Strategic Management of Tesco: Analysis of External Environment and Mission/Vision Statement

Strategic Management

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................5
TASK 3............................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic management includes the formulation of strategies and implementation of objectives
and goals of a business. The strategic management involves deciding the aims and objective of
business by analysing the internal and external environment of organisation. After deciding the
aims and objective, the business decided the tactics and strategies through which it can achieve
that goal. Strategic management is considered as a major factor in planning. A business uses
various strategies plans and methods such like SWOT, PESTEL, and VRIO and so on to make
their strategies more strong and appropriate. For reference purpose this report has taken an
example of a company, Tesco (Ward, 2012). Tesco is a British multinational company which
deals in groceries and general merchandise. It is a retail company which was established in the
year 1919 by Jack Cohen. Tesco has a total of 6800 stores at different locations and serves the
countries like United Kingdom, Ireland, India, Thailand, Malaysia, and Poland and so on.
This report talks about the external environment which affects the activities and
operations of the company, the missions and visions of Tesco. The report also covers
strategic competencies and strategies which are used by the company which has lead him to
get this successful.
TASK 1
Tesco is one of the biggest supermarket chain of UK which has a market share of more than
27%. It is present in many countries all over the world because of which it has a very dynamic
macro business environment. PESTLE framework can be used effectively to understand better
the external environment of Tesco Plc Ltd.
PESTLE analysis of Tesco Plc Ltd:
PESTLE analysis is a tool which is used to evaluate and forecast the impact of macro-
environmental factors that are relevant for an organisation. This tool is very useful for pre-
determining any opportunities or threats. PESTLE is an acronym for Political, Economic, Social,
Technological, Legal and Environmental factors. Each factor and its impact on the organisation
is being analysed below:
Political factors affecting Tesco Plc Ltd:
These include factors such as political stability or instability, government policy, trade
policy, corruption etcetera. Global political environment creates a massive impact on the
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operations of Tesco since the company operates internationally (Williams, 2012). Increasing free
trade policy between the countries that enables an organisation to expand its business beyond the
national boundaries is a huge opportunity for Tesco plc ltd to increase its presence in the
international markets and generate more revenue at a global scale. Brexit has had a huge impact
on the supermarkets of the UK, big chains like Tesco are being forced to procure more and more
materials from the suppliers within the country at a higher price generally which has led to an
increase in the cost of the product. This can prove to be a huge threat for Tesco unless the
management comes up with some strategy.
Economic factors affecting Tesco Plc Ltd:
Economic factors include elements such as economic growth rate, tax rate, currency
exchange rates, disposable income of people, inflation etcetera which have a direct impact on the
effective demand in the economy (Vu, 2016). Income and the purchasing power of the
consumers all over UK has declined significantly due to many factors such as inflation and low-
pay rates which came into play as a consequence of Brexit. Tesco plc ltd. is highly dependent on
the markets within UK for the most part of its revenue. Company has a market share of 27% in
the country. The management of the company needs to plan strategically to empower and
increase its operations in other emerging markets of developing countries to decrease its reliance
on the domestic markets.
Social factors affecting Tesco Plc Ltd:
Social factors include demographic features like population growth, age-distribution,
lifestyle, health concerns etcetera. Tesco has started offering a wide range of non-food items as
well due to the recent trends of ‘bulk-shopping’ and ‘one-stop shopping’ in UK. Type of
products and services demanded by the consumers is highly influenced by the values, beliefs and
attitude of the population (Srdjevic, Bajcetic and Srdjevic, 2012). Consumers these days are
becoming more and more aware of health issues and their concern for safety is rapidly increasing
which has increased the demand of organic food items. Tesco has recently launched a new range
of organic food products keeping in mind the changing trends of consumption.
Technological factors affecting Tesco Plc Ltd:
Technological factors refer to the advancements and innovations in the field of
technology that affect the operations of the business or the industry as a whole. The recent
technological innovations have fostered the growth of a new sales channel of online sales. This
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