Strategic Management: Tesco's Competitive Advantage and Strategic Direction

This report discusses Tesco's strategic direction, competitive advantage, and external environment analysis. It covers company overview, VRIO analysis, PESTLE analysis, Porter's Five Forces model, and more.

Strategic management

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Task 1...............................................................................................................................................3
Company overview......................................................................................................................3
Task 2...............................................................................................................................................5
VRIO analysis..............................................................................................................................5
Task 3...............................................................................................................................................7
Pestle analysis..............................................................................................................................7
Task 4...............................................................................................................................................9
Porters five force model...............................................................................................................9
Task 5.............................................................................................................................................10
Balance score card.....................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
In the field of managements and business organisation, strategic management have bene
considered he important level as aspects which have the clear level of involving of the different
formulations the implementations of strategies. This have been extended to have the initiative
which is taken any the company achieving it respective goals and objective on the behalf of the
organization’s stakeholder, allocation of the resources with assessment of the internal and
external aspects in which the organization tends to have to operation (Lisdorf, 2020). Tesco have
been renowned as British multinational groceries and general merchandise retailer need to have
the strategic planning in the market environment to aim more level of competitive advantage
against the competitors. This report will have the clear level of discussion on the company
strategic direction by implementing the competitive advantage by having the external
environment and development of competitive strategy.
MAIN BODY
Task 1
Company overview
Strategic management has the base of the clear level of understanding of the company
vision, mission and objective which have the major level of emphasis on the company values to
have the guiding of the firm descriptive action in permanent manner n (Orgad and Meng, 2017).
There is the involvement have the major planning of the strategic decisions and along with
activities to have the proper level of resource allocation which is needed have the achievement of
the goals in perfect manner. ‘the corporate mission and vison statement of the company have
been considered as the important tool for the establishments of the growth target of company in
the effective manner.
Tesco Vision
The vison of the company to more level of valuable business by the customer, the communities
in the operate and to be loyal and committed to the level of colleagues and respective
shareholders.
 The company vision has the respective five element which describes the sort of company
which can be the wants and needed to have the establishment all around the world.
 The firm wants growing the building and full of opportunities.
 There is need to be modern, innovative and be creative adhering the full level of ideas.
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 To have the establishment of skill at the global manner along with inspiring and the
earning trust and loyal customer forms the colleagues and communities.
Tesco mission statements
The company have the clear statement in order we make what matter the better and all together.
The company have the clear level of statements which is parcel of success to have the
potentiality for contributing the continuous level in the corporation (Young, 2018).
 The company is working with the approach of communities in order to have the standing
against the rivalry forms which have the clear level of demonstration of the Tesco’s
‘Three Big Ambitions. The following are such as
 To have the creation of new level of opportunities for the millions of people around the
world.
 The company tends to have the improvement in the health respective in order to have the
dealing with world global obesity crisis.
 To have the lead in reducing the food waste in the global manner.
Tesco Core Values.
The firm want to treat
There has the vison aspect to be important which will make the company to have struggling they
remain competitive –
 Trying harder for the customer to make the more satisfied.
 To have the targeting of all stakeholder with respect and dignity
 To never compromise with scale of goods
As the development of the Tesco values will be helpful in developing the vital level of success
as the value of Tesco have been embedded the business performance in needed at every level.
The company have values which have the people understand the kind of business they are
working.
The company have the committing of the billion level of investments to have revenue statements
for improving the level of customer satisfaction which is being designed as the strategies to have
the achievement of the goals by highly valued the customer by enjoying the stronger level of
long-term growth. There is the specifically the customer which have the culture inclined in the
preceding the most modern and conductive level of shopping the environment.
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Task 2
VRIO analysis
As per the considered to the Tesco framework, the firm resources are considered to be important
aspects which can be been imitates in the quickly manner by allowing if the tempororay level of
benefit. It can be escalating been see as the sustained level of affordable advantages which is the
firm to have the flexibility, market-oriented techniques along with being suffered in long term
relationship as well as innovative studies and ability of the entrepreneur.
The major level of key which is contributing the in the success of the Tesco have the approach
of being the strong level of customer focussed which will have the strictly level of localize
translating the needs and demand of the host country (Vargas-Hernández and Garcia, 2019.). The
company have the always been one step early as compared to the respective competitors such as
Sainsbury and ASDA.
