Analysis of Tesco's Market Opportunities and Future Strategies

This report provides a strategic analysis of Tesco, a multinational retailer, examining its market opportunities and future development strategies. The analysis begins with an introduction to strategic management and its application to Tesco, highlighting the company's position in the retail sector. The main body of the report delves into Tesco's market opportunities, focusing on its strategies to maintain its market position and adapt to changing consumer demands. It analyzes the impact of job cuts and cost-cutting measures, including store hour reductions, and discusses how Tesco is adapting its store formats. The report then applies Porter's Five Forces framework to assess the competitive landscape, evaluating the threats of new entrants, substitute products, and the bargaining power of suppliers and customers. Each force is analyzed in the context of Tesco's operations and market environment, providing insights into the company's strengths, weaknesses, and strategic responses. The report concludes with a summary of the key findings and implications for Tesco's future strategic direction.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Examine the market opportunities of business............................................................................1
Analyse the better understanding about the future development of business. ...........................6
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Strategic management is a method that is used by the company in order to formulate and
implement new strategies by which different goals and initiatives has been attained by the
company in constructive manner. In this various resources and reflection of the working process
of the business is identifies as by considering the impact of business on several functions and
operations. It provides the clear direction to the company by which the development of plans an
policies are designed to accomplish certain goals and objectives (Ansoff, 2018). In this
implementation of various strategies and plans is identifies by the business by which the ability
to gain more competitive profit is getting advanced. The following report is based on the Tesco
that is British multinational retailers and have provide groceries and general merchandiser. It is
the third largest retailer as in terms of revenue generator and having a headquartered in Welwyn
Garden City, Hertfordshire, England, UK. The report consist of different strategies that are taken
by the company in order to generate better market opportunities that helps to develop effective
making of strategies. In addition to this appropriate understanding about the different strategies
which is implemented in future period of time is analysed.
MAIN BODY
Examine the market opportunities of business
Tesco is a retailing sector company that has worked on a larger scale and have served
eleven countries such as like Ireland, India, South Korea, Czech Republic, Hungary. Slovakia
and UK as well. They have processed their products and services as in supermarkets, superstore,
hypermarket and convenience shop as well. It was founded in the year 1919 by Jack Cohen and
as the time passes their number of stores also get increases and as of now it is around 6,800.
Tesco has worked with 450,000 number of employees and have generate the revenue of £63.911
billion and its operating income is £2.206 billion and new income is £1.320 billion. Tesco has
also provide the diverse range of goods and services in the market as like book, clothes, telecom
and financial services, petrol, toys, electronic, furniture and many others as well (Carayannis,
2018). The company is using different strategies to get retain its market position and for that
they have raises the downmarket standards by using high-volume and low cost retailing by which
have tries to attain the attention of more number of employees in appropriate manner. Strategic
management is basically a process that is used to set particular objectives as by considering
1

internal and external factors that ensures about the validate set of strategies through which it is
easy for the company to attain more success and development. The management of strategies
considers the goals setting, analysis, formulation , implementation and monitoring of various
strategies that aid to achieve its targets in appropriate period of time.
The management of Tesco is facing certain biggest issue which is related to cost cutting
that is the largest redundancies as they have cut the jobs of around 4,500 and it is announced by
them for their express stores. It is the largest cost cutting which is arise in express branches or at
supermarkets. Tesco designed the new strategies under this they have reduces the opening hours
of 134 express stores of them. In this the stores are opened late in the morning and closed earlier
in the evening and for this Tesco states that they have done this to reduces the the working
process and simplify the working procedure (Darling, 2019). The accommodation of customers
is most needed and with this metro stores are more bigger in the size as well but it is
comparatively smaller as well. For this Tesco designed the originality thus they have make
certain changes in their weakly shops under which 70 % of its shops that are placed in metro are
used as the convenience stores.
In context of strategic management, the issues that is faced by company is controlled and
managed with the parallel support of strategy and policy. In this porter's five forces are
considered that helps to provide certain information that is more relatable and helps to gain
selective changes by making appropriate and adequate analysis of all the different aspects.
Porter's five forces analysis: It is a framework that is used to measure the market
competition that affects the business performance and productivity. It helps to draws better
drives of economy by which the competitive intensity is identifies that aid to enhance the
attractiveness of business in terms of profitability. It is method that helps to identifies certain
strategies through which market opportunities are identified. It is more helpful and supportive for
Tesco to achieve more profit and sales within the stipulated period of time. It is more important
for the business to perform and induce some strategies through which they have intensifies its
working performance (Ferreira, 2018). Company faces the job cuts and in parallel there is an
urgent need to analyse the market requirement. For this different opportunities that is developed
as from the competitive market is needed to understand in timely manner. Porter's five forces is
being used to analyse the weakness and strength of business that assist to make and design
effective corporate strategy. It consist of different parameters that are as explained below as:
2

