Strategic Management Plan for Tesco

This document is a strategic management plan for Tesco, a British retailer. It includes analysis of the macro environment, internal environment, SWOT analysis, and Porter's Five Forces model. The plan outlines Tesco's strategies for achieving competitive advantage and market position.

Strategic Management
Plan
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK1.............................................................................................................................................3
P1 Through appropriate framework effectively analysis the macro environment in
organisation............................................................................................................................3
M1 Effectively analysis the macro environment & strategic management decisions............5
TASK 2............................................................................................................................................6
P2 Analysis the internal environment and capabilities of company.......................................6
M2. Assess the internal environment by analysing the internal capabilities of company......7
Task 3...............................................................................................................................................7
P3 Assess porter five forces model for analysing the competitive forces for business..........7
M3 Describe suitable theory for improving the competitive edge and market position........9
TASK 4............................................................................................................................................9
P4 Assess various theories and models for strategic planning for chosen organisation........9
M4. Develop a strategic management plan for the organisation..........................................10
D1 Critically assess the information.....................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
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INTRODUCTION
Strategic management plan refers to a document which is used by an organisation for better
communicate with their organisation related to organisation goal, set priorities, focus energy,
strength and also assist in ensure that their all employees & stakeholders are efficiently working
towards the achievement of common goal (Aula, and Mantere, 2020). It will provide a clear
direction to organisation and include various strategies that will assist in the success of company.
Tesco Company is choose for this report. It is a British retailer company headquarter is in UK. It
was developed by John Cohen in 1919. It will expand its market area and profitability through
retailing of books, furniture, toys, home decoration and also provide various services such as
internet & financial services. This report will include PESTLE and SWOT for better analysing
the internal and external factors. Other than this it will include porters five forces model for
analysing the competitor’s factors faced by the industry. This report will include various theories
such as porter’s generic theory and a strategic management plan for organisation.
MAIN BODY
TASK1
P1 Through appropriate framework effectively analysis the macro environment in organisation.
Macro environment- It refers to the major uncontrollable external forces such as
political, economic, demographical, and cultural and so on (Gheorghe, 2019). All these factors
will influence the growth and decision making of an organisation. A business have no control
over these factors and for better analysing these factors company will require to adopt an
effective strategy. In context of Tesco, it was analysis that it will operate their business activities
globally and for making effective strategy company will have clear vision, mission and
objective. In context of selected company these are discussed below:
Mission- In context of selected company, their mission is to create higher values for their
target customers for achieving the lifetime loyalty of their customers. .
Vision- Selected company vision is to enhance the scope of their business and make a
long term sustainable business for their customers into the large geographical market.
Objective-
 Increase the sales by 1.36% by increasing the number of market share & number of
customers.
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 Create an high value brand
 To be strong in non-food business through international expansion.
In relevance of Tesco, various external factors which influence the growth of their business are
mention below:
PESTLE Analysis-
It is a tool that will be used by an organisation or marketer for analysing and monitoring
the macro environmental factors which will directly impact the growth of business. This
framework will include six important external factors over which organisation has no control. In
relevance of chosen company various macro environment factors are mention below:
Political factor- It is a macro environmental factor which define the government
intervenes in the economy. This factor will include various policies of government, political
stability or instability in the oversea market. Other than this it will include the trade and tax
policies and so on. It was analysis that any negative change in it will directly affect the
operations of business. In context of selected company, they will operate their business activities
in many countries but their major market shares are in UK. Stable political condition of UK will
help company to achieve higher growth (Kowalski, and Conway, 2019). In relevance of Tesco, it
was analysis that UK government has adopt a fat tax with the objective of control obesity and
limits the medical problems associated with the product. This measure will adversely influence
the sales and revenue of business but Tesco will launch a brand new healthy food range which
will reduce the effect of this factor.
Economical factor- Another important external environmental factor is related to the
economic factor which will influence the business operations and profitability. This factor will
include the economic growth rate, and disposable income of customers etc. In relavence of
selected company, it was analysis that its headquarter is in UK and customers of UK will spend
more money on buying goods as because the UK has a growing economic condition which help
selected company in achieving higher return on their investment. The UK economy is showing a
positive signs of recovery from the financial crises in other countries. In context of Tesco, higher
economic growth rate was forecasted and the gross domestic product was estimated to be 2.7%
higher than previous year.
