Strategic Management: Strategic Analysis

This report analyzes the strategic management approaches of Tesco Company, including a comparison of theory and practice. It explores topics such as business environment analysis, competitor analysis, and Porter's five forces model.

STRATEGIC
MANAGEMENT -
STRATEGIC ANALYSIS

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Compare theory and practice.......................................................................................................3
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic management is defined as formation of strategies on the basis of the set goals
and objectives of the organisation. This report is based on the case study of Tesco Company in
respect to its strategic management approaches. Tesco Company is a United Kingdom based
retail sector organisation. Company started its business operations in the year 1919. Company
deals in high quality clothing, food products and home products. This report will project the
strategic management approaches of the Tesco Company. Henceforth, report would emphasis on
the comparative theory and practices in respect to the Tesco Company. Competitive analysis of
Tesco Company will be conducted in this report. Analysis such as business environment
analysis, competitor analysis and competitive analysis will be conducted in this report.
MAIN BODY
Compare theory and practice
Retail sector is among the most emerging market sector across the globe. The sector is
gaining a huge demand in the market all across the globe. Retail sector comprises with product
range that belongs to basic needs of the people. With the support of various analytical tools like
business environment analysis, competitive analysis and comparative analysis positions of the
company in target market can be projected.
Business environment analysis
Business environment is considered as the environment in which companies conducted
their business operations. External business environment can be analysis on the basis of PESTEL
Analysis tool. This tool is a well diversified tool that support companies to collect all relevant
information about the market and associated market sector.
PESTEL Analysis
PESTEL Analysis is a well diversified analytical tool covers all factors that influence
company’s business in the associated market. Business environment consist a volatile nature that
offers plenty of uncertainty in the market. PESTEL Analysis comprises with factors like
political, economical, social, technological, environment and legal factors. All such factors
directly influence the company’s operations and business outcomes in the market. Retail sector
comprises with basic needs of human beings so all such factors aggressively work over the
business operations of the company.

Political Factor: Political factor is among the key external factor hat influences company
operations. Policies frame by government related to the corporate sector is a part of the political
factor. Government all across the glove support companies in operating business operation.
Corporate sector contributes in the economic growth of the country. Retail sector comprises with
basis products requires for living that also attract special interest of government in the growth
and development of the retail sector (Kolk, 2016). Retail sector is among such sector that
generates one of the major tax returns in indirect forms due to its heavy demands on a regular
basis. The sector comprises with all economic background and class people and all human
belongs to any culture, religion and any social factor. The area of the sector is too vast which
also offers special interest of policy making of government in retail market. Recently the sector
has also seen some restrictions. In recent times BREXIT influences the business operations of
the companies like Tesco in a negative manner. BREXIT offered restriction to companies
operate in England that also resulted into reduced demands of the retail product. Political
stability is also a big factor that influences the business operations of company. Political stability
allows companies to frame long term business development and growth oriented strategies.
Economical Factor: Economic factor in among the crucial business environment factor
influences company operations. Economic factor denotes about the economic situation of
country. Factors like currency exchange rate, value of currency in international market, stability
of the currency, economic policies of government, monetary policies and different other policies
frame by government to strengthen the economic environment is a part of this factor of business
environment (Holmqvist and Ruiz, 2017). All such factors directly influence the sales of the
company in market. Product prices are also influenced with these factors. Tax reform of
government also put a big impact as it reduces the selling price of products. Taxation directly
increases the prices of products. Stable economic position of the government keeps the prices of
product at low rate. Economic stability allows Tesco Company to develop a long term business
growth plan and strategic formation. Inflation in economy is also a huge factor associated with
the economic factor. Inflation directly restricts the purchasing power of the end customers as it
resulted into price hike of all the retail products.
Social Factor: Social factor involve different elements that influences the operation of the
company in market. Social factor are among the dominating tool related to business growth are a
part of the PESTEL Social factor comprises with factors like choice of people, religion, culture,

