Strategic Evaluation of TESCO

This report evaluates the value of clear purpose, vision, mission, and objectives in setting the strategic direction of TESCO. It also assesses the competitive advantage using the VRIO framework and analyzes the external environment using the PESTLE framework. Additionally, it applies Porter's Five Forces model for TESCO.

Strategic evaluation

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY .................................................................................................................................1
Critically evaluation of the value of clear purpose, vision, mission and objectives in setting the
organisational strategic direction................................................................................................1
Assessment of the competitive advantage using VRIO framework............................................2
Analysis of external environment using PESTLE framework....................................................4
Application of porters five model for TESCO............................................................................5
A review of an organisational strategy........................................................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Strategic management is the ongoing process of planning, monitoring and assessment of
the all essential aspects that are needed by the organisation in the accomplishment of the goals
and objectives(Deroba, and. et. al., 2019). Strategic evaluation is the last step in the process of
strategic management. Which is refers to the collection of all information about how well
strategic plan is working within the organisation, strategic evaluation is also described as the
process of determining the electiveness of current or given strategic in the accomplishment of the
goals ans objectives of an organisation and taking actions whenever it required between the
operations. In which it main key area is to examine the underlying basis of the given strategy in
the firm, comparison of the actual outcomes with the standard one that made before the
implementation of the strategy, and taking the corrective actions. Evaluation of the strategy has
been ensures that strategy as well as its implementation meets the organisational objectives. This
report is based on the TESCO company which is an UK based multinational groceries and
general merchandise retailing company with the headquartered in Welwyn garden city, England.
It is an third largest retailer in the world as per the gross revenue, it operates in the seven
countries across Asia and Europe. This report is consist the information about evaluation of
value of the company's clear purpose, vision, mission and objectives in setting the strategic
direction, also the assessment of competitive advantage of the company which has been evaluate
through VRIO. Furthermore it includes analysis of external environment by using PESTLE
analysis and porter's five model for the competitiveness.
MAIN BODY
Critically evaluation of the value of clear purpose, vision, mission and objectives in setting the
organisational strategic direction
Organisational strategy is refers to the sum collection of the action or plan that a company intend
to take as to achieve the organisational goals and objectives. It is tend to be an combination of
the purpose, vision and mission of a company that provide support in the better growth, longer
sustainability and success of the company(Sun, and. et. al., 2019). The main reason in behind
making the strategy is to ensures the smooth and effective running of the operations of the firm
and profit maximizations. It helps in proving the healthy and positive environment to workforce
so that they are able to provide the effective productivity to the organisation.
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Mission: this is an short statement which states that why an organisation is exist, it refers
to an overall goal of an organisation, mission statement of TESCO is “ to create the value for the
customers, to earn their loyalty for the lifetime. This provides an goal to the company to strive
towards and reach for(Somarathna, 2020). It ensures that customers are given best available of
the product and services from the TESCO staff. And this develop an environment where
everyone will be able to achieve their potentials and contribute in the continued growth of the
organisation.
Vision: this is refers to an mental image of an possible and desirable future state or
position of an company. This describes the aspiration for the future as well as the destination of
an organisation. Vision statement of TESCO is “ To be the highly valued company from the
customers to which they serve and the communities in which they operates”
Objective: This is refers to the something which is specific and actionable targets that
need to accomplished in the smaller period of time to reach at the desirable goals. There are main
five objectives of TESCO.
 To maximize the sales as to increase along with the increase in profit.
 Decrease their prices, as its objective is to make the shopping cheaper and reasonable for
the average households.
 To introduce the more healthy eating product in the wide range of groceries they provide
to the consumers.
 To develop an large online shopping site, TESCO objective is to provides an groceries,
electronics, and clothing along with the number of their services via online site or shops.
 To help and provide the jobs to their local communities.
Purpose: Tesco purpose is to be an champion for the customers and helping them to
enjoy the better quality of product and services along with the easier way of living. As customers
want great products at the great value which they can easily and tesco has focused on delivery
their products and services in the right way(Prasad, S., Khanduja, and Sharma, 2018).
A clear statement of vision and mission along with the purpose and objectives add the
value in the decision making process of the strategies which is being used by the company in
order to achieve the desired goals.