Threat of new entrants: It is a factor that has very lower impact on the productivity of
Tesco as its capital requirement is more certain along with this they have better significance in
the market as well. Tesco doesn't have worried about new entrants as they have formerly enjoys
the economies of scale and having a better core competencies as well. The company is in profit
because they have large distribution network and have explore wider market as well. It requires a
lot of amount and in this Tesco is also be able to make easy access of all the network. In addition
to this it is required that Tesco have continuously make balanced changes within the their
policies by which they have easily make replicative modifications within the working nuances
that helps to gain more profit (Holloway, 2018).
It is more essential that to cope up with the certain issues Tesco never underestimate the
presence of other businesses as these are those that have worked in similar sector. In this Tesco
have ensures that they have worked with effective strategies by which it is easy for them to
continuously attain the attention of customers. Tesco have cut down the jobs by which its
employee have started finding new jobs that diversified the talent of company. Thus Tesco make
sure that they analyse the strategy that is used by other competitor as like Aldi and Lidl as they
have offered high quality products to the customers with 40% discount so as to gain competitive
advantage or to grab the attention of customers. The entrant must have offered quality products
at lower cost that is eventually to increase the sales of business.
Threat of substitute products: Tesco worked in grocery market and threat of substitute in
this sector is much higher thus its intensity is also be very high. But Tesco is in profit in this
situation as they have offered the better substitutes in terms of diverse range of products and
services as like food, clothes, furniture, electronics etc. It helps to retain the attention of
customers for longer period of time. The groceries design and structure is being continuously
changes and it is done to attract the attention of customers in effective manner. Tesco is in profit
as per the consideration of this concept as they have provide the diverse range of products in
both departmental and non-departmental stores (Makadok, 2018). Job cutting is more vital and
with this it is required that Tesco have induces certain set of strategy by which there dependency
in market is getting enhanced in adequate way. The reduction in the opening and closing time of
stores due to the reduction of employee's rate is most effective. Thus Tesco must have induces
better strategy to get over from different worst situation that is arise as per the unavailability and
lack of employees.
3

It is considered by Tesco have faced more challenges as per the shortage of employees
and in this the other competitors have tries to gain more profit as by enhancing the working
abilities and conditions of business. Thus other businesses have used to make positive shift in the
production rate and with this their manufacturing probability also get enhanced. In this Tesco
have analysed the market capacity and need of customers and then raise the working norms
accordingly (Meyer, 2018). In addition to this Tesco have induces certain modifications in
applied strategy with this to meet the requirement of market Tesco have start working with more
flexibility and keep the less amount of stock in back offices.
Bargaining power of suppliers: Tesco works with the lot of suppliers as of about 25000
and it is within UK only while there are many others as well those are in abroad. Thus the
intensity and power of suppliers is quite lower along with this it doesn't have any significant
impact on the performance and production of Tesco. To gain profitable margins Tesco have
negotiate more with the suppliers and with this they have also getting accused as well as they
have bullying out the suppliers and it is for price cutting. The strategy of price cutting is used as
a strategy and tactic of business with this they have tries to gain the attention of more of the
customer as per reducing the production cost. Due to the market adaptability it is more important
that company have uses various strategy under which cope up with the level of market
satisfaction.
Due to the loss in job the productive power of an company is getting varied. The
employees are lesser in amount thus it is mandatory that Tesco make effective utilisation of
resources. In this the ability of Tesco to match up the resources with the number of employee is
difficult. Thus Tesco have used the staff management strategy in which manage the staff and its
working as per the demand of market (Okumus, 2019). They have produce only those product
with specified amount as those are needed or required by customers by which the brand and
image of Tesco is getting intensifies. It is essential aspect for the company that they have uses
the different set of strategy by which profit margin is either get increases or balanced in
systematic format.
Bargaining power of customers: It is a factor that is basically get used to manage the
need and demand of customers in effective manner. Tesco is having millions of customer all
across the world and that all are connected either from online medium or by stores as well.
Moreover, the bargaining power of customers are low as it is not much organised as well. The
4

