Analyzing Business Strategy and Macro Environment for Tesco

This report analyzes the influence of macro environment on Tesco's business strategies, evaluates its capabilities and internal environment, and applies Porter's five forces to evaluate the competitive forces in the market sector. It also applies different models, theories, and concepts to interpret strategic planning for Tesco.

BUSINESS
STRATEGY

INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Apply different frameworks to analyse the influence of macro environment on a company
and their business strategies.........................................................................................................3
TASK 2............................................................................................................................................6
P2 Evaluate the capabilities and internal environment of a company by using appropriate
frameworks..................................................................................................................................6
TASK 3............................................................................................................................................8
P3 Implement porter's five forces to evaluate competitive forces of a market sector for a firm.8
TASK 4............................................................................................................................................9
P4 Apply different models, theories and concepts to interpret strategic planning for a company
.....................................................................................................................................................9
M4 : Strategic management plan that includes strategic priorities and objective.....................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy considered as those decisions which is based over strategies and
decision that makes benefits to be attained in relation to goals and objectives that has been set by
an organization. Further it is referred as master plan implemented by an individual in order to
attain competitive position within market. The organization taken within the report is Tesco plc
which an UK base retail organization and manufactures day to day products and home used
products. Further the report is based upon micro organization within business strategies within an
organization. Also analysis is been done upon micro environment factors and Porter’s five force
is covered for making evaluation. In the end various methods, models and theories in relation to
make strategic decision developed within an organization.
TASK 1
P1 Apply different frameworks to analyse the influence of macro environment on a
company and their business strategies
Vision: The vision of Tesco is to develop global standards in relation to both national and
international organization over measuring performance.
Mission: Tesco have mission for creating inspirational quality that makes accessibility
attained. It helps organization over increasing customer base that makes high profit achieved.
Objective: In relation over Tesco objective of an organization is based upon attaining
leadership within retail sector. This makes Tesco compete with its rivals in more effective
manner( Hernández, Yañez-Araque and Moreno-García, 2020).
Strategy means those actions taken by mangers of an organization through which
organizational goals is been achieved in effective manner. This helps in formulating effective
business strategy that performs over gaining of high advantage in comparison to its rivals.
Further it increases revenue and sales with the help of these strategies for an organization like
Tesco.
Different strategic planning techniques

 Benchmarking: This is been defined upon comparing those metrics within entire
industry upon operating an organization. This make Tesco attain positive position within
market through comparing its performance (Karadag, 2017).
 Business analysis: By analysing the business and its activities in an appropriate way,
TESCO will acknowledge their strengths or weaknesses by efficient means so that only
right and strategic decisions will be taken by TESCO to attain expected outcomes.
Various analytical framework to acknowledge macro environment
Stakeholder analysis
A stakeholder analysis is the process for making identification over impacting
performance before starting a project. It is helpful for Tesco in grouping its shareholders as per
interest level within the project. Further analysis has been explained as follows:
Step 1: Determination in relation to stakeholders is done with the help of preparing list of
potential stakeholders. In case of TESCO , potential stakeholders will be sales department,
executive staff, marketing executives, customers, employees, suppliers, public, government,
shareholders etc.
Step 2: As the important stakeholders is been listed managers of an organization requires
over prioritizing it under various categories which are as follows:
 High power, high interest: They are most important for Tesco and helps organization
perform business activities smooth and better manner.
 High power, low interest: These stakeholders mainly affect working and does not have
high rate of interest within Tesco’s project.
 Low power, high interest: Such stakeholders provide information about projects in
relation to Tesco.
 Low power, low interest: They have no interest in activities of Tesco and does not
possess power.
Step 3: In this step, manager of TESCO communicates stakeholders according to their
priority in order to complete the project .
PESTLE analysis
PESTLE framework is that kind of tool used by an organization to analysis external
factors affecting business. Further PESTEL upon Tesco is done as follows:

 Political factors: These factors are based upon tariff rate and tax policies which makes
stability over central government. Policies related to tax within UK is beneficial for
Tesco as tax rate is less.
 Economic factors: Such factors is based upon inflation rate, unemployment and
spending done by people in UK. Therefore growth rate within UK is high. Due to
increased inflation rate Tesco faced negative impact on its sales.
 Social factors: Various social aspect exists that makes attitude, opinion of people living
in place. UK is open minded society uses advanced and modern ways in their lifestyle.
Tesco is required to analyse these trends for high revenue.
 Technological factors: UK is a technologically superior and has advance machinery
within its industries. Tesco should upgrade its technology for increasing its delivery
standards which helps customer base to be formed with loyal customers.
 Legal factors: In this micro factor is involved with legal rules and regulations that is
been formed within in order to make welfare of society done. Tesco is required to follow
such rules in order to avoid any legal issues in future (Kato and Charoenrat, 2018).
 Environmental factors: These factors deal with environment and ecology. Also takes
initiative in protecting environment. Tesco with the help of this attains positive image
which impacts sales and profit within an organization.
SWOT framework
SWOT analysis is that kind of analysis which is based upon analysing of strength and
weaknesses in appropriate manner. Also it focuses over threats and opportunities which impacts
business in appropriate manner. In context with TESCO , SWOT has been done as follows:
Strengths Weaknesses
 Brand reorganization of Tesco is very
high because of quality offered by them
over products and services.
 Organization has wider product like
groceries and daily use item like soap,
detergents etc. This give customer
wider choice over products.
 Population of UK and outer region is of
opinion that Tesco is not trendy for
both adults and youth in relation to its
clothes stock.
 Company use old methods for
production of products that makes high
comparison over rivals within an
organization.

