Strategic Planning and Macro Environmental Analysis of Tesco

Business Strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
P1: Macro environmental analysis...............................................................................................2
P2: Analysing internal environment and capabilities..................................................................4
P3: Porter five force analysis for evaluating competitive forces.................................................5
P4: Strategic management plan...................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategic planning is defined as the approach to formulate, implement and evaluate the
business strategies and their impact on organizational performance (Bryson, Edwards and Van
Slyke, 2018). It is important for the business to assess both internal and external environment so
that decision making can be improved and growth objectives can be achieved. For this purpose it
is necessary for the organization to have complete knowledge and accurate assessment of its
competitors as well as factors affecting its business operations and decisions. The study will take
Tesco into consideration for analyzing its strategic planning and business environment analysis.
The report will discuss the analysis of internal capabilities of the organization and macro
environment factors using models such as PESTEL and VRIO. It will also include strategies for
achieving different business objectives.
MAIN BODY
P1: Macro environmental analysis
Tesco is among one of the leading merchandise retailer and multinational grocery store
which provides services in UK as well as other parts of the world. The company mission
statement is based on team work and quality which states that company provides better by
working together. Its key elements emphasise on improving lives and health of community by
providing distinguished quality of services and products. The vision statement of Tesco states
that all of its customers, shareholders, colleagues and communities must be served and satisfied
with loyalty and efficiency (Tesco mission and vision statement analysis, 2020). For working
with this vision and to accomplish business goals organisation must analyse external factors
affecting business decisions. The analysis of these macro factors is as follows:
Political: The political relations and stability influences the multinational company Tesco.
Uncertainties in regulation due to Brexit can affect the sales in both positive and negative way.
Some of the inventories of Tesco are also imported from outside the Europe and thus changing
political relations and import duties can directly affect the profitability (Wolf and Floyd, 2017).
Similarly the supermarket tax such as Tesco tax can also result in increasing price wars and
burden on organisation expenses.

Economic: After 2018 minimum wage act is increasing and thus the total cost spent by the
supermarket giant is also increasing by millions of pounds. Thus Tesco must focus on hiring a
strong work force which is highly skilled and trained so that related costs can be reduced. Further
rising borrowing cost also lower the profitability of the company. Amid the pandemic situations
of Covid 19 increasing unemployment rates has significantly affected disposable income of
buyers which will make it necessary for Tesco to enter more into low price strategies (George,
Walker and Monster, 2019).
Social: In last few years life expectancy rate has increased in UK. Thus Tesco must increase the
range of individual groups which must be taken into consideration for business. In this response
company must increase approaches like online shopping and home delivery so that more and
more customers who does not want to visit store can buy through internet. Similarly in products
also organisation must launch new organic products or food products specific to different type of
requirements of people. It will help Tesco to respond properly towards social changes and to
maintain its brand value.
Technological: The biggest change in technology has been already adopted by Tesco which is
online retailing and digital marketing. It has allowed company to operate easily worldwide
without any disruptions. However with increased operational challenges company must also
improve its supply change management system so that their efficiency can be increased. Apart
from the operations Tesco must also enhance use of artificial intelligence to predict the buying
behaviour of consumers. It will help to sustain the fierce competitive environment.
Environmental: As a result of increasing awareness about global climate change and
environment sustainability Tesco is also making efforts to reduce its energy consumption and
green house emission (Abdel-Basset, Mohamed and Smarandache, 2018). Strategies like waste
management and reduction will help to meet CSR goals of company so that a positive brand
perception can be created and operational waste can also be minimised to raise profitability.
Legal: Various laws related to employment force Tesco to maintain adequate wages and working
environment for its staff members. The financial services like loans and credit card provided by
company are also influenced by financial service act. For this company must also change its
policies and actions regularly. The changing agricultural policies can also affect the prices at