Social factor- This factor is also known as socio-cultural factor. It is a macro
environment factor that include shred beliefs & attitude of the population. This factor will
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include population growth rate, health consciousness, and career attitude and so on. In case of
Relevance Company, they will effectively analysis the needs and requirement of their customers
and then provide them appropriate product as per their requirement. Company analysis that now
a day’s people of UK are more conscious towards their health and for successfully catering the
requirement selected company will introduce new healthy products which help them in targeting
a unique market and expand their business. It was analysis that due to COVIDE-19 people are
not prefer to go to physical stores for buying the products. But the adoption of online shopping
by Tesco for grocery products will assist them to face this pandemic effectively.
Technological factor- This external will define that how fast the technology landscape
change and how much it will impact the organisation. Innovation in technology will provide
opportunity as well as it will affect business growth. This factor will include automation, amount
of technology awareness which possess market. In context of selected company, they will
already adopt new technology and provide various innovative tools which will increase the
satisfaction level of company. Tesco will use a self-check-out technology under which their
customers will not require any store assistant they will pay the bill with their own. This strategy
will help them in reducing their cost of human resource and also help in achieving competitive
advantage (Lee, 2021). Technology is consider as an opportunity for Tesco as because its new
and innovative technology will assist them in achieving the competitive advantage in market.
Legal factor- This factor of macro environment is related to the various legislation of
government. This will include health & safety, equal opportunity, advertisement standards,
consumer rights and so on. In context of Tesco, their management will formulate their strategies
under these laws and effectively follow all legislation of government. It was analysis that any
change in the policies of government will require to also implement new policies which will
require a lot of time & money of organisation. It was analysis that there are numbers of laws
which are govern by the government that may affect Tesco as because the organisation markets a
wide number of products and services.
Environmental factor-The last important external factor will influence the growth and
operations of business. It was analysis that the importance of these factors will increase because
of increase in the scarcity of raw material, pollution targets, and sustainable company. This
factor will include the carbon footprints which are set by the government, weather condition and
so on. In context of selected company, their management will analysis that now days more &
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more customers are demanding that the products they will purchase re sourced ethically or from
sustainable source. Tesco will effectively fulfil their CSR activities and adopt various strategies
which help them in reducing the carbon footprints as per the government guidelines. This will
assist them in effectively managing a good brand image in the market. In context of Tesco, they
are also adopt various effective strategies which will reduce the carbon footprints for company.
This will also create a positive image of company.
M1 Effectively analysis the macro environment & strategic management decisions.
From the above discussion on the various macro factors it was analysis that legal factor
will influence the business most. As any change in this factor will directly influence the policies
and strategies of business. Other than this it was analysis that company will achieve various
opportunities as because of their remaining other factor but company will deal in an global
market which is uncertain. Company will enjoy the benefit of good economic and political
condition of UK but any unfavourable change in that factor will influence the growth and
profitability of company (Venturini, and et. al. 2019).
TASK 2
P2 Analysis the internal environment and capabilities of company.
SWOT Analysis
It is a tool which is used by the marketer or organisation for analysing the competitive
position of company in the market which help company to achieve competitive advantage. It will
also assist in effectively developing an appropriate strategic planning (Lee and Yang, 2017). This
framework will assist in better analysing the internal and external factors & also the current and
future potential of company. This framework will include four important factors which are
strength, weakness, opportunity and threats. Strength refers to what an organisation will have
excel from its competitors which help them in achieving competitive advantage. Weakness will
define those points which stop an organisation to perform with its full efficiency. While
opportunity will include all those favourable external factors which help company to achieve
competitive advantage and higher growth in market. Last one is threats which include those
factors that have the potential to damage an organisation. In context of Tesco, their SWOT
analyses are discussed below:
Strength Weakness
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 Tesco will have a sufficient cash
reserve and a wide property which
provide financial position to company
and help them to wealth all type of
economic cycle.
 Selected company has various
supermarkets and have a strong
financial position in market.
 Tesco will gain the benefit of advance
technology as it will reduce their cost
of production & enhance experience of
their customers.
 It was analysis that during the
pandemic Tesco is registered a 10.5%
growth in the last three months. This
growth is come from the company
online stores.
 Competitive pressures will led to price
wars which will affect the profitability
of company.
 It was analysis that retailers to U.K will
mostly depend on the economic
condition but any change in it will
directly influence company growth.
 Tesco will use various strategies for
quality control and also take various
measures, but a disturbing complaints
from a customers will affect the image
of company.
Opportunity Threats
 It was analysis that growth of online
stores will provide various opportunity
to Tesco to increase their sales of
products at the time of COVIDE-19.
 Higher employment rate is an
opportunity for Tesco s they will get
skilled labour at low cost which will
help them in enhancing their revenue.