The policy of the company is to have the offering the high level of quality of products to the
respective customer at the lower prices with the strong level of strategic tactics which will b
helpful in enhancing the employee in terms of efficiency , designing the effective level of
delivery systems and avoiding the food wastage and reduction in the carbon emission.
On the other hand , the Tesco have succeeded in the setting up the global level of sourcing the
teams to have the packages of the non-food products from around the world which are
procuring the firm the different developing the countries such as china and India by keeping
the process at the low sage.
On the other hand, there website of companies is another example the strategic capability which
have the allowing of the proper level of sheering the convenience to have comforting the
customer. Moreover, the development of supply chain has been designed in the effective manner
in order to have the establish of connection. The company information technology have been
indemnified as the organizational competencies as the firm have been the first one to have the
introduction of the RFID technology in the respective supply chains as have the implementation
of the lean managements for the purpose of eradicating the waste and improving the quality and
reduction in prices. The supply chain of the company is at more advanced level in order it age
the cost and time effective deceiving to the desired store. The efficiency of the Tesco distribution
system by the further level of encarnalising the by upgrading the in-store processes and the
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ordering systems. The low-cost home delivery system also helps Tesco to maintain the customer
choice as a first priority.
On the other hand, the other prominent level of competency of the Tesco is the strong level of
financial assets and making the proper developing if the market goodwill; which is considerable
to be the good will of company have been increased almost 20 % in the last 1 years. The
company have successes in the introducing he cross docking operation with the collaborative
plan, forecasting and replenishment in in support of the inventory management (Lopes, and et.al.,
2018). This have been the skill fully have ne the enjoyed there the shun need to the stores an
lessen the inventory holding.
The company have the well motivate staff which are always ready to helps the customer with
their queries in the shopping experience. The 24-hour service is open for the late-night travellers
unlike many other grocery stores. The employee of the company is the considered to be the
integral parts or the business of Tesco which have the believing the employee empowerment
and workforce development for tasking the business r the next excel.
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Task 3
Pestle analysis
A pestle analysis is based on the framework or tool that mainly used by marketers to
analyses, monitor the macro environment.
Political Factor: Tesco is operating the business in 12 countries including Europe, Asia. It also
exposed too many political factor that directly affects on the business operation and function
of Tesco. It is mainly include tax rates, impending legislation, unemployment rate, economic
condition of nation where it is operating (Srdjevic, Bajcetic and Srdjevic, 2012). For
Example- Import duty on the good and service which effect on the overall condition of
Tesco.
Economic Factor: The cost of labor is an important that can affects on UK super markets. For
example- It is annual wages bill that amounting GBP 4.5 million. The upward shift has price
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cost of Tesco millions of pounds. There are various factors that affects Tesco in term of
prices, cost and profit. The organization is mainly focused on the increasing borrowing price
in UK (Srdjevic, Bajcetic and Srdjevic, 2012). Therefore, it will increase price and also
decreased its overall profit rate. Tesco will be implementing the diversification strategy for
growth and success so that it increase 27% share in UK marketplace.
Social Factor: Nowadays, customer shopping trend has constantly changing, increasing over
time. People have tough schedule and want same day to deliver the better services. In some
situation, it has preferred to focus on one-stop shopping experience. Tesco is relying on UK
existing customer and also understanding the current issues, problems. In order to resolve by
using an effective strategies. The demand for product as well as service related to consumer
attitude, belief which consider as common issues. According to report, it has identified that
65% UK shopper are becoming loyal where Tesco should avail this opportunity by closing
ties connection with consumers.
Technological Factor: Nowadays, Tesco was facing issues such as poor client experience. The
advancement of technology that brought new opportunities to Tesco and regain customer
trust. Modern technology always support for increasing the overall business performance
and efficiency. Tesco has adapting the opportunity which available retrial techniques. In
some cases, Tesco is mainly focused on RFID technology which increases in-store
experience for client. This technology is automatically counts stock and also removed the
sales.
Environmental Factor: it is an important factor whereas Tesco facing the issue immense pressure
from government agencies. In order to address the environment condition or situation. Tesco
is liable to response to environmental issues and try to implement sustainable development
approach. Therefore, it will maintain the overall business capability and ability. Tesco
encouraging its existing customer to identify suitable product as well as service (Srdjevic,
Bajcetic and Srdjevic, 2012). Tesco drives will not only use fuel saving routes but collect
unwanted plastic bags from client. Furthermore, the organization is used renewable source
and also generate 100% of electricity.