fashion, trend and various other factors that directly impact over the purchase decision making of
the customers. All such elements influence the buying decision of customers. Fashion and trend
is also a huge factor part of the purchasing decision making of customers is a part of the social
factor. Fashion and trend is directly influences the sales of company. Tesco Company’s
marketing team make various policies and strategies to make the product of company trendy and
fashionable with the support of its marketing campaigns (Berman and Dalzell-Payne, 2018).
Company always try to attract the decision making of buyers in retail sector by channelizing an
effective marketing campaign. It can be projected that social factor involve in business
environment is among the most dominating factor as it directly influences the buying decision
making of all customers.
Technological Factor: Technological factor involve all technological advancement and
development. This factor guides companies in respect to all technological advancement and
development. Technology is among the key factor part of the business environment that has
transformed the entire corporate sector. Technological advancement has also guided Tesco
Company to introduce online retailing. Technological factors also supported different functional
activities associated with the organisation hierarchy of company. Tesco Company organisation
hierarchy supports different functional activities like marketing, finance, sales, public relation,
operations and other operation functions are directly operated with various technological
equipments (Sales and Beschorner, 2017). Technological factor also support company in
innovation and product development activity. Tesco Company in engaged with selling its
products over online and offline modes. Inclusion of online retailing in the business strategies the
sales of the company has gone to different level. It also improved the customer satisfaction and
company could also deal with all issues of customers. It has directly expanded the growth
potential of the company at international level. Technological development has immensely
supported company’s sales and public relation along with the marketing campaigns of company.
Company is utilising latest technological equipments in operating and controlling all three
functional activities. Due to technological developments company has also improved its brand
presence with the support of effective marketing campaigns.
Environment Factor: Environment factor involve in business environment is also a part of the
PESTEL Analysis tool. This can be stated as the recently developments of business environment
after the emergence of awareness in society towards environment protection and use of eco

friendly products. People are keener to utilise eco friendly products that can support environment
protection along with coping up their needs (Neneh, 2016). Company deals in high quality
clothing, food products and home products which contains the eco friendly nature that has
further channelized into sales of the company in market. Tesco Company is also a part of
different social activities like plantation, water harvesting, energy saving, green energy and other
forms of social activities as a part of the corporate sector responsibility. Corporate social
responsibility enables companies to contribute in the conservation of environment. This also
allows company to improve the brand loyalty in respect to the society. All such social activities
also results into effective sales growth of company. Environment factor also involve government
restrictions over corporate organisation as per the environment protection guidelines.
Environment analysis also guides Tesco Company in regards to all such guidelines issues by
government. Environment factor enables company to influence its growth in the market.
Legal Factor: Legal factor is also an important business environment factor associated with
PESTEL Analysis. Legal factor indicate about all laws and legislation part of the corporate
sector. In order to conduct business operations Tesco Company needs to cope up with all
different laws and legislation applicable by the government (Daniluk, 2017). Different laws like
equality, data protection, minimum wage payment and other legislations are applicable on Tesco
Company. Organisation needs to cope up with all guidelines associated with such legislation in
order to conduct all different functional activities of company. Legal factor also guides company
in respect to all legislative requirements company needs to fulfil in case of business expansion.
Legal factor are among the key business environment factor that supports company in
conducting all functional activity in legal manner.
The above mentions factors are associated with business environment. Different factors
of business environment influences operation activities of company along with its growth
potential in the market. All the above factors cover all uncertainties offer by business
environment. PESTEL Analysis is a well diversified tool that involves all different factors part of
the business environment.
Competitor Analysis
Tesco is associated with the retailer industry in the market and in this industry there is a
lot of competition which has come up in the past few years. This organization is giving a lot of

products for the customers such as food, clothing, electronic and other products which are the
basic needs of customers (Harrison and et.al., 2017). Tesco is providing the basic needs for
which the demands in the market are increasing and Tesco is providing the customers with good
quality and services as well for lower prices. There is an aggressive demand which is increasing
and the sector has to make the customers get what they need is very important for the
organization. The growth rate of retail sector in United Kingdom is approximately 5% which is a
great threat for the organization but a great opportunity as well because Tesco is one of the oldest
in the market and have set a base for them in this market.
The competitors of Tesco are Sainsbury’s, Marks and Spencer, etc which have joined the
retail industry are creating a great threat for Tesco in the market. Sainsbury’s is one of the
biggest competitor of Tesco in the country and globally. According to the last financial year
there is approximately 16% growth rate has been entertained by Tesco which is a great progress
in the market with the competition (Gladden, 2017). There are a lot of methods which have been
adapted by Tesco so that they can have a better functioning for themselves.
There are stores which Tesco is opening in different locations which are a great factor for
the company because the customers will be able to access effectively. Internet is one of the
strength which Tesco has created for them globally which is going to help the organization have
a better functioning for them in the market (Jain and Li, 2018). There is a huge demand for
online services by the customers and the growth of sale can increase by 6% every year. The
project with which the organization is coming up with is giving the growth rate of 33% for Tesco
in United Kingdom.
Porter’s five forces model
This is a very important framework which the organizations must use so that they can
find out the competition in the market. There are a lot of forces which are making the
productivity in the organization reduce and the market share in decreasing as well because of the
competition. There has to be better decisions which have to be taken by the organization after
analyzing the competitive market (Krylov, 2019). Competition in industry (High)
The competition in the market is high but Tesco has been in the industry from a long run
which is a great advantage for the organization. There are a lot of companies in the market who