 It was analysis that AI and machine
learning to predict and deliver street
level requirements could be a game
changer for selected company.
 Economic recession and credit crunches
are threats for company as it will
reduce the market share and
profitability of company.
 It was analysis that the UK and EU
relations are not as good as because of
Brexit, which will affect the trade of
UK businesses.
 Increasing price of raw material will
reduce the power of company (Vera
Meléndez and Rodríguez Niño, 2020).
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M2. Assess the internal environment by analysing the internal capabilities of company.
From the above analysis it is determined that to examine the internal surroundings of the
chosen company the SWOT analysis is taken into account, through this it is analysed that
company strong brand image in the market and is one of the largest and most profitable retail
company which leads company towards enhancing their competitiveness in the market. however
it is also analysed that increasing competition and changing taste and preferences creates threat
for the company and unavailability of the retailers all these work as the weakness of the company
( Evans and Tse, 2018). In order to grab opportunity and increase their profitability company can
expand into the online market and also in the private label market. The resources and capabilities
will play and fundamental role in leading business towards growth and development, the
capabilities will enable company to expand into the new market, both will help company to
enhance their productivity and profitability.
Task 3
P3 Assess porter five forces model for analysing the competitive forces for business.
To analyse the competitive force for the chosen company the porter five force model is
taken into consideration as discussed below:
Porter five force model: It is one of the important strategic tools used by the company to
analyse the competitive of the business organisation effectively (Porters 5 Forces Definition,
2021). The porter five force model was given by the Michael E. Porter in 1980, in order to
understand and analyse the competition, profitability of an particular market or the industry, it
includes mainly five forces as discussed below:
Competition in the industry(Strong Force): it includes the number of competitors
present in the market, if the number of competitors are more in the market it will influence the
performance of the company. The number of competitors in the retail industry is generally high.
In context to the Tesco, company faces a lot of competition from the number of competitors
present in the market such as Sainsbury, Asda and so on (Chul Park and Lee, 2018).
Potential of new entrants (Weak force): If the new entrant is coming with innovative and
creative ideas into the market then it will influence the existing companies, but if there are strong
barriers to the entry of new company this will lead to restricting the entry of new entrants. The
threat of new entrant in the retail industry is low as because of the high level of competition
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available. In context to the Tesco, it is analysed that this force of this factor will be low as
competing with well know brands will be tough for the new entrants.
Bargaining power of suppliers (moderate force): If the number of suppliers are less in
the industry this will allow them to bargain more eventually, in context to retail industry the
bargaining power of the supplier is less as there are more number of options present to the
business organisation to chose. In case of Tesco, the suppliers has to follow the standards set by
the company, so in such case the bargaining power of the supplier becomes low.
Bargaining power of buyers (strong force): If the number of buyers present in the
industry are less then the bargaining power they will held will be much higher. As if the buyer as
less then company has to depend on them only. The bargaining power of the buyer is high in
case of retail industry as there are number of options available and buyers can easily shift from
one company to another. In context to Tesco, company has loyal buyers but still because of the
high competition the bargaining power of buyers is more (Yeon and Grant, 2018).
Threat of substitute products (Moderate force) : If there is availability of same product as
same of the company’s product then it will lead to creating barrier for the main company and can
effect profitability of the company. In retail industry the threat of substitute in the food line is
low. In context to Tesco, company needs to offer unique and differentiated products to deal with
this factor effectively.
M3 Describe suitable theory for improving the competitive edge and market position
In order enhance the competitive edge and market position, it is analysed that company can use
innovation and differentiation strategy in the marketplace, this strategy will allow company to
bring innovative and unique product and services in the market and will help the company to be
innovative, being innovative will allow company to gain competitive advantage in the market
and enhance their productivity and profitability effectively (Porter's 5 Forces, 2020). It will also
allow Tesco to grow and develop themselves. In addition to this the use of differentiations
strategy will help company to offer unique and differentiated product to their targeted customers
leading to attract large number of customers and satisfying their needs and maximising profit.
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TASK 4
P4 Assess various theories and models for strategic planning for chosen organisation.
In order to continue to grow and develop themselves in the competitive environment it is
very essential for the business organisation to effectively evaluate and implement essential
strategic plan and understand their position in the marketplace. In context to they Tesco, in order
to analyse their position and enhance their effectiveness the Porter’s generic strategy is taken into
consideration as discussed below:
Porter’s Generic strategy: It is one of the important strategic technique taken into consideration
by the company to evaluate effectiveness of the business in the marketplace. This strategy was
given by the Michael Porter in 1985 mainly including 3 factor using which will help business
organisation to gain competitive advantage in the marketplace (What Is Strategic Planning?
