Strategic Management of Tesco :An In-Depth Analysis

This text is the table of contents for a report on the strategic management of Tesco. The report aims to define strategy, provide context for the company, and analyze its external and internal environment using various models such as PESTLE analysis, Porter's Five Forces analysis, and VRIO analysis. The report also discusses Tesco's vision, mission, values, culture, resources, competences, core competencies, and financial performance. The report concludes with a portfolio analysis using one of several models such as the Life Cycle, Boston Matrix, GE McKinsey, or Parenting Matrix.

STRATEGIC MANAGEMENT OF TESCO

Table of Contents
1. Introduction............................................................................................................................4
1.1 Aim and Objectives of the report.....................................................................................4
1.2 Define strategy.................................................................................................................4
1.3 Context of the company...................................................................................................5
1.4 Industry/Sector – Defines them, say which your company is in, how big they are, and
are they in growth...................................................................................................................7
2. External Environment - Need to define the external environment and external
analysis/audit mentioning various levels....................................................................................7
2.1 Macro environment..........................................................................................................7
2.1.1 PESTLE.....................................................................................................................7
2.1.2 PESTLE – apply it to your company........................................................................8
2.1.3 PESTLE – critique the theory.................................................................................10
2.2 Microenvironments........................................................................................................10
2.2.1 Definition Porter 5 Forces.......................................................................................10
2.2.2 Application of Porter 5 Forces in TESCO...............................................................10
2.2.3 Porter 5 Forces – critique the theory.......................................................................12
3. Internal Environment...........................................................................................................12
3.1 Vision, Mission, Values, culture.....................................................................................12
3.1.1 Analyze/critique your company’s vision, mission, and values................................12
3.1.2 Culture/leadership – apply cultural web..................................................................13
3.2 Resources/competences/core competencies...................................................................14
3.2.1 VRIO Analysis........................................................................................................14
3.2.2 Application of VRIO in TESCO.............................................................................14
3.2.3 Critical analysis of the VRIO in TESCO................................................................15
3.3 Portfolio Analysis...........................................................................................................15
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3.3.1 Life Cycle or Boston Matrix or GE McKinsey or Parenting Matrix– choose one to
use and define it................................................................................................................15
3.3.2 Application – apply it to your company..................................................................15
3.3.3 Critique – critique the theory..................................................................................16
3.4 Financial performance – define what financial performance is.....................................16
3.4.1 Revenue...................................................................................................................16
3.4.2 Profit........................................................................................................................16
3.4.3 Gross Margin...........................................................................................................16
3.4.4 Net Margin..............................................................................................................16
3.4.5 ROCE......................................................................................................................16
3.4.6 Liquidity/cash..........................................................................................................16
3.4.7 Gearing 3.4.8 P/E ratio............................................................................................16
4. SWOT Analysis....................................................................................................................17
4.1 Definition of SWOT Analysis........................................................................................17
4.2 SWOT Analysis of TESCO............................................................................................17
5. Strategic Options Analysis...................................................................................................19
5.1 Business Strategy...........................................................................................................19
5.1.1 Business model – Porter’s Generic strategy............................................................19
5.1.2 Application of the model to TESCO.......................................................................20
5.1.3 Critique of the theory..............................................................................................21
5.2 Strategic Direction & Methods......................................................................................22
5.2.1 Definition Ansoff.....................................................................................................22
5.2.2 Methods of Ansoff...................................................................................................23
5.2.3 Application of Ansoff and methods to TESCO.......................................................23
5.2.4 Critical evaluation of the theory..............................................................................24
6. Conclusions and Recommendations.....................................................................................24
6.1 Definition of TOWS.......................................................................................................24
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6.1.1 Application of TOWS..............................................................................................24
6.1.2 Critical evaluation of the model..............................................................................25
6.2 Definition of SAFe.........................................................................................................25
6.2.1 Application of SAFe................................................................................................26
6.2.2 Critical evaluation of the model..............................................................................26
6.3 Conclusion......................................................................................................................26
6.4 Recommendations..........................................................................................................26
6.5 Balanced Scorecard........................................................................................................27
References................................................................................................................................30
Appendices...............................................................................................................................34
Appendix 1: History of TESCO...........................................................................................34
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1. Introduction
1.1 Aim and Objectives of the report.
The main aim of the research is to analyze the strategic management of TESCO through the
application of some of the leading models.
