Global Business and Strategy

This document provides a case study analysis of Tesco Plc, a multinational retailer, focusing on its global business and strategy. It includes a brief background of the company, internal and external analysis, identification of sustainable competitive advantage, and strategic recommendations. The document also discusses implementation issues that Tesco may face while implementing its strategies.

Global Business and Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
Main Body.......................................................................................................................................3
Brief background of the case study organisation.........................................................................3
Internal and External Analysis.....................................................................................................3
Identification of company's sustainable competitive advantage..................................................6
Strategic Recommendations and discussion of implementation issues.......................................7
CONCLUSION................................................................................................................................9
REFERENCES................................................................................................................................1

INTRODUCTION
Global business refers to the trade at international level in which the organisations
performs their business activities throughout the world. Business moves out with the aim to
expand their business and to ensure their survival. For this they have to formulate various
strategies such as corporate strategies, growth strategies etc. which depends upon the overall goal
of the organisation. To plan and to formulate strategies the organisations need to analyse the
market in which operates. For this the report the organisation which is taken into consideration is
Tesco Plc, which is a multinational retailer that provides groceries and general merchandise. The
report includes analysis of the internal and external factors, sustainable competitive advantage
which the organisation can take and the recommendations which are based upon such analysis.
Apart from this various implementation issues are discussed which can be faced by the company.
Main Body
Brief background of the case study organisation
Tesco Plc is the British multinational retailer, headquartered in Hertfordshire, England.
The company is trading with the name Tesco and offers general merchandise and groceries. It is
third largest retailer of the world on the basis of their gross revenues but is a market leader in
UK. The company is operating in seven countries across Asia and Europe. It was founded by
Jack Cohen in 1919 as a group of market stalls, the business was successful initially with food
and drink. Later on they diversified their business into clothing, electronics, insurance and
others. With the increasing competition the company is facing decline in the business as
Morrison Supermarket Plc is expanding their alliance with the U.S online giant. This put
pressure on the Tesco to improve their online operations (Tesco suffers weak UK market, 2019).
Internal and External Analysis
For the companies it is important to analyse the internal and external factors so that they
can identify the opportunities and the threats and their impact on the organisation. To analyse the
impact of various macro factors Pestle analysis for Tesco need to be done.
PESTLE Analysis of External environment are:
 Political Factors: Political factors are the factors which reflects the extend to which the
government can intervene in the business. Such factors are tax rates, political stability etc.
The import duty in the country has impact on the Tesco as they import various goods

from other countries. Decrease in the import duty has positive impact on them as it will
reduce the prices of the company. This will facilitate Tesco to attract more of customers
at lesser prices than the competitors. But the tax on supermarket which is known as
'Tesco Tax' was proposed by the local council which was rejected by the UK government
can affect the operations in future. It will increase the tax payable by the company which
will impact their profitability and thus will affect their overall organisational goals (Scott
and Davis, 2015).
 Economic Factors: Economic factors are the factors which are associated with the
interest rate, inflation rate, unemployment etc. The labour cost is a crucial factor which
has impact on the cost of operation of the supermarkets. The minimum wage rate in UK
has increased for the employees at the age of 25 or more. This has adverse impact on
Tesco as it increases their cost in millions of pounds. The other factors which can affect
the Tesco adversely includes the borrowing cost. Increase in borrowing cost affects the
prices, profits and cost of the company as increase in borrowing cost increases the cost
and prices and reduces the profits for the Tesco. The diversification of the company has
positive impact on the company as they are present in other market here they can
compensate the adverse impact on the company.
 Social Factors: Social factors include demographic factors, taste and preference etc. of
the customers. The trends in the shopping of the consumers have impact on the
operations of the Tesco. Nowadays the customers have tough schedules which are why it
is difficult for them to go out for the shopping. So they prefer delivery of the goods at
home. This has positive impact on Tesco as they are one stop solution to various products
required by the consumers. The major health issue which is faced by the consumers are
obesity, this demands more of healthy food. It brings adverse impact on the company as
they have to add more healthy options in their stores.
 Technological Factors: These factors are associated with the advancement in the
technology which are used by the company. With the help of this factor companies take
competitive advantage over others. The adoption of RFID technology by the Tesco has
offered positive impact on them as it improves the in-store experience of the customers.
Also it reduces the load for the company of managing the stock as it is automatically