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Assessment of the competitive advantage using VRIO framework
Vrio is refers to an business analysis framework which is used as the tool to help the
organisations in uncover and protect the resources as well as the capabilities that provides long-
term competitive advantage to the organisation. This is also described as the basic strategic
process which is begins with a vision statement and continues with the objectives, internal and
external environment analysis, development of strategy and implementation. Below are detail
discussion of the VRIO analysis in context to the TESCO company:
Basis Valuable Rare Imitable Organized
Human resources Yes No No No
Brand image Yes Yes No No
Technology Yes Yes Yes No
Supple chain Yes Yes Yes Yes
Valuable resources: this is refers to an resources that add value by enabling the organisation in
exploiting opportunities and provide support in to defend against the threat. Resources are also
valuable when they help organisation in increasing perceived competition(Surma, and. et. al.,
2018). In relation to the tesco company, its main and most valuable resource is human resources,
they are the most important which help the company to execute the plan into the actions through
which company generate revenues and achieve higher profitability. Along with this, brand
image, technology and supply chain is also considered as the valuable resource of the tesco. As
they plays the vital role in the success and longer sustainability of the company. Tesco is having
the strong brand image that help in increasing the sales revenue, technology that is being used in
the operation of an firm help to maintain the quality of product and services and supply chain is
the essential aspects in the distributing the goods to the final customers.
Rare resources: it is an resources that is acquired by one or few companies, considered to be
rare, in relation to tesco company, its rare resources are brand image, technology and supply
chain. This is an multinational company along with the strong brand recognition across the
world, which stands rare then the other retailing company (Joshi, and Rathod, 2019). And
technology that is used by company is also rare that help them to stand different in terms of the
quality of product and services.
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Imitable resources: this is described as the resources which can be easily imitate by the other
companies. And if resources is costly to imitate, then it is tough for the other firms to imitate
it .With the perspective of tesco, technology and supply chain is the one which can be imitate by
the other firms. As technology can be buy or implement by the any firm and supply chain is
refers to an process that followed while distribution of the good and services. Which can also be
imitate by the other firms.
Organized resources: the resources will not provide any advantage to the company, until they
are not organized in a well defined manner (Du, and. et. al., 2020). In context to the tesco, they
have well defined and organised resources that provides positive outcomes and help in the
success of the company. Tesco is the multinational retailer in which its supply chin is the most
organized resource.
Analysis of external environment using PESTLE framework
PESTLE analysis refers to the framework which is used as the tool by the company as to
evaluate the external or macro environment in which company operates and have direct impact
on the performance and productivity of an company. This analysis help in providing the better
insight of the external factors that played the vital role in the making strategic decisions for the
longer sustainability and success of the company. Factors of the pestle analysis has been
discussed below in context to the TESCO company:
Political factors: this is refers to an rules and regulation made by the government, it
includes political stability, political situations, fiscal policy and exportation policies. UK has the
great political stability that means there is a less changers in the policies and regulations. And
this could be beneficial for the tesco and also company is well know and established in the UK ,
so the political factor have the fewer or a little impact on the company. However, on the other
side tesco could face the challenges and uncertainty in the trading of product and services outside
the territory boundaries due to the BREXIT impact (Hayward, and. et. al., 2018). To overcome
this threat, company can make appoint the experiences analytics that can make the effective
strategy that help in the better profitability and growth.
Economical factor: this factor is depend on the economic conditions and performance of
an country that affect the profitability and sustainability of an company. This includes, inflation
rate, exchange rate, interest rate, disposable income and consumer confidence in spending on the
particular commodity. UK has the great economic conditions and stability that is the advantage
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for the tesco that helps in the better growth and expansion of the business. Along with this there
are various factors also that have the negative impact on the performance of the company. Such
increasing level in the salary expectation of the employees an potential candidates that has the
direct impact on the profitability of business (Hübner, Huang, and Peleska, 2019). In addition
to this, there is a fluctuation in the borrowing and lending money rates, that may hamper the
financial operations of the company.
Social factor: this factor includes culture and beliefs of country's populations and its
impact on the productivity of an company. This is refers to an family, friends, colleagues and
social circle that has influence the individual attitude and opinion which has impact the sales
revenue of an company. UK is the place with the big consumer market and tesco has the
opportunity to carter the need for the wide segment of the consumers however, the population is
multi-cultured. But people are become more aware and concerned about the health and organic
products that is threat as well the opportunity for the tesco.
Technological factor: it is described as the all externally generated changes in the
technology and process which is used by the company in their operations. There is huge
advancement in the technology in UK, as London the hub of both financial and technological
institution(Fiorentini, and. et. al., 2019). which is an beneficial for the tesco, as this can be used
to provide the better quality and service to the consumers which provide in the profit
maximization. But this is also an disadvantage, as because of rapid changes, technology becomes
obsolete easily and for the new implementation, it needs and huge investment cost that has
resulted in increment in cost of the company.
Legal factor: this is refers to the laws and regulations made by the government that can
influenced the decision making of the company. This includes maternity and paternity leave,
minimum wages, holiday pay, sick pay and some other rights that are legally protected. In UK
there are various rules and laws for the retailing company and for the multinational trades that
can impact the business of tesco company. To deal with various laws and regulations company is
focused on the better and proper regulations of the business strategies that provide support in the
growth and longer sustainability of the company (Fajardo, and. et. al., 2020).
