Strategic Management: Tesco's Growth Strategies and Competitive Advantage

STRATEGIC
MANAGEMENT

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Porter five force model................................................................................................................3
Pestle Analysis.............................................................................................................................5
TASK 2............................................................................................................................................7
SWOT Analysis...........................................................................................................................7
VRIO Analysis.............................................................................................................................9
Rationale......................................................................................................................................9
TASK 3..........................................................................................................................................11
Strategic Advantage...................................................................................................................11
Porter’s Generic Model..............................................................................................................12
Horizontal and Vertical Integration...........................................................................................13
Bowman’s Clock Strategy.........................................................................................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
It is very essential to determine all the factors which help business to increase its
efficiency to develop and achieve its objectives. Strategic management is the framework which
helps business organization to reduce threats and increase opportunities to compete in market
and increase their potential effectively. This report provides detailed study on strategies of Tesco
which helps the company to grow and manage all of its work effectively. Report also provides
effective understanding about external business environment analysis to determine competitive
advantage effectively. this also helps the company to develop effective strategies to grow and
expand in market and gain higher profit margins effectively.
TASK 1
Porter five force model
Porter five force refers as a strategic model which is used to analyse existing competition.
In other word, five competitors forces which gives shape to each industry and supports to
identify weaknesses and strength and weaknesses of organization. It is not only used to identify
structure of organization but also determine corporate strategy (Varelas and Georgopoulos,
2017). It encompasses five competitors forces such as competition is the industry, potential of
new entrants into industry, power of suppliers, power of customers and threats of substitutes. To
analyse external environment of Tesco chooses porters five model which is described below:
Bargaining power of suppliers (Low)
Tesco is a multinational company which retails groceries to customer across the world. it
has low bargaining power due to high presence of suppliers in the retail industry. So, non-
compatible suppliers can easily replace by other suppliers which is golden opportunity for
organization because they can get products or goods from suppliers at low costs for enhancing
their profit margin.
Bargaining power of customers (High)

Tesco is supermarket retail industry which has wide line of product portfolio and offer
goods and services in varieties such as financial services, mobile services, groceries, home
accessories, clothing and other items. As similar product offers by other companies i.e.
Sainsbury, Aldi, Morrison and Lidl. So, these companies are major competitors of Tesco because
they offer similar products on lowest cost. Due to high availability of supermarkets enhance
power of bargaining of customers (Vargas-Hernández and Garcia., 2019). To enhance selling
infrastructure of products offers products or services at different cost that becomes easy for
customers to switch Tesco to other competitors when they retail products at high cost. Highly
availability of similar product automatically decreases charge of products which enhances client
power to elect between competitors who retails products or goods in same price range.
Threat of substitutes (High)
Currently, Threats of substitutes is too high in grocery market for both food-item and
non-food item. Tesco can get face such kind threats which can come from other retailers in other
supermarkets. These markets can retail not only food items to customers but also non-food items
like clothing, financial services, home accessories and electronics. Apart from this, competitors
can create strong connection with customers by including non-food retailers and department
stores along with both scale and distribution for competing with Tesco. Competitive companies
are BHS, Primark, House of Fraser and Debenhams who can offer different item except groceries
and non-groceries item to compete with Tesco.
Competitive of rivalry (High)
The big four companies Morrison, Sainsbury and Asda are the supermarket companies
which gives intense competition to Tesco. Competition of these rivalries are too high because
they offer similar products i.e. groceries, clothing, electronics, furniture’s and highly relevant to
cost that automatically makes products to switch cost low. Where customer can easily shift
Tesco to other who offers product at lower cost along with good quality. It directly gives impact
sales infrastructure of Tesco. Due to similar products creates cut throat price war among big four
companies in term of products advertisement and product innovation. Currently Tesco faces
major competition from German discount Aldi and Lidl who offers high discounted product
along with good quality up to 40% which directly gives impact on Tesco’s market share.