Strategic Analysis of Tesco Plc

Running head: STRATEGIC ANALYSIS OF TESCO PLC 1
Strategic Analysis of Tesco Plc
Student name
Student number
Course title
Submission Date

STRATEGIC ANALYSIS OF TESCO PLC 2
Table of Contents
Introduction......................................................................................................................................3
Brief overview of the company....................................................................................................3
Strategic analysis of Tesco plc........................................................................................................5
Current strategy............................................................................................................................5
Innovation strategy adopted by Tesco plc..................................................................................10
Risk management strategies.......................................................................................................12
Recommendation...........................................................................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

STRATEGIC ANALYSIS OF TESCO PLC 3
Introduction
Tesco plc is a UK based retail company has been successful in the UK market and the
world in general and this can be attributed to its sound strategic management, which it has
effectively aligned with its business policies. Tesco, which is a major player in the retail industry
as stipulated in its brief overview, intends to increase its sales by over 20% through expansion of
its global business coverage and hence, the best strategies that it can adopt are increasing value
addition and loyalty programs, managing risks, and expanding further especially in risky
emerging markets.
The organization has managed to internationalize effectively and this can be attributed to
its competition strategy, risk management strategy, and innovation strategy, all of which have
been integrated in its main goal of adding value to the customers so as to gain their loyalty in
long term. Tesco has positive prospects for growth in the retail industry and thus, the paper will
analyze the strategies and their theoretic underpinning and offer recommendations in which the
organization will effectively maintain its leadership in UK and global market while at the same
time enhancing the values for customers.
Brief overview of the company
Tesco is a British multinational retailer that deals with general merchandize and grocery.
In terms of profit, it is the third largest retailer in the world. The company has stores in 12
nations across Europe and Asia. The company has a market share of 30% in the United
Kingdom. Basically, the organization that was established in 1919, the company has been
growing through mergers, formation of strategic partnership and formation of its wholly owned
subsidiary (Tesco, 2007).

STRATEGIC ANALYSIS OF TESCO PLC 4
Environmental analysis
This analysis is based on SWOT that can be used to analyze both the internal and external
factors that influence the strategic decisions made by the organization. The internal environment
is determined by the strength and weaknesses of the business while threats and opportunities
determine the external environment.
Strength
 Tesco has a strong brand name and was among the top 100 most valued brands.
 Has developed innovative business ideas that include establishing Tesco metro
and Tesco express in neighborhood to increase convenience to customers.
 Advanced online retail platform.
 The advantage of economies of scale.
 Immense product diversification.
Weaknesses
 Limited global diversification as the business is highly concentrated in the United
Kingdom despite being a multinational organization.
 High prices for products
 Lack of experience in some markets that it intends to enter
 Opportunities
 Increased internet penetration offers opportunity for increasing online business
globally.
 Expansion through mergers and acquisition especially in emerging economies.
 Expanding global economy after the devastating 2010 economic recession and
hence more consumers can afford to purchase the products.