Environmental factor: this includes light, sound, food, water, pollutants and natural
calamities that influences the living being and physical environment. UK government consist of
the various laws and regulation in concerned to environment, and provides subsidy and
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compensation to the companies who are following eco-friendly process in their operations. This
is an advantage for the tesco, as this help in attracting the consumers along with reduction in
cost.
Application of porters five model for TESCO
Porters five force model refers to an framework which is used to analysing the competition for
the business. It has been draws from the industrial organisational economics to drive five forces
that helps in determining the competitive intensity of an company along with the attractiveness
of an industry in terms of an profitability (Chiu, Lee, and Wang, 2019). This model is used for
understanding of industry structure to evaluate its corporate strategies. Factors of this model is
discussed below In relation to the tesco company:
Bargaining power of buyers: This is refers to the ability of buyer to drive down the prices of the
product and services. It is affected by the number of customers that a company has, how
significant each customers is and how much it cost a company to find new customers for the
positive outputs. In the retailing industry bargaining power of buyer is high, as buyer wants to
buy the best offerings available by paying minimum prices as possible. This put pressure on the
tesco to cut down it prices in order to maintain the longer sustainability and profitability.
Bargaining power of suppliers: this is described as how easily an suppliers can drive up the cost
for the inputs. This factor is effected by the number of suppliers available in the industry , hoe
unique the inputs are and how much it cost to switch to the another supplier. The fewer in the
industry the more company depend on them. In the retailing industry, bargaining power of
suppliers is low, has there are number of suppliers in the retailing industry that supplies the key
inputs to the companies (Stocker, Arruda, and Cunha De Mascena, 2018). Tesco has the
advantage to lower the prices and increase the profit margin
Threat from new entrants: A company's power is also effected by the force of new entrants in
the market, the less times and money it cost to enter into the market then it will be effective
competition within the industry. Here the threat of the new entrants for the tesco company is
moderate, as it is easy to enter into the retailing industry, but company like tesco which is
already an well established multinational company , get less affected by the new entrants.
Threat from substitute goods: this is refer to the goods and services that can be used in the place
of the company's product or service pose a threat. Companies that produces goods and services
which have no close substitute will have more power to increase it price and that poses in the
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favourable terms(Guo, Qu, Zeng, and Yuan, 2018) . And when an close substitute are available
then the consumers have the option to go for the another company. In relation to the tesco, there
are number of substitute in the retailing industry. Thus, threat from the substitute goods is high
for tesco.
Rivalry among the existing competitors: this is described as the number of competitors and their
ability to undercut a company. The larger number of the company in the industry along with the
number of equivalent products and services they offer then it states the lesser power of a
company. Supplier and buyer seeks for the company's competition as if they are able to give
better offers or lower prices. And when competition rivalry is low then the company is able
charge higher prices and able to negotiate in a better terms. However in the retailing industry
competition rivalry is high and can hamper the performance and productivity of tesco (Fajardo,
and. et. al., 2020).
A review of an organisational strategy
Tesco is one of the largest retailing company in the world, that stands at the third position
in the world measures by the gross revenues with providing the best quality of the goods and
services, company has maintain its growth in the market. Company has been use various
organisational strategy that provide support in the longer sustainability and success of the
company. Vision and mission statement of the tesco helps in the better understanding of the
goals and objectives and ass more value in the growth of the business. This organisation is keep
on focusing on the innovation and technology that help in providing quality of product and
services along with the retention of the customers.
As per the above evaluation company is VRIO analysis helps the company in the better
understanding about the various strength and capabilities that provide support in the developing
the competitive advantage within the industry (Chiu, Lee, and Wang, 2019). Moreover, from
the PESTLE analysis, company is able to determine that there are various external factors which
have the direct impact on the company's performance and decision making process, to deal with
this company is using various strategies that help in growth while defending the against the
threat. In addition to this, porters five force model helps the company to analyse the competitive
threats and advantages within the industry so that with the various strategies company can make
its business more effective. Thus, tesco has increased its development and growth by making the
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effective customers relationship and a strong customers base along with satisfying their needs
and demands.
CONCLUSION
From the above analysis it has been concluded that strategic evaluation is the collection
of all information to determine that how strategy is being working within the company and take
the corrective actions. The organisational strategy is refers to the process of planning and
organizing all the activities so that competitive advantage can be gained along with the growth in
the market. Vision and mission statement of the company play an important role in the better
understanding of the company's goals and objectives and add value in the strategic decision
making process. VRIO analysis has been used to know about the strength and capabilities of the
company. Whereas, PESTLE analysis help in to evaluate the external environment in which
company operates. Porters five force model provides the knowledge about the competition
within the industry and how it is used to increase the profitability.
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