adjusted as and when sale is done. But the advancement of the technology is consistent
which increase the requirement of the finance of Tesco.
 Legal Factors: These are the factors which are associated with the implications of the
regulations imposed by the system in the economy. The legal action against the company
by the employees for age and gender discrimination adversely affected the image of the
company. But Tesco conduct their operations in accordance with the code of practice
provided by the food retailing commission. This makes their operations clear and
effective (Spender, 2014).
 Ecological Factors: Various laws and impositions have to be complied by the companies
as they faces tremendous pressure of government to consider environmental issues. Tesco
encourages their customer to shop through their websites which will reduce the use of
fuel when they will visit to the store. Also they aims to minimises the carbon footprints
which will have positive impact on their practices.
SWOT Analysis of Internal factors:
Strengths Weaknesses
 Tesco is one of the biggest retailer in
UK which implies that their revenues
and sales are more in comparison to
others in the market.
 The company is a diversified company
which has a large number of stores
which makes them easily accessible to
the customers.
 Tesco offers a large number of
diversified products and services to the
customers.
 The company has low cost strategy
which reduces their profit margins.
 The performance of the company is
poor in some segments and this is
because of inappropriate research.
 They were charged with the fines due
to misrepresentation of the profits.
Opportunities Threats
 The business has opportunity to expand
their operations through online
platform which will help them to meet
 The competition is a major threat for
the company as it directly affects their
operations and strategy.

up with the competition.
 Tesco has opportunity to form alliances
with other brands this will increase
their capacity to expand their
operations (Rachapila and Jansirisak,
2013).
 Expansion of their newly introduced
stores as Jacks. They can easily and
successfully expand their business.
 Availability of the finance is also a
threat because of increased regulations
of the company.
Identification of company's sustainable competitive advantage
Porter's Generic model helps the company to take the competitive advantage which helps
them to sustain in their business. With the help of this model Tesco can identify the appropriate
strategy which can help them in taking sustainable competitive advantage. Generic strategy
facilitates in improving the performance within the industry with the help of four strategies. The
four strategies which are suggested by this model are:
 Cost Leadership: As per this strategy the companies aims to increase their customers
base by becoming low cost producer in the industry. This can be done by Tesco by
utilising their entire capacity with little differentiation in the products offered by them
in comparison to their competitors. It will help Tesco to manage their operating cost
which will increase their profit margins. Such a situation can bring the company in
competitive situation (Choi, 2015).
 Differentiation: This strategy focus upon providing differentiated products to the
customers so that they can be loyal towards them. It can be done by Tesco with the
help of better quality of the products, strong customer recognition, improving the
distribution channel of the company. The strategy will facilitate the Tesco to establish
brand loyalty for the products and services which are offered by them.
 Cost focus: In this strategy the company focus on the small segment of the target
market where they aims to take lower cost advantage. Tesla can provide the goods
which are similar to high priced goods but are available at comparatively lower cost.
This will focus on enhancing the internal efficiencies of the company that will make

them competent enough to deal with the situation of competition prevailing in the
industry.
 Differentiation focus: In this strategy the aim of the business is to create
differentiation in just one segment of the target market. With the help of this they can
serve the specific customers which will satisfy their specific needs and wants. But for
the products they generally charges premium prices (Cadle, Paul and Turner, 2014).
The strategy which is being followed by Tesco for long is cost leadership strategy which
helps them to achieve the high standards of the share in the retail market. This is because they
utilises their capabilities and efficiencies in greater volume.
Along with this the hybrid strategy is adopted by the Tesco in which the objective of the
company is to achieve the differentiation in the products and services offered by them with the
lower prices. This will facilitate them to improve and expand their businesses. They even need
not to reduce their prices if they are able to create differentiation as they have to reduce their
prices only to the extent of the prices of their competitors such as ASDA, Morrison etc. This
hybrid strategy is being adopted by Tesco as their global strategy which help them to target both
the increase in the market share and to make their customers loyal. It will make them competent
enough to target their competitors and even to expand in different locations with differentiated
products at lower prices.
This hybrid strategy will help the Tesco to deal with the competition which they are facing from
the alliance of the Amazon and Morrison. As they can effectively make changes in their process
of providing the product and services online. Tesco has already been operating through online
platform, they just have to enhance their performance with the help of various programs and
campaigns (Köseoglu, 2013).
Strategic Recommendations and discussion of implementation issues
On the basis of the analysis of internal and external factors of Tesco various
recommendations are provided to the company which can help them to implement their
strategies effectively. Also such recommendations will help them to take the competitive
advantage over other with the help of various advantage they have such as market share, brand
recognition etc. Various recommendations which are provided to Tesco are:

