Business Strategy: Analysis and Recommendations for Tesco

This report analyzes the macro and internal environment of Tesco, including its mission, vision, and objectives. It also discusses the competitive forces in the market sector and provides recommendations for strategic management decisions.

Business Strategy

Contents
Introduction......................................................................................................................................2
Part 1................................................................................................................................................2
Discuss and analyse the macro environment of the given organisation using suitable
framework...............................................................................................................................2
Significantly examine the macro environment to determine strategic management decision.4
Discuss the internal environment and capabilities of given organisation using suitable
framework...............................................................................................................................4
Assess the internal environment to determine strength and weakness of organisation internal
capabilities..............................................................................................................................5
Assess the competitive forces of a given market sector for an organisation..........................6
Develop suitable strategies to enhance competitive edge and market position based on
outcomes.................................................................................................................................7
Part 2................................................................................................................................................8
Develop strategic planning for a given organisation..............................................................8
Develop strategic management plan that has tangible and tactical strategic priorities and
objective.................................................................................................................................9
Interpret information and data, using environmental and competitive analysis to create
suitable strategic directions objectives and tactical actions.................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
1

Introduction
Business strategy is basically defined as the long term plan of an organisation set in order to
achieve specific goals and objectives, it defines the required actions and decisions a business
organisation needs to undertake in order to achieve targeted goals, it is very important for the
companies in order to grow and develop. For this report Tesco is taken as the base company.
Tesco is one of the top international retail company and third biggest retailer around the globe in
case of gross revenue. Tesco was founded in 1919 by Jack Cohen offering books, clothing,
electronics, furniture, financial and internet services and so on. This is divided in two parts, the
first part covers detailed analysis of the internal and external environment with evaluation of
competitive advantage and justification of existing and potential competitive advantage also
strategy for achieving overall strategic objective is also highlighted in this report. The second
part covers various types of strategic available to company and justification and evaluation of
strategy for growth and success is also highlighted.
Part 1
Discuss and analyse the macro environment of the given organisation using suitable framework
Macro environment includes all the factors which are present outside the business
environment but has direct impact on the performance and profitability of the business
organisation. Proper analysis of the external environment enables business to understand the
various factors available in the environment and their impact on the business effective analysis
helps business to gain competitive advantage in the market (Arora and De, 2020). In context to
Tesco, which is an one of the top multinational retail company, operating in around 12 country
globally, company has strong brand image world widely continuously working towards
satisfying their customers, before forming any kind of strategy it is important to know about
company’s goals, mission and objective which enables in implementing best and suitable
strategy as discussed below:
Mission: The mission statement of Tesco is “to make what matters best, together”. Company
provides an environment in which everyone can achieve their goals and can contributes towards
the success and growth effectively.
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Vision: The vision statement of Tesco is to be the most valued business for the their potential
customers, the community. They are continuously working towards offering value to their
customers to earn their loyalty and trust.
Objective: The main objective of the company to enhance their market share in the coming
years and also gain competitiveness in the marketplace through offering quality and value added
goods and services to the target audience. The Tesco aim is to be the leader in the marketplace
through satisfying their customers needs and wants. Company also aims to offer job
opportunities in the local community and offering healthy products in order to attract large
number of customers base and increase market size effectively (Barlatier and Mention, 2019). In
order to make suitable strategy for the organisation the PESTEL analysis is taken into
consideration.
PESTEL analysis: It is one of the essential marketing tool used by the marketing manager to
analyse and assess the different outside factors present in the external environment but having
considerable impact on the functioning of the business. In context to the Tesco the PESTEL
analysis is discussed below:
Political: The political factors includes tax rate, government policy and rules and
regulations, any kind of political instability will create hurdles for the chosen company. In
context to Tesco, company operates world widely, so it needs to follow the political rules for
smooth functioning, another factor is Brexit, and there will be changes in the regulations which
will leads to decrease of increase in sale. Political stability will leads to profitability for the
business.
Economical: It includes factors like interest rate, inflation rate, changes in and spending
capacity of the consumers. Strong and developed economy will leads an business towards growth
and success and vices versa. In case of Tesco, company needs to ensure any kind of changes in
taxation, or any economical factors which could effect its feasibility.
Social: The social factors includes the behaviour and cultural factors of an individual
which can directly impact the operations of organisation. In context to Tesco, as of social change
the customers are moving towards bulk shopping and to deal with this company has increase
their sale of non food items and also company is offering organic products to satisfy the
increasing needs to health conscious food (Baumgartner and Tippmann, 2019).