Legal Factor: In context of enterprise legal environment, Tesco must focus on the legal action
and reduce the gender discrimination at workplace. In some situation, staff members are
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extremely irritated, frustrate after low payment. In this way, Tesco has faced the legal
action for accounting the fraud and also misleading investors.
Task 4
Porters five force model
Porters five force model helps in analysing impact of five forces in order to understand
competitive environment in which Tesco operates (Lewis, 2017).
 Bargaining power of the buyers: Threat of this factor is high for Tesco. This is majorly
because there are various substitute products available for the customers that can help in
fulfilling their needs and requirements. Not only this switching cost from one product or
service to another is also lower for customers. Due to this factor threat of bargaining power
of buyers for Tesco increases. Many organizations in fact provide high quality products in
lower cost to the customers because of which switching cost of customers decreases even
more due to which Bargaining power of buyers increases.
 Bargaining power of the suppliers: Threat of this factor is lower because of various kinds of
reasons. One of the main factors that decreases threat of supplier is that there are numerous
of suppliers available in the market who can readily supply required raw materials to Tesco
in lower price (Kung, 2017). This increase switching options for Tesco for switching from
one supplier to another.
 Threat of new entrants: threat of this factor is also lower because of various reasons. One of
the main reasons is that establishment of a new business require huge capital investment,
establishment of brand name so that customers get attracted towards their products and
services. there are already established organizations such as Aldi, Asda, Sainsbury and many
more which makes it difficult for new entrant to establish their business and give a tough
competition to already established organizations like Tesco.
 Threat of substitute products/services: Threat of this factor is moderate. Tesco offers wide
range of products and services to their customers. they focus upon providing both quality and
lower price products to their customers with wide category to choose from. This helps in
decreasing threat of this factor however, increasing competition is making it increasing
availability of products and services for the customers at even lower price (Ahmad, 2019). As
a result, switching cost for customers decreasing and threat of this factor increases. Retail
sector is one of those sectors in which availability of any products and services for customers
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in lower price is no big deal as there are various kinds of large organizations that provide
similar products and services to the customers.
 Rivalry against existing competitors: threat of this factor is high due to various reasons.
Rivalry in this industry in intense for Tesco as there are many other already established
brands that increases competition for Tesco and makes it difficult for them to gain
competitive advantage. In order to compete with powerful competitors like Sainsbury, Aldi
and many more Tesco need to adopt strong advertising and marketing techniques in order to
gain competitive advantage.
Task 5
Balance score card
Tesco is the one of the largest levels of food retailers which is functionally in smooth manner
2700 tires across the globe. The company have the tendency in the providing the more level of
platformer which is looking to make the online shopping to the customer with the helping the
subsidiary (Hernández and Garcia, 2018). On the company gave the enduring of the respective
activities which dent have the harming of the element of environment which is effective
measures and the environment sustainability.
On the other hand, the company is dealing with major level of threats by taking the effective
level of measurement at the respective time of have the overcoming the situation. In addition, the
firm have also succeeded in there utilizing the various opportunities for the betterment of there
company (Kopia and et.al., 2017). The overall analysis has the shown that’s their business
function of Tesco so considered to be fruitful for the customer as well as employee of company.
Balance scorecard approach as the management tools which issued by the companies to have the
gains the complex level of information’s at geared to the top managers about the compressive
view of company. The balanced scorecard allows managers to look at the business from four
main perspectives: Customer perspective, internal perspective, innovation and learning
perspective and financial perspective.
There is the discussion as follows
Financial perspective is helpful in measuring the company start by with implementation and the
execution of the contributing the bottom-line improvements by the calculation of the traditional
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return-based efficiency and effectiveness metrics. The company have reduction in the direct
expenses by introducing the self-services.
Hence as the result the company is being successful in the return of capitals employees about
15% while the camions and return in the capital employed by the increase of 9% (Vu, 2016). The
firm have succeeded there relative level of difference 88% which have the sign fines as there
firm is controlling the cost as compared to the Sainsbury by incursion the net profit.
