goods that is environmental friendly and did not
harm the environment. With reference to TESCO, its motivates customer to buy products from
tesco,com. In addition to this, it’s van drivers make use of fuel saving routes and also collect
plastic bags from users in order to recycle them. By the assistance of this, TESCO is able to
attract more number of people that has a positive influence on its market image and market share
as well.
SWOT analysis
This model was used by companies in order to know about the strength and weaknesses so
that improvements can be take place in an effective manner. In addition to this, it also aid in
analysing the threats and weaknesses which in turn help company to develop effective strategy
on order to decline the level of threats and grab the opportunity at marketplace. The SWOT
analysis of company is given below in relation to the chosen company:
Strength Weaknesses
 One of the strength of company is its
market presence as it offer products in
more than 18 countries, this help
company to attain higher profits.
 TESCO offer high quality products to
its customer that aid in gaining trust of
customers and retain them for longer
time period.
 It is one of the profitable supermarket
in the world due to which it has the
 It is determine that some of the
organization subsidiaries is not
performing better due to external
factors. This decline the revenue level
of company as it undertaken as a
weakness of TESCO.
 The company is highly depend on the
Europe and United Kingdom for its
sales & therefore did not spent
resources in other developing markets.
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