The objective of the research is as follows:
● To study the recent position of the company considering both the internal and the
external factors through the models such as SWOT and PESTLE
● To evaluate the industrial position of TESCO through the porters five forces model.
● To measure the financial position of the company through the application of the
critique theory
● To analyze the strategic option and strategies and their application in the company.
● To recommend the business strategies by evaluating and mentoring their strategic
planning of TESCO.
1.2 Define strategy
Strategy is the long-term policy of the organization considering changes both in the internal
and the external environment of the business. Strategies provide the direction to the managers
of the company in achieving the long-term and the short goal of the company. The company
needs to fulfill the stakeholder objectives by configuring the resources and the competencies
of the company.
According to Krummel (2022), the strategic management of the organization works at
different levels mainly the "business-level strategy", "operational strategy" as well as
"corporate-level strategy". It is essential and beneficial for the company in making a
complex decision that impacts the policies of the company in the long term.
The basic elements of strategic management in the company are as follows. The following are
"strategic position", "strategic choice" and "implement the strategy or strategy in action".
The "strategic position" is measured by the internal and external environment of the
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company. The "strategic choice" aims to the development of the methods for
"implementing the strategy" through the "development of infrastructure", "managerial
position" as well as the "efficient workforce" (Singh et al. 2021). Strategy management is
essential for meeting the goals and the objective of the company by planning, monitoring as
well as monitoring the necessities of the organization.
1.3 Context of the company
Founded
TESCO was founded in the year 1919 by Jock Cohen who was an emigrant from Poland. The
brand made its first appearance in the market in the year 1924. The first store of TESCO was
opened in the year 1929.
Key periods of growth of TESCO
1977- The economic crisis that hit TESCO caused the company to close 500 stores
From 1979 to 2005- The Company’s sales reached £1 billion leading the company to launch
the “Extra hypermarket in Pitsea, Essex”. The company's profit during this period turned
out to be £2 billion.
2007 to 2011- During that period the market share of the company reached a high of
approximately 31.4%. The company's profit reached £ 3.9 billion (business insider, 2022).
Figure1: Rise and fall of TESCO
(Source: business insider, 2022)
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Size/scale of TESCO Today
Figure 2: Number of worldwide stores Tesco from 2008 to 2022
(Source: Statista, 2022)
Around 4.7 thousand stores TESCO is situated in the UK providing a wide range of products
to its customers (Statista, 2022). In the year 2022, the stores of TESCO counted around 4750
stores including its franchise stores. It becomes one of the leading supermarkets in the retail
industry employing around 353000 people from around the world (Statista, 2022).
History
[Refer to appendix]
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1.4 Industry/Sector – Defines them, say which your company is in, how big they
are, and are they in growth.
TESCO has become UK's largest retail industry and has become the largest market leader in
the retail industry in the world.
Figure 3: Revenue of TESCO
(Source: Statista, 2022)
The annual revenue of Tesco in the financial years 2021 and 2022 is more than 56 billion
pounds in the UK. it has increased 3 times in comparison to the previous financial year. The
profit and the rate of return by the company have also increased by around 2190 million in
the current financial year (Statista, 2022).
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2. External Environment - Need to define the external environment and
external analysis/audit mentioning various levels
2.1 Macro environment
2.1.1 PESTLE
The Macro environment of the company comprises the economic, natural, social, cultural,
demographic, political as well as legal factors that influences and impacts the major decision
of the company. As stated by Singh et al. (2021), the macro-environment immensely
influences the strategic management and the success of the business by critically examining
the external forces such as the “inflation rate”, and “fiscal and monetary policies” that
affect the growth of the businesses.