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Technological: The technological factors includes any kind of changes or advancement in
the technological factors which directly influence the business. In case of Tesco, company has
implemented online shopping facility and also started the feature of self service checkout points
in order effectively deal with this factors.
Environmental: it includes working towards the welfare and sustainability of the
environment which leads business towards gaining competitive advantage. In context to Tesco,
company is continuously working towards the sustainability of environment by reducing their
carbon footprints and reducing waste produced.
Legal: The legal factors includes factors like legal rules, regulations and legislation which
is needed to be followed by each and everyone, strict legal laws will create problem for the
company and vice versa. In context to the Tesco, company needs to ensure that they are
following legal laws for smooth functioning (Curtin, 2019).
Significantly examine the macro environment to determine strategic management decision.
It is analysed that political stability is bit challenging for the Tesco because of the Brexit
and changing political rules and regulations, but company has advanced technology which helps
organisation to enhance their competitiveness in the marketplace and also improve their
performance. In addition to this the use of advance technology allows company to attract large
number of customers base. Because of the strong and stable economy of the UK helps Tesco to
grow and develop themselves and continuously moves towards success effectively, because of
the stable and developed economic the consumers are spending more which enables company in
increasing their profitability and reducing cost. Tesco is also continuously working towards the
welfare and sustainability of the environment through reducing carbon footprints and wastage
products, this effectively leads company to gain competitive advantage in the marketplace. The
evaluation of these factors will be benefited for the organisation in their strategic management
decision and leads to implementing correct strategy effectively (Diderich, 2020).
Discuss the internal environment and capabilities of given organisation with the help of
appropriate framework
The internal surroundings includes all the elements present inside the business
surroundings how they considerably impact the performance and effectiveness of the company.
In context to Tesco in order to determine their internal environment and capabilities the SWOT
analysis is taken into consideration.
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SWOT analysis: The SWOT analysis is an important marketing framework used by the business
organisation in order to understand strength and weakness of the organisation. In addition to this
various opportunity and threats available to the business, analysis of strength and opportunity
helps business to grow and develop further. In case of selected company the swot analysis is
mentioned below:
Strength Weaknesses
 Tesco is one of the top multinational
retailer of the UK with around 7000
retail stores in more than 14
countries.
 Company has strong brand image
around the globe.
 Tesco offers diversified products
and has diversified market and
product range.
 The low cost strategy used by the
company is one of his biggest
weakness.
 Another weakness of the company is
low operational performance in
certain market.
Opportunity Threat
 Expanding into new market to
enhance their market size can be an
opportunity for the company.
 Tesco company can expand their
product line
 Company can upgrade their online
shopping business with more
advanced technology.
 The major threat for the company is
increasing competition in the
market.
 The changing trends and customers
preferences can create threat for the
company.
 Political and economic instability
will create challenges for the
company.
Assess the internal surroundings to understand strength and weakness of organisation internal
capabilities.
From the analysis of internal environment, it has been analysed that the major strength of
the company is having strong brand image in the market and around the globe and being the top
multinational retailer around the globe with more than 7000 retail stores in more than 14
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countries. Strength of the company is dealing in diversified market and product range, these
strength of the company helps them in gaining competitive advantage in the market and
enhancing their profitability and productivity (Diderich, 2020). Company needs to continuously
invest in the research, human, technological resources in order to enhance their strength, whereas
it is also analysed that the weakness of the company is low cost strategy and low operational
performance ion the market which creates challenge for the company, but the low cost strategy
has also enables company to attract large number of customers whereas increased the cost of the
company. Company needs to ensure that their weakness in not creating challenge for them and
appropriate strategy is taken into consideration in order to deal with this issue effectively (Dobni
and Klassen, 2020).
Organisations resources and capabilities
The resources are the essential assets of the company whereas the capabilities are what
company is able to do. In context to Tesco, the resources are categorised in two tangible and
intangible resources. Tangible resources of the company include its 3700 stores, 440,000
employees, around 62 billion turnover and 4 billion incomes. Whereas the intangible resources
of the company are vast knowledge of retailing industry, vast customer information and
enhanced brand awareness and the main resources are company. in case of company’s
capabilities they have ensured that they are valuable for their customers in order to gain
competitive advantage. There core competences are based on product value, customer services
and vast product range. Another major strategic capability of the company is its cost efficiency.
Assess the competitive factors of a specified market sector for a business.