Opportunities Threats
 Company is required to make its
expansion in Asian countries due to
potential customers (Kuma, Samalia
and Verma, 2017).
 Company invest within marketing
activities so as to make number of
people get know about products offered
to them.
 Changing political environment over
global business operations acts with
effectiveness for an organization.
 Rival organisations such as Zara, H&M
is giving tough competition to TESCO
which can be a big threat for the
organisation.
TASK 2
P2 Evaluate the capabilities and internal environment of a company by using appropriate
frameworks
Strategic capabilities and their key components
Strategic-capabilities is been defined as those strategies which is shaped and auctioned by
an organization in order to gain high merits against competitors in market. Such strategies makes
capabilities develop with the help of six main components that is strategic purpose, key goals,
action planning, tools for analysis, values and vision. They make strategy developed in
advantageous manner.
Resource based view strategy
Resource based over view that is been referred as managerial framework that is use by
organization in deterring about strategies and resources that has been exploited in order to gain
sustainability. In relation to strategy only two resources is required which is tangible and
intangible. Tangible assets are physical and intangible are those which can be felt these resources
can be arranged by Tesco.
McKinsey's 7S model

McKinsey's framework is a tool which helps in analysing organisational design of a firm
by identifying seven key internal components. Such components make alienation over business
organization like Tesco for achieving its goals. Components are explained as follows:
 Strategy: Under it plan is been formed by an organization which makes competitive edge
to be attained in proper manner. Tesco will not have robust strategy which faces
issues that reduces customers’ base.
 Structure: It depicts business units and division that is organized through sharing
information. If Tesco have inappropriate structure then effectiveness of an organization
that makes advantages attained over rivals.
 Systems: This process of an organization aims upon depiction done over daily basis
activities and decision making within an organization. This makes appropriate system
benefiting through implying organizational change in proper manner (Oni, 2021).
 Skills: In this competencies and capabilities of employees in Tesco has been performing
organizational work. Tesco will allow them in dealing with complex situation in effective
way.
 Style: This represents the manner in which a firm is managed by management and top
level managers and the way in which they interact with their employees. In TESCO ,
participative style is used where opinion of employees are given considerations.
 Staff: The elements are related upon number or employees that work within Tesco and
required employees for hiring, training and motivating employees.
 Shared values: This is core part of McKinsey's 7s model and includes about standard
and norms that guides organization like Tesco.
VRIO framework
VRIO analysis is that kind of analysis which makes rarity, value and immutability added
within an organization. This is strategic tool used by high competitive advantage over rivals. In
relation with Tesco VRIO analysis is done as follows:
 Valuable: This is important for manager of Tesco in utilizing valuable resources that
give tough competition to its rivals. If an organization posses upon valuable resource
which makes profit earning possible. For ex, valuable resource for TESCO is their
employees, distribution and supply chain management.

 Rareness: The aspect that is been benefitted by firm over understanding product is been
prepared. Rare products offered by Tesco helps in gaining of loyal customers.
 Imitable: TESCO is required to offer those products which cannot be copied by rival
organisations. If products are copied then rivals then price gets impacted and sales of
Tesco’s product decreases.
 Organisation: It is vital for business organisations such as TESCO over managing its
resources and materials in very organized and systematic manner which makes cost
enhancement possible. This reduces revenue and makes competition become difficult
task. Different resources in this context are employees, suppliers, investors and
stakeholders of company.
TASK 3
P3 Implement porter's five forces to evaluate competitive forces of a market sector for a
firm
Porter's five forces makes strategic framework developed upon taking decision which is
considered over generating outcome over analysing present competition. These five aspects of
framework are as follows in relation to Tesco.
 Threat of new entrants: Threat form new entrants are not that high as Tesco which
makes renowned organization over global level. This is not possible for new generation
which invests as much as Tesco does for performing business operations and activities.
This makes new firm within market over offering products and customers (Prashar,
2020).
 Bargaining power of suppliers: There are various large organization that deals within
retail sector especially related to food and clothing. Due to such bargaining power
supplier increases. If other firm pays more to supplier then they may not give required
raw material to Tesco.
 Bargaining power of buyers: In case of bargaining power of buyers, it is high in case of
TESCO as competition in retail sector is very high. If company will charge high prices
from their customers without giving satisfactory product then they can shift their
preferences towards the products which will be offered by rivals.