2020). In context to the chosen organisation porter’s generic strategy is discussed below:
Cost leadership strategy: The first factor of this analysis is the cost leadership strategy,
under this strategy in order to gain competitive advantage in the marketplace the company will
offer their product and services at relatively lower prices to attract large number of customers. In
context to the Tesco, offering their product and services at the lower prices will help company to
attract large number of customers and increasing their sale, this can be done through using
advance technology which helps in lowering the production cost and enhancing the productivity
(Kouamé and Langley, 2018).
Differentiations: The another strategy which can help company to achieve competitive
advantage in the market is the differentiations strategy, under this unique and different products
are offered to the customers in order to satisfy their needs. The use of differentiations strategy
helps in attracting large number of customers. In context to the chosen company, continuous
research of the marketplace needs to be conducted by the company in order to be more innovate
and understand the taste and preference of consumers and accordingly should provide them
unique products.
Focus strategy: The last strategy is the focus strategy, under this in order to achieve the
competitive advantage in the marketplace the business required to offer unique and differentiated
product to the particular target audience effectively, this will allow the chosen company to focus
on their particular target segment effectively and gain competitiveness and enhance their
productivity and profitability.
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M4. Develop a strategic management plan for the organisation.
Executive summary: Tesco is planning to enhance higher level of competitiveness in the
marketplace. It is analysed that due to the availability of high competition in the marketplace
company will gain competitive advantage through their capabilities and available strength.
Background Statement: Tesco is one of the well established British retail company, founded in
the 1919 by Jack Cohen offering wide range of products world widely. Having strong brand
image and loyal customers.
Market analysis: in order to grow and develop it is very essential for the business organisation
to analyse their market effectively. In context to the chosen company, to analyse the market the
Ansoff matrix is taken into consideration as discussed below:
Ansoff matrix: The ansoff matrix is an important technique used by the business organisation in
order to analyse the effective and essential strategy that can be used by the company to achieve
desired growth and success. It includes mainly four strategies which can be used by the business
to grow themselves. The four strategies in context to the company are discussed below:
Market penetration: The first strategy is the market penetration strategy, under this
strategy the business organisation mainly focus on selling the existing products and services into
the existing market in order to increase their sale and profitability, this can be mainly used
through increasing the promotion of existing product and services (Kumar, 2018).
Product development: Another strategy is the product development, under the product
development strategy the company focus on offering new and unique products into the already
existing market in order to attract large number of customers. This can be done through
analysing the market and understanding the needs of customers and accordingly satisfying them.
Market development: The market development strategy allows company to focus on
entering new market or expanding their market size with the already existing product, this allows
business to expand their market size effectively and enhancing their profitability and
productivity. This can be done through entering into the international market with the well
established product or services (Shanmuganathan, 2018).
Diversification: The last strategy is the diversification strategy, under this business enter
new market with new and innovative product, this is an risky strategy and with new product and
into the new market company can face high level of competition but it can also be rewarding
strategy for the company.
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From the it is analysed that in order to gain competitiveness and increase their
effectiveness in the marketplace company can use market development strategy, this strategy
will allow business to enter into the new market with their already well established product this
will helps company to gain competitive advantage into the new market and increase their market
size effectively.
Objective: The main objective of the Tesco is to increase their product range and also to
enhance their sale by 20% in the next one year.
Monitoring & Controlling
For the successful implementation of the strategic plan it is very essential for the business
organisation to continuously monitor it. Company will require implementing essential tool in
order to continuously monitor their strategic plan (Strategic Management: Definition, Purpose
and Example, 2021). In context to the chosen company the SAF model will be used to evaluate
their strategic plan effectively.
D1 Critically assess the information.
After analysing and evaluating it is interpreted that in case of environmental analysis both
any change in the political and legal factors directly influence the functioning and profitability of
the business and will also have direct impact on the growth of the business. in addition to this
increasing competition in the market and continuous changing taste and preferences of the
consumers will create threat for the company. The market differentiations strategy is used by the
company to gain competitiveness and effectiveness in the market. The quantitative objective of
the company is to increase their sale by 20% in the next one year and increase their sustainability
through their strength and capabilities.
CONCLUSION
From the above report it is concluded that strategic management helps business
organisation to effectively plan their strategy which helps them to grow and develop themselves
effectively. It helps business organisation to evaluate various factors which influence the growth
and profitability of the company. This report highlights detailed analysis of internal and external
factors influencing business using PESTEL and SWOT analysis and also the competitive
analysis of the business is also highlighted in this report.
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