Strategic Management

Running Head: MANAGEMENT 0
STRATEGIC MANAGEMENT

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Executive Summary
This report outlines the Tesco strategic direction in relation with various theoretical models
and environment context. Some of the management tools and framework that are being used
including Pestle, Porter, SWOT and VRIO.
Tesco is one of the prominent corporations in the retail industry. The company strategy is
based on cost leadership and differentiation enabling company to attain distinct position in
the industry. The retail environment of Tesco is full of threats and opportunities and it is the
responsibility of management to identify those opportunities in order to attain competitive
advantage in the marketplace.

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Contents
Introduction..............................................................................................................................3
External Business Environment..............................................................................................3
Porter’s Five Forces Model.....................................................................................................4
Internal Business Environment..............................................................................................6
SWOT Analysis........................................................................................................................7
Conclusions...............................................................................................................................8
References.................................................................................................................................9

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Introduction
Tesco is one of the top food retailer operating globally in 13 countries and was established in
1919 by Jack Cohen. In relation with operations, the extended product portfolio of the
company includes selling of books, furniture, clothes, electronics, internet and financial
services and retailing of clothes. Tesco yearly revenue in the UK and Northern Ireland
calculated to about 45 billion British pounds in 2017-18 economic year (statista.com, 2018).
With regards to this, the market capitalisation of Tesco PLC is 29,43B and the company also
increase its number of stores to nearly 3,739 in 2017 (chinabrands.com, 2018).
In comparison with other retail groups (including Aldi, Asda, and Sainsbury), Tesco market
share in the UK stands out with 27.8% (statista.com, 2018b). The company strategy intended
to enhance consumer loyalty so as to develop the shopping experience for its consumers.
Tesco follows both cost leadership and differentiation strategy as the company drive to be
lowest cost operator in the industry in comparison with Morrison, Sainsbury and very close to
Asda. In addition, the company also differentiated itself from the rivals in area of delivery,
online sales, product range, club schemes and many more.
External Business Environment
The macro environment analysis of TESCO will be based on the PESTEL framework and it
is presented below –
 Political Environment - The rise of various political movements around the world
has created substantial uncertainty for several organisations and one of such
movement is Brexit. According to market intelligence firms, customers identify Tesco
as the brand most connected with Brexit. In short term, it is important for Tesco to
build new domestic suppliers relations to natively sourced products that are at-risk for
the highest post-Brexit tariffs.
 Economic Environment – Tesco sustainability and business life cycle are ultimately
impacted by the economy of various countries in which the company is operating. For
instance, Tesco sales dropped to 16 years with the 2008 recession, however, Tesco
manages to counter this by presenting a new discount range (dailymail.co.uk, 2008).