In order to assess the competitive forces of a given market sector for an organisation the
porter’s five force model can be taken into consideration, In context to the Tesco, the porter’s
five force model is discussed below:
Porter’s five force model: It is a necessary technique used by the marketer to evaluate the
different forces which determines the competition present within the industry. It helps business
to examine the level of competition available within the business (Gibe and Kalling, 2019). In
context to Tesco, in order to analyse competitive forces for the company different forces of the
model are highlighted below:
Rivalry among firms: The large number of competitors present in the market will create
barriers for the other companies. The level of competition is high in the retail industry. In context
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to Tesco, business faces lots of completion from the competitors like Asda, Sainsbury. But with
their strong brand image they have maintained their competitiveness.
Threat of new entrants: If the new entrants is coming with innovative and innovative
product then it will create challenge for the existing companies in the industry, but is the there
are strong barriers for the new entrant then it will create threat for them, the threat of new entrant
is low in the retail business. In case of Tesco, because of company’s strong brand image the
threat of new entrant is low, but with increasing number of new entrant can create challenge for
company (Hanson and et. al., 2019).
Bargaining power of suppliers: If the number of supplier are less in the industry then the
their bargaining power will be higher and wise versa, the bargaining power of the suppliers are
less in the retail industry. Also in Context to Tesco, company is well established and has strong
brand image so the supplier has to follow the standard lay down by the company, their
bargaining power is less.
Bargaining power of buyers: when there are less number of buyers available in the market
then in such case their will hold more bargaining power, the bargaining power of buyers in the
retail business is high because of the high level of rivalry buyers can simply move from one
brand to another. In case of Tesco, company has trustworthy customers but still because of the
number options present the bargaining power of buyer is high. Company can offer differentiated
and unique product to deal with this force.
Threat of substitute: under this if a company is offering same products of the company’s
product then such situation will lead to the threat for chosen company. In the retail industry the
threat of substitute is low for the food products whereas it is high for the non food items. In case
of Tesco the threat of substitute product is relatively low for their food products.
Develop suitable strategies to enhance competitive edge and marketplace situation based on
outcomes.
In order to enhance the competitive edge and marketplace position, company can use
differentiation strategy and innovation, as from the above it is analysed that the increasing level
of competition and new entrant in the industry are the threat for the company, so in order to deal
with this and gain competitive advantage and market position company can use innovation and
differentiation strategy, this will help company to offer unique and differentiated products and
services to their customers, which will leads company towards gaining competitive advantage in
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the market, also company can offer innovative products and services, like no other company is
offering in the industry (Heischmidt and Gordon, 2020). In addition to this company can also use
cost leadership strategy in order to gain competitive advantage in the market, this will allow
company to offer their products at low prices attracting large number of customers (Hirsch,
2020).
Part 2
Develop strategic planning for a given organisation
In order to develop strategic planning and analyse the strategic position in the marketplace
and also to gain competitive advantage in the market, the Porter’s generic strategy can be taken
into consideration. In context to Tesco, in order to analyse the strategic position and gain
competitive advantage, company can use porter’s generic strategy as mentioned below:
Porter’s generic strategy: It an framework used by the business organisation in order to analyse
the potential area in which company can gain competitive advantage effectively, it includes
mainly three strategy which can be used to enhance the competitiveness in the market as
discussed below:
Cost leadership strategy: This strategy is used by the business organisation in order to
offer the product and services at low prices which leads to increasing customers base. In case of
Tesco, company can use this strategy to become market leader and gain competitive advantage
through offering products and services at lower prices and through effective value chain
management. This will allow company to expand their market share.
Differentiation strategy: The differentiation strategy is used by the organisation as this
helps company can gain competitive advantage through offering unique and differentiated
products. In context to Tesco, according to the changing taste and preferences of the customers
company can offer unique and differentiated products and services in order to gain competitive
advantage in the market, this will allow company to increase their customer base and increasing
profitability and productivity (Hirsch, 2020).
Focus strategy: This strategy is taken into consideration by the company to enhance
competitive advantage is focus strategy, this will allow company to offer their products and
services at low cost focus strategy in the targeted market, this will allow Tesco to offer low cost
at best value for the target market. This will allow company to gain competitive advantage
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through focusing on target market. Company continuously modify their branding strategy and
product designing.
Develop strategic management plan that has tangible and tactical strategic priorities and
objective.
Executive summary: The plan will focus on enhancing the competitive advantage in the
marketplace, as is it identified that increasing number of competition is a major threat for the
company. it is developed in the basis of company’s strength and capabilities (Kingsnorth, 2019).
It will be enhanceed through offering differentiation.
Background statement: Tesco is one of the top multinational company offering wide range of
product and services, the company was founded in 1919 by Jack Cohen. Company has strong
brand image globally, having more than 7000 retail stores in more than 14 countries.
Continuously working towards satisfying their customers.
Values: it has been evaluated that customers trust, loyalty, innovation are the core value of teh
company.