 The process of the online services has to be improved by the company with the help of
timely delivery, adequate information about their products and services which are available
online.
 The reduction in import duty is favourable for Tesco, so they can procure the material in
bulk which will reduce their cost. With the help of this they can offers heavy discount to the
customers.
 Various promotional campaigns need to be launched by the Tesco as it will help them create
awareness about the product and services which are offered by the company to the
customers. Also with the help of this they can make them understand the differentiation
among their products and the products of the competitors.
 As the company has adopted hybrid strategy, it offers them an opportunity to expand their
business by way of formulating various alliances with other brand. It will help Tesco to
increase their market share.
The focus must be on the promoting the business under brand name Jack, as it will help them to
enhance their presence (Elg, 2012).
To effectively overcome the impact of competition Tesco has to take sharp move by
overcoming various issues. With the help of various strategies they can overcome the issues to
fall in market share. But various strategic issues which can be faced by the Tesco while
implementing the strategies can be related to various aspects which are given below:
 Lack of resources: The strategic implementation increases the demand for the resources
which are held by the company. It increases the cost of adopting various technologies,
improving the processes, fees of various consultants, training cost etc. All these affect the
decision making of the Tesco of implementing the strategies on floor. This limit the Tesco to
frequently make changes in the strategies to meet with the competition.
 Ineffective Training of the employees: The strategies are formulated by the companies as
per their objectives and goals. On the basis of such strategies the employees needs skills and
trainings, which is to be provided by the Tesco. For this the managers have to identify the
appropriate trainings programs which can save the time and cost both for the Tesco. Due to
this the implementation of the strategies delays.
Lack of communication: Communication in crucial while implementing any strategy. Tesco
faces this issues while implementing the strategies as for this an effective communication plan

has to be formulated in which all the policies, changes are clearly defined. If there is honesty and
transparency in the implementation it will encourage the employees of Tesco to support it by
adopting the changes which incurred due to new strategies. Due to lack of communication they
faces resistance by the employees and this affects the culture of the organisation and thus the
overall performance of the organisation is influenced (Aras and Crowther, 2012).
Lack of follow through: The another issue which is faced while implementing the strategies are
lack of follow through, as the managers Tesco does not undertake the reviews on the new
strategy which is being adopted by the company. This has impact on the performance of the
employees because the evaluation is not conducted properly.
CONCLUSION
It is concluded from the above report that the organisations have to consider the impact of
the competitors and various factors which can affect the business such as internal and external
factors. Such analysis can be done through PESTLE Analysis and SWOT Analysis, on the basis
of this the companies formulate various strategies. It is also concluded that Porters Generic
model are used by the organisation which helps them to determine the strategy which can
provide them the sustainable competitive advantage.

REFERENCES
Books and Journals
Aras, G. and Crowther, D. eds., 2012. Business strategy and sustainability. Emerald Group
Publishing Limited.
Cadle, J., Paul, D. and Turner, P., 2014. Business analysis techniques. Chartered Institute for IT.
Choi, P., 2015. Immigration as Business Strategy: Simplifying American Immigration Law in a
Global Economy. U. Mass. L. Rev., 10, p.164.
Elg, U., Deligonul, S.Z., Ghauri, P.N., Danis, W. and Tarnovskaya, V., 2012. Market-driving
strategy implementation through global supplier relationships. Industrial Marketing
Management, 41(6), pp.919-928.
Köseoglu, M.A., Topaloglu, C., Parnell, J.A. and Lester, D.L., 2013. Linkages among business
strategy, uncertainty and performance in the hospitality industry: Evidence from an
emerging economy. International Journal of Hospitality Management, 34, pp.81-91.
Rachapila, T. and Jansirisak, S., 2013. Using Porter’s Five Forces Model for analysing the
competitive environment of Thailand’s sweet corn industry. International Journal of
Business and Social Research, 3(3), pp.174-184.
Scott, W.R. and Davis, G.F., 2015. Organizations and organizing: Rational, natural and open
systems perspectives. Routledge.
Spender, J.C., 2014. Business strategy: Managing uncertainty, opportunity, and enterprise.
Oxford University Press.
Online
Tesco suffers weak UK market, 2019.[online] Available through:
<https://www.bloomberg.com/news/articles/2019-06-13/tesco-suffers-from-u-k-s-
weak-market-and-tough-comparisons>
1