have entered this industry late but have captured a large place for themselves in the market which
is a great advantage for Tesco. Tesco has been losing their loyal customers and also market share
which the company has gained over the years (Brui, 2018). There are a lot of decisions which
have been taken by Tesco like getting online so that the company can have better profitability
opportunities in the market. In United Kingdom there is an attraction of other companies to enter
the retail industry of the country by 6% which can be a great threat for a long run of the
organization. Tesco will have to understand the strategies and methods which are being used by
the competitors in the market and then take the right strategies and methods for themselves so
that they can get a competitive advantage in the market as well. There are small stores as well
which have gotten online for getting in customers which is creating a great threat for the
organization. Potential of new entrants in market (Medium)
There are no major competitors or new entrants in the market of retailer because there is a
requirement of a lot of investment which will be required. There are a lot of retailers in the
country which have already made a strong base for themselves in the market. The demands of
the stakeholders and their responsibilities in Tesco are also increasing because of the competition
in the market (Vetrov, Vandina and Galustov, 2017). There is a need for new methods and
techniques so that the organization can become the best retailer in the country. There are a lot of
small retailers which have gotten online and that are taking away the market share for Tesco.
This is not a threat for Tesco in present but for a long run it can be therefore the company will
have to find itself better functioning and methods to function and operate in the market. Power of supplier (Low)
Tesco has been in the market from a long which is why it is very important for the company
to be able to have a function effectively because the experience is very essential. It is because of
the experience which the organization is having in the market is making the company have a
better functioning for themselves (Grant and Baden-Fuller, 2018). The competitors have taken
the suppliers in their organizations but there are a lot of suppliers in the market which can make
the company have a better functioning and provide with the supplies on time. There is no
dependency on the products and raw material from the suppliers in the company because the
company keeps shifting from one supplier to the other which is making the organization get the
best of raw material for production in the organization. There is a requirement of a lot of

networks which the company has to create in the market so that there is a better functioning and
the trend and fashion also has to match the expectations of the customers. Power of customer (High)
The demands of the customers are increasing rapidly which has to be fulfilled by Tesco so
that they can make the organization gain their faith and trust in the company. The prices and
services are two factors which are being focused upon by Tesco so that they can get more
customers and gain loyal customers in the market which is a very important factor for the
organization. There are strategies which have been adapted by Tesco so that they can get the
productivity higher so that the demands of the customers can be met on time and that is a very
important factor for the company (Berisha Qehaja, Kutllovci and Shiroka Pula, 2017). The
products in the organization are also improving from time to time and the organization is doing
investment in two factors which is technological and research and development department in
the organization so that Tesco can get in loyal customers and unique feature in the organization.
It is because of innovations and inventions that Tesco has found itself the best and cost friendly
methods to make the customers get the best of services and products from the organization which
is making Tesco have higher profit margins. Trends are also very important for the customers
which have to be followed by Tesco so that they can gain the trust of the customers. Threat of substitute products (Medium)
There are a lot of competitors in the market which have to be analysed and they will make
the substitute for all the products which are in the market so that they can get in more customers.
There are a lot of varieties which the customers can find in the market which have to be analysed
by the organization and then innovate their products accordingly so that there is a better
functioning. There are offers and discounts which are put out by Tesco from time to time so that
the customers can get loyal to the organization and the best of services and products are reaching
the customers (Jasiulewicz-Kaczmarek and Stachowiak, 2016). The demands are increasing
which have to be controlled by the organization so that there is a better functioning. The cloth
lining of the organization is having a tough competition in the market which Tesco will have to
plan their strategies accordingly so that there is a higher profit margin.

CONCLUSION
From the above report it can be concluded that there is a need for the organizations which
are functioning in the market to have a better analyses of the external and internal factors before
any further decisions in the company are made. The competition in the market is growing
therefore it is very important for the organization to be able to have a better functioning and
make their operations and productivity higher so that the demands and needs of the customers
can be met. The competition in the market should also be understood so that the organization can
compete with them effectively and maintain their market share for a longer run.

REFERENCES
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