Market analysis:
In order to attain desired growth and success in the market place, the Ansoff matrix strategy can
be used by the company. it involves four strategy which will helps company to grow in the
marketplace. In case of Tesco, in order to grow the company can use Ansoff matrix strategy as
discussed below:
Ansoff matrix: It is one of the effective tool used by the marketing manager in order to
determine and analyse their strategies for growth and development. it is tool used by the business
organisation for the future growth, it includes four strategy which helps in determining the
growth of the business as discussed below:
Market penetration: The initial strategy is the market penetration, under this marketer
focus on trading their existing products into an existing marketplace, the main focus of the
management is to lower the price of the product or to enhance the various promotional activity.
Product development: The another strategy that can be taken into consideration by the
business organisation is the product development strategy, under this marketer focus on
launching new products into the existing market, it will help the company to enhance their
customers base through developing new and innovative products (Kosutic and Pigni, 2020).
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Market development: under this strategy the company focus on entering into new market
with existing products, this strategy will allow company to grow and enhance their market size, it
will also increase their profitability and productivity, entering new market with already well
established product will help company to grow and gain competitive advantage.
Diversification: The last strategy that can be used by the marketer in order to grow and
develop is the diversification, this strategy allows the company to enter new marketplace with
new innovative product, it is risk process but unique and differentiated products will allow
company to grow and earn rewards.
From the above, in context to Tesco, in order to grow and develop the market development
strategy will be best suitable as it will allow company to expand their market size with their
already existing products, it will help company to increase their market size, as Tesco is one of
the well established brand globally, it will make it easier for the organisation to expand their
market size through entering into international market effectively (Kunc, 2018).
Objective: The objective of the company is to enhance their product range and to enter into new
international market into next one year. Also increase the sale by 24% within the next 6 months.
Evaluation and monitoring plan
For the successful implementation of the plan it is very essential that should be continuously
monitored and evaluated. In context to the chosen company in order to evaluate the strategic plan
the SAF model is mentioned below:
Suitability: It is analysed that the current strategic plan is appropriate as it is based on the
company’s strength and core competencies and capabilities and also strength of the company.
Appropriate: The selected strategic plan is appropriate as it will lead company towards
growth and success and evaluated through cost benefit analysis.
Feasible: The strategic plan is feasible as it is based on the company’s resources,
capabilities and strength.
Highlights information and data, through environmental and competitive study to create suitable
strategic directions objectives and tactical actions
In order to analyse the environmental analysis of the company the swot analysis is taken into
consideration, it is analysed that company has strong brand image in the market which is strength
of the company whereas offering products at the low cost will work as the weakness for the
company. Changing taste and preference and increasing competition will create threat for the
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company. In addition to this various external factors like political change or economic instability
will create barrier for the company, however factors like technological, environmental and social
factors will create favourable environment for the company and will help grow and develop. To
achieve competitiveness, the chosen business should effectively evaluate and analyse their
internal and external market environment. In addition to this in order to analyse the competitive
analysis of the business the porter’s generic model is taken into consideration, and it is analysed
that the level of competition is high for the company, but the threat of new entrant is low for the
company because of its strong brand image similarly the bargaining power of supplier is low as
they have to follow the standard of the company, but because of the number of competitors
present in the marketplace the bargaining power of buyer is high. Through this competitive
analysis it is analysed that business has well-built brand image in the marketplace and is
effectively competitive in the market (Luo and Bu, 2018). In order to enhance their
competitiveness the company use differentiation strategy which allows company to offer unique
and different product in the market to attract large number of customers effectively.
As per the data and information it can be evaluated that the political and economical factors
are influencing the functioning of the business, also growing competition is also threat for the
company. The quantitative objective of the business is to increase their sale by 24% in the next 6
months and also to expand their business into the new international market. in addition to this the
qualitative objectives of the company is to continuously provide quality product and services to
their customers, which is an tactical actions taken by the company to enhance their growth and
productivity (Rebière and Mavoori, 2020).
Conclusion
From the above discussion it can be concluded that business strategy is one of the most
essential part of the business, it helps business to effectively plan and taken required actions in
order to achieve target goals and objectives. Achieving desired goals leads business towards
growth and success, it also helps in enhancing the profitability and productivity of the business
and improving overall performance. This report highlights the detailed description of the
business strategy it effectiveness and analysis of the external and internal environment and
competitive environment of the business. In addition to this detailed evaluation of the
organisations potential competitive advantage with valid strategies and tactical objectives of the
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organisation are explained. Furthermore, the analysis of various strategic directions and
recommendation and evaluation for suitable growth strategy is also highlighted in this report.
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References
Books and Journals
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