 Threat of substitutes: There is possibly no substitution for clothes and food. Due to this,
threat from substituted products in less in case of Tesco. However, if offered products
will not be good, customers will feel reluctant in buying the offerings of firm.
 Rivalry among existing competitors: There are different kinds of retail organization
that has been operating within UK and at global level that is H&M, Zara etc. This makes
competitors very high which gives rivals chance to go ahead of Tesco.
TASK 4
P4 Apply different models, theories and concepts to interpret strategic planning for a
company
Porter's generic strategies
Generic strategies of porter are helpful for identifying of competitive advantage of an
organization. There are three kinds of strategies which are differentiation, cost leadership and
focus. In relation to Tesco such strategies explained as follows:
 Cost leadership: These strategy, price sensitive which is been targeted in easy manner
by a business organization. Under the strategy Tesco has been products to its customers
at fewer prices. Also organization like Tesco should offer discount to friends and family.
This makes organization increase sales with high profits attained from it (Rauch,
Dallasega and Unterhofer, 2019).
 Differentiation: Under this strategy an organization offers innovative products to its
customers in order to deal within same sector. This makes Tesco offer new products tom
its customers that enhance sales.
 Focus: The strategy involve within various aspects is focused over cost focus and
differentiation focus. In relation to this Tesco requires all products with fewer prices for
making number of people over buying them. It makes differentiation offered with modern
products so that individual can buy them without being sensitive.
Bowman's strategic clock
Bowman strategic clock this model deal upon business organization which helps in
exploring appropriate strategic positioning through which Tesco makes high advantage upon

rival companies attained in appropriate way. Aspects related with this framework are mentioned
below:
 Low price and low value added: Position is less competitive for Tesco as products is
not been differentiated then consumer perceives less value over product with fewer prices
Sadeghi, V.J. and (Biancone, 2018).
 Low price: Under this aspect Tesco position itself over low cost leaders that is been
marked by using cost minimization technique. Profit of product is low upon high sale
volume and overall profits.
 Hybrid: In this strategy involves over elements which is low and product differentiation
created with effective in relation to Tesco.
 Differentiation: The strategy of Tesco mainly requires focusing over innovative
offerings in order to enhance sales.
 Focused differentiation: Products is placed at high price level consumer over
purchasing product with perceived value. Strategy is used by luxurious brand over
operating at global level.
 Risky high margins: In this strategy an organization requires to face high risk that
results in business failure. Tesco set high price over offering extra perceived value.
 Monopoly pricing: In market monopoly has been offering products with strategy which
is not concerned over price within innovative factors. Customer needs to buy price that is
too high.
 Loss of market shares: In this strategic position which desire in relation to competitive
market within a company required for middle range product and market share is less.
Also standard is been formed as per pricing id product.
In relation to Tesco these two models makes strategic direction within an organization
possible that makes differentiation strategy used within new and unique products that has been
offered to customers which makes high profit and revenue attained. This makes strategy with
innovation in product is been given to its customers over which interest increases. It makes sales
and revenue over organization to be enhanced (Viesi and et. al., 2017 ).

M4 : Strategic management plan that includes strategic priorities and objective
Strategic planning is helpful in identifying if various activities, priorities, focus, resources
and operations (Hernández, Yañez-Araque and Moreno-García, 2020). This ensures that people
working towards common goal and organization like Tesco implies about strategy that has been
explained as follows:
Product The pct provided by an organization like Tesco is solar panels and batteries. They
are known for their variety of products within market. In this product that is been
sold is developed with existing product.
Price As they are having strong brand value which makes premium strategy over
products that makes unique and high value. They use pricing strategy of its
products like solar panel. Thus makes expansion possible with same strategy.
Place They are having physical store and outlets which makes distribution of sales and
products done that makes expansion open more stores within local area.
Promotion The promotion mix used by the Tesco is direct marketing, viral marketing etc. but
for developing the market they need to advertise through television and
magazines as per the social class and income group which they want to target.
Implementation: This important form an organization which makes implementation over plan
formulating and allocation of resources. Tesco with the help of fund allocation can set its budge
as per market condition (Harney and Alkhalaf, 2021). Allocation of resources implements plan
over formulating needs with resources. It is helpful in making internal audit to be done within an

organization which makes budget performance possible. Also key performance indicators can be
used to measures and
Evaluation: This is related over collecting of information and follow up with the plan that is
going to helps in identifying issues as per performance of employees in an organization. This
makes developing market of Tesco and making actual performance of marketing team to be
analyzed with marketing plan.
CONCLUSION
From the above discussion it can be marked out that adopting of appropriate strategies
for business it is not possible for an organization to achieve desired success with growth. In this
various analysis is done that is PESTLE, stakeholders, SWOT, Ansoff matrix which makes firms
over attaining better growth opportunities. Also this makes both internal and external factors be
analyzed in proper manner. Through VRIO framework organizational capability is been
identified and by using Poter’s five force model an organization makes competitive edge within
market to be analysed. Under it various theories and models is been applied like Bowman
strategy, porter's generic strategy, a company can implement right strategic planning for
themselves.

REFERENCES
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