customers are always be more needy and have easily switched to other businesses in easiest way.
There are a lot of competitor of Tesco as like ASDA, Sainsbury's etc. and they have also induces
several strategies in order to attract more of the customers. It is a parameter that reduces the cost
benefits and imparts cost cutting in which the profit is getting divided into different slots. In this
if Tesco wants to gain more benefits then they have to be more attractive and induces various
strategy and policy accordingly (Pfarrer, 2019). Tesco have deals in grocery sector as well and in
this bargaining power is much more as customers only needs the products those are lesser in cost
and have better quality.
In this if company wants to the effective profit in the business thus they have to produce
the products those are good in quality and provide effectual profit and cost margin. It is required
that Tesco must have manage the quality and quantity of products and its production. Due to the
shortage of employees on both factory or at stores it is not easy for Tesco to manage the
working. Thus they have ensure that difference in between the employee at site or at shop is
much balanced and tries to increases the amount of employees at site by which production rate is
increases. On the other hand ensure that talented or those employee those have good
communication skills are appointed at stores by which they have easily influenced the
purchasing behaviour of customers.
Competition rivalry: Tesco have faced a number of competitors that are all across the
nations and along with this there competitors also spend a lot of amount on advertising and other
marketing strategies to attract the customers or to gain their attention. In this Tesco is in favoured
position as they have lead the competitive market and along with this also face intense
competition from their competitors as well. It is a condition that develop price wars in between
the different competitors that reduces the amount of margin which is gained through profit
maximisation. In this it is needed that Tesco have develop and explores the impact of
competition on the customer mindset and as per that designed most suitable strategy that aid to
gain better profit (Pröllochs, 2020).
It is considerable that Tesco face challenges in terms of decrement of employees by job
cutting by which its working performance and its probability has negatively impacted. The loss
in job at fewer stores enhance the level of disappointments and to balance that Tesco uses
“Leaner management structure”. It helps them to get over from cost pressure by which
continuous change in retail environment is getting increases.
5

Analyse the better understanding about the future development of business.
Future development of any of the business is completely based on the strategies and
policies that are used by the business in current period of time. In this Tesco have uses Ansoff
matrix to measure the future liability and dependability of business by which they have gain
better profit and sales in systematic format.
Ansoff matrix: It is usually a strategic technique that is used by the Tesco to know about
the current situation of the business by which the future strategies is getting devised by which
certain growth is achieved in timely basis (Schilling, 2019). It has been used to analyse the
different direction that is selected by the company in order to make and design strategic planning
and it is as briefly explained below as:
(Source: What is Ansoff matrix, 2019)
Market penetration: It is a strategy that is used by the business in order to sell the
existing products and services in the existing market. It has been used to expend the business
services as with its inception by which the market share and availability of resources is getting
enhanced. Tesco have uses this strategy in order to develop competitive strategies and along with
this also provide the special offers to the customers with this its sales probability is getting
enhanced (Simandan, 2019). It is used to squeeze the profit margin of company and with this
ability of company to enlarge its performance is increases.
Market development: In this strategy Tesco sell its already present products and services
in the newer market or region. Tesco expands its business at international level and also opened
750 stores at Thailand in the upcoming years and also closes some of its stores from China,
6