PESTLE analysis is the strategic model that allows the managers to analyze the external
factors "(Political, Economic, Sociological, Technological, Legal, and Environmental)". The
identification of the key factors significantly affects the success and the failure of the
strategies implemented by the organization.
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2.1.2 PESTLE – apply it to your company
Political ● Worldwide operation of TESCO in
different countries
● Politically stable overseas market
● Response of TESCO to current and
future legislation
Economical ● Global economic crisis mainly the
pandemic
● Economic downturn mainly in the
UK
Social ● High demand for meat by Muslim
customers
● High demand for vegan food in the
European market
Technological ● Self-service check-out points
● The outage from customers was
caused by technological glitches
Environmental ● Pressure by UK government to
remove the plastic
● Concern by the public to address the
environmental issue
Legal ● Prohibition of anti-competitive
activities by the UK government
● Fines and sues for misleading the
customers
Table 1: PESTLE of TESCO
Political- The political stability in the UK environment is provided through Brexit to TESCO
which has helped in avoiding the uncertainty in the market. The overseas market of TESCO
is also quite stable from a political perspective and has provided a conducive business
environment for the company (Alexander, 2020). Company in recent years has proved to be
capable enough to respond to the changing legislation of the government. It has helped
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TESCO in adjusting to the changing marketing and business policies.
Economical- the pandemic in the years 2020 and 2021 has caused the business to suffer high
losses as customer spending was significantly decreased. The shift of the customers to
cheaper brands severely affected the operation and the profits of TESCO. The economic
downturn significantly increased the labor cost that caused the company to face losses.
Social- the Jewish customers in the UK of TESCO have a high demand for vegan food and
drinks which is raising the demand for TESCO in the European market.
Technological- The "self-service checkouts" provided by the company to its customers at
their convenience have helped the company in reducing its cost. It has encouraged gaining
the loyalty of the customers (Awadari and Kanwal, 2019). The technological glitches in the
website of TESCO have increased the outage among the customers as they were not able to
place an order or receive the delivery.
Environmental- the pressure from the UK government caused the company to remove one
billion pieces of plastic from carrying its business operations. The pressure from the public
concerning environmental issues has also been addressed by the company.
Legal- The prohibition of “anti-competitive activities” has helped the company in keeping a
watch on its competitors and merging their purchases in the supermarket.
2.1.3 PESTLE – critique the theory
TESCO has explored and analyzed the "political", "economic", "social", "technological",
"environmental", and "legal" factors that affect Tesco's business in the current macro
environment. As stated by Cooper, (2020), the analysis of the various factors of the macro-
environment by TESCO has helped the company in managing its strategic plans. It has
allowed the company to become of the leading retailers in the world and the market leader in
the UK supermarket.
2.2 Microenvironments
2.2.1 Definition Porter 5 Forces
The Porter 5 forces determiners the structure of the industry and measure the level of
competition in the industry to be faced by the company. According to Zhao, (2021), The
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Porter analysis tool examines the microenvironment of the company which helps in
understanding the impact of each factor that affects the industry. The knowledge of the
different aspect of competition prevailing in the market is essential in determining the success
of the business (Adamyk, 2019). The different factors such as the customers of the company,
its suppliers, and competing business firms in the industry help in formulating the strategic
plan by the company. The threat of new substitutes and entrants as well as the power of
buyers and suppliers evaluates the interconnected relationship between the various factors for
the strategic management of the company.
2.2.2 Application of Porter 5 Forces in TESCO
5 forces Degree of competition
The threat of new entrants Very low
Threat of substitutes High
Bargaining power of buyers High
Threats of suppliers: Average
Rivalry High
Table 2: Porter 5 forces
The threat of new entrants- The degree of competition from the new entrants to the
company is high. In the last 30 years, the retail grocery market has changed into a
supermarket. The entry of new competition is the major barrier to TESCO and the company
needs to overcome them. The company is edging the competition and still dominating the
other companies by changing its management strategies (Phan, 2021). The company has
adopted the changes in operational efficiency and invested in advanced technology like one-
stop shopping. The economies of scale, as well as product differentiation in marketing its
operation, are also posing a barrier to the company.