Customer perspective
The manger of the firm have their need to make proper identification of the customer market
segments in order to have compete there meagre of business performances and there respective
target market. However there the firm have found to nit easier as compared to coasters to
identify the vale of customer. The major level of key which is contributing the in the success of
the Tesco have the approach of being the strong level of customer focussed which will have the
strictly level of localize translating the needs and demand of the host country. The company have
the always been one step early as compared to the respective competitors such as Sainsbury and
ASDA.
Internal Perspective
In the company have the major level of responsibility to have the proper level of focus of the
internal process in order to have the achievement of customer and financial objective. The
company is applying major level of attention of there latest trends to be developed tree new
products (Lakshmi and Rao, 2017). The company have he use if payback methods to have
analyse the performance of new products an sale of new one.
Innovation and Learning Perspective
The employee have the company have the belonging form there different backgrounds and the
firm is providing the opportunity to have the equally level of growth opportunities . But the fir
has the fairly to have the proper level of measurement as it is complex to regular maintain and
measure their performance o staff (Alam, and Raut-Roy, 2019). The firm is offering the staff the
apposite the job strange which have the inclusion of the shadowing, coaching and mentoring. As
the result, this have only the partial level of resulting as the more level if experienced worker
have reduction in the work load.
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CONCLUSION
From the above file it can be stated as Tesco have been renowned as British multinational
groceries and general merchandise retailer need to have the strategic planning in the market
environment to aim more level of competitive advantage against the competitors. Strategic
manager has the base of the clear level of understanding of the company vision, mission and
objective which have the major level of emphasis on the company values to have the guiding of
the firm descriptive action in permanent manner (Fatricia, 2017). The company have the clear
level of statements which is parcel of success to have the potentiality for contributing the
continuous level in the corporation. Tesco is liable to response to environmental issues and try to
implement sustainable development approach. In order to compete with powerful competitors
like Sainsbury, Aldi and many more Tesco need to adopt strong advertising and marketing
techniques in order to gain competitive advantage. The company have the always been one step
early as compared to the respective competitors such as Sainsbury and ASDA.
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REFERENCES
Books and Journals
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Ahmad, S.M., 2019. Market Research: Demand & Business Models for an Online Grocery
Shopping service in Porvoo.
Srdjevic, Z., Bajcetic, R. and Srdjevic, B., 2012. Identifying the criteria set for multicriteria
decision making based on SWOT/PESTLE analysis: a case study of reconstructing a
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Lisdorf, A., 2020. Build the data refinery: Because cities run on data. In Demystifying Smart
Cities (pp. 175-186). Apress, Berkeley, CA.
Young, B.M., 2018. Definitions and Visions of Consumption. In Consumer Psychology (pp. 1-
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Orgad, S. and Meng, B., 2017. The maternal in the city: Outdoor advertising representations in
Shanghai and London. Communication, Culture & Critique, 10(3), pp.460-478.
Vargas-Hernández, J.G. and Garcia, F.C., 2019. The Link between a Firm´ s Internal
Characteristics and Performance: GPTW & VRIO Dimension Analysis. REBRAE,
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Lopes, J., and et.al., 2018. Does regional VRIO model help policy-makers to assess the resources
of a region? A stakeholder perception approach. Land Use Policy, 79, pp.659-670.
Hernández, J.G.V. and Garcia, F.C., 2018. The link between a firm´ s internal characteristics and
performance: GPTW & VRIO dimension analysis. Revista de Administração IMED,
8(2), pp.222-235.
Vu, M., 2016. IS THE BALANCED SCORECARD USEFUL IN A COMPETITIVE
INDUSTRY?: Using Tesco PLC as a case study in the UK grocery retail industry.
Lakshmi, S. and Rao, S., 2017. Implementation and Practicalities of Balance Scorecard: A Case
Study. Asian Journal of Applied Science and Technology (AJAST) Volume, 1, pp.61-
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Fatricia, R.S., 2017. STRATEGIC ANALYSIS OF TESCO SUPERMARKET. Jurnal
Manajemen Terapan dan Keuangan, 6(02), pp.69-86.
Alam, S. and Raut-Roy, U., 2019. Evaluating the Effectiveness of Reward Strategy at Tesco:
Evidence from Selected Stores in UK. Indian Journal of Industrial Relations, 55(1).
Kopia, J and et.al., 2017. Performance measurement of management system standards using the
balanced scorecard. Amfiteatru Economic, 19(11), pp.981-1002.
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