Japan and Korea as they didn't provide much profit. In this company have tried to enter in newer
market by which its market reach is getting developed in effective format. It is more suitable for
the business and for its growth as well such as it helps to target new customers by which
potential customer base is increases in suitable manner.
Product development: It is a strategy in which Tesco have presented new product and
services in the present market by which its ability to retain the potential customer is developed in
continuous basis. Tesco has make continuous development in there goods and services and also
offered the other companies product under its own brand name (Sullivan, 2018). In this useful
impacts are generated in which they have negotiate with the product suppliers and with this its
ability to develop more profit also get enhanced. It is also be costly process for Tesco and with
the issue such as job cutting it is also be not possible for them to make repetitive changes and
modifications in products and services.
Diversification Strategy: It is a strategy that is quite more difficult for Tesco to
implement as selling of new product and services at completely new market is also be not
possible for the business. Product development is one of the most successful strategy but it is
only is possible if company have enough amount of employee in the business by which the
working is managed in adequate manner. It consider both product and market development and
Tesco is not in that suitable situation and have faces continuous fall down of employment as
well.
Tesco must have uses market penetration strategy and have sell all its product and
services in similar marketplace. It also help to get over from the job cut challenge in suitable
manner. As Tesco reduces its working hours of some stores thus with the support of this strategy
they have target the potential customer by managing the flow of goods and services on repetitive
manner (Teece, 2019). It is used to control the performance and productiveness of Tesco under
which both product flow and customer retention is managed.
7

CONCLUSION
It has been concluded from the above report that strategic management is the most vital
prospect of the company and with this they have make relative changes and modifications as per
need and dependability of marketplace. In this company have faces the challenge related to job
cut by which productivity and performance of business is getting negatively impacted thus
porter's five forces is used to measure the current situation of business. In addition to this
company have uses Ansoff matrix in order to measure the future reliability of business.
8

REFERENCES
Books and Journals
Ansoff, H.I. And et. al., 2018. Implanting strategic management. Springer.
Carayannis, E., 2018. Strategic management of technological learning. CRC Press.
Darling, E.S. And et. al., 2019. Social–environmental drivers inform strategic management of
coral reefs in the Anthropocene. Nature ecology & evolution. 3(9). pp.1341-1350.
Ferreira, J., Mueller, J. and Papa, A., 2018. Strategic knowledge management: theory, practice
and future challenges. Journal of knowledge management.
Holloway, S., 2018. Changing planes: A strategic management perspective on an industry in
transition. Routledge.
Makadok, R. and et. al, 2018. A practical guide for making theory contributions in strategic
management. Strategic Management Journal. 39(6). pp.1530-1545.
Meyer, K.E. and Xin, K.R., 2018. Managing talent in emerging economy multinationals:
Integrating strategic management and human resource management. The International
Journal of Human Resource Management. 29(11). pp.1827-1855.
Okumus, F. and et. al., 2019. Strategic management for hospitality and tourism. Routledge.
Pfarrer, M.D. And et. al., 2019. Sociocognitive perspectives in strategic management. Academy
of Management Review. 44(4). pp.767-774.
Pröllochs, N. and Feuerriegel, S., 2020. Business analytics for strategic management: Identifying
and assessing corporate challenges via topic modeling. Information & Management.
57(1). p.103070.
Schilling, M.A. and Shankar, R., 2019. Strategic management of technological innovation.
McGraw-Hill Education.
Simandan, D., 2019. Iterative lagged asymmetric responses in strategic management and long-
range planning. Time & Society. 28(4). pp.1363-1381.
Sullivan, K. and et. al., 2018. Using industrial ecology and strategic management concepts to
pursue the Sustainable Development Goals. Journal of Cleaner Production. 174.
pp.237-246.
Teece, D.J., 2019. A capability theory of the firm: an economics and (strategic) management
perspective. New Zealand Economic Papers. 53(1). pp.1-43.
ONLINE
What is Ansoff matrix, 2019. [Online] Available through:
<https://www.smartinsights.com/marketing-planning/create-a-marketing-plan/ansoff-
model/>.
9