The threat of substitutes- Theother competitors of Tesco in the industry are offering the
same product to the customers at competitive prices. The substitutes in the market are
describing the customer base of the company. As the customers keep an eye on the new
competitors in the industry that provides them with the same product at a lower price. The
main competition of TESCO in the grocery industry is the "competitive pricing technology"
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in form of products. The major threat of substitutes for TESCO is from the "Asda-Walmart"
and "Sainsbury's" that our label and are present in the local cities and same retail market as
TESCO.
The Bargaining power of buyers- TESCO faces the high bargaining power of customers as
they pose an essential part of the business. The customer's needs are difficult to fulfill and
thus making a profit from the customers is also difficult. There are different kinds of buyers
for TESCO such as the "concentrated buyer", "low switching buyer" and "buyer competition
threat" (Ahmed and Moosafintavida, 2020). The company implies the famous "Club card"
strategy for retaining its customers which has proved to be one of the leading strategies by the
company in combating the competition in the market. The company is applying the strategy
such as customer service, low pricing, NPD, and adding differentiated products to meet the
changing demands of the customers and promote the brand effectively.
Threats of suppliers- The supplier helps in operating the business operation effectively and
smoothly. The raw material, the equipment, and the labor required by the companies in
progressing their work are supplied by the supplier. Thus, the bargaining power of the
supplier is high in situations such as high switching costs and concentrated suppliers. TESCO
provides a better price to its supplier and thus the threat of new suppliers in the industry
increases (Alexander, 2020). The company can maintain its supply by creating new suppliers
from other countries. Therefore, the degree of competition for TESCO from the suppliers is
average.
Rivalry- Competitive rivalry arises from the different organizations in the same industry that
are targeting the same customers in the retail industry. The different factors that cause rivalry
in the industry are industry growth rate, high fixed price, and low differentiation. TESCO
accelerates the rivalry in the industry by improving its level of services and inventing new
products. This has proved to be beneficial for the company in retaining its market share. The
company shifted its focus to low prices by reinforcing added facilities to their services
provided to the customers in attracting the price points.
2.2.3 Porter 5 Forces – critique the theory
The analysis of the competition in the market has proved to be the critical component of
TESCO in successfully carrying out its business. The assessment of the potential risk by the
company through the various factors has helped the company in establishing its business
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more effectively in the retail industry. The overall assessment of the competition in the
industry has helped the company in responding to the intensity of the competition and thus
contributing to the overall growth of the business. The identification of the negative and the
positive aspect has helped in catering to the ideal competitive market in the industry for the
different companies and batting profitable margins.
3. Internal Environment
3.1 Vision, Mission, Values, culture
3.1.1 Analyze/critique your company’s vision, mission, and values.
The vision of TESCO
The core vision of the company is to serve the customers, communities, and the planet in a
better manner every day. The company keeps its customers at the heart to reflect its
responsibility to the community by serving customers and society more broadly (Tesco,
2022).
The mission of TESCO
The mission of Tesco is simple “to champion its customers” by providing them with better
and great quality products at a greater value. The company aims at helping its customers to
enjoy a quality life and also allow them an easier way of living.
Values of TESCO
Three values drive the business of TESCO:
● To treat the customers the want they want to be treated- the success of TESCO has
been possible to provide a culture of trust and respect among their colleagues. The
company values help in catering a feeling of recognition to the colleagues and
rewarding them for their work (Tesco, 2022).
● Every little help to the company makes a bigger difference - Its value ensures that its
communities and the customers are served better every day. It helps to reduce the
global wastage of food and make a positive contribution to society.
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● To try harder for its customers -It includes understanding its customers as they are the
considered “Heart of TESCO”. The Clubcard data and the tools of social media help
in changing and innovating the needs of the customers.
3.1.2 Culture/leadership – apply cultural web.
The main six elements of the cultural web for the company TESCO concerning its culture
and leadership are as follows. The following are
Stories- TESCO was established in the year 1919 and founded by jack Cohen from a market
stall.
Rites and Rituals - TESCO fulfills staff potential by building talented staff through training
and development.
Symbols- TESCO's steering wheel includes people and considers its employees as the biggest
asset.
Organizational structure- The organizational structure of TESCO includes the "chairman",
"2 executive directors" and "7 independent non-executives" (Tesco, 2022).
Control systems- “UK Corporate Governance Code” and the “Financial Services
Authority” principles are applied by the company.
Power structures- The Company applies “Talent Planning for vacancies”. 8% of the
management of TESCO is from the position of the employee.
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Figure 4: Cultural Web
(Source: WordPress, 2022)
3.2 Resources/competences/core competencies
3.2.1 VRIO Analysis
The abbreviation of the term VRIO suggests the "value, rarity, imitability and the
organization". That is the framework based on the four questions that focus on the
abbreviation of the term VIRO.
3.2.2 Application of VRIO in TESCO
The application of the VIRO is based on the identification of the value and the cost to
replicate resources, findings of the risk associated with the business, and strategy
development to protect the resources and constant monitoring of the VIRO.
3.2.3 Critical analysis of the VRIO in TESCO
The application of the VIRO in TESCO can facilitate the sequential analysis of the tangible
resources and the intangible resources to improve the value chain of the business of TESCO.
It will also be beneficial for the formulation of innovative strategies to mitigate the existing
competence in the market.
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3.3 Portfolio Analysis
The application of Porter’s generic in TESCO will resolve the threats and the weakness of the
business. The innovation in cost leadership will improve the operating profits of TESCO via
the development of a low-cost strategy and the global extension of the business. Cost
leadership will also improve the quality of the product and the service through the
management of the supply chain and market strategies of the business (Krummel, 2022). The
Differentiation will improve the business innovation of the business and impact the
mitigation of the supply chain issue, product issues, and strategic issues of the TESCO.
3.3.1 Life Cycle or Boston Matrix or GE McKinsey or Parenting Matrix– choose one to
use and define it.
This present framework conduct the performance and it directs to a scientific and methodical
framework with the McKinsey model by which it can develop its strengths that demonstrate
the association between financial or market construction, market manners, and its
arrangement. The conception of perfection in “Industrial Organization Economics” that
investigates and describes the interchange between “organization structure (environment),
organizational conduct (behavior) and organizational performance (achievement)”. The
establishment conducts the performance and shows a causal hypothesis description of these
three motions.
3.3.2 Application – apply it to your company
It represents their powers, features, and downsides. This model can evaluate the existing
problem in this organization in their different sectors such as cost, employment, and their
development plan strategies condition, on which depend their success or failure rate.
Moreover, competitive market threatsand customer power, and the power processed rate by
the suppliersall can be calculated through this business management model.
3.3.3 Critique – critique the theory
The framework of the “Structure-Conduct-Performance (SCP)”plays an essential role and
performs many constructive and effective agricultural strategies. The “Structure-Conduct-
Performance (SCP)”is a methodical and systematic technique or framework which operated
to analyze how the configuration or framework of their market and the manners of their
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sellers of various entities and benefits impact the interpretation of marketing demands, and
accordingly, the interest of their government entirely.
3.4 Financial performance – define what financial performance is.
3.4.1 Revenue
The annual revenue of TESCO is "5,788.7 crores GBP" in the year 2021.
3.4.2 Profit
The percentage of the profit of TESCO is 2.26% as per the data of August 2021.
3.4.3 Gross Margin
The data for 2022 it has been suggested that TESCO has $16.468B cash.
3.4.4 Net Margin
The Net margin of the TESCO is 35Cr as per the data of August 2021.
3.4.5 ROCE
ROCE of the TESCO is about 7.4% in the year 2019.
3.4.6 Liquidity/cash
As per the data for 2022 it has been suggested that TESCO has $6.468B cash in hand.
3.4.7 Gearing 3.4.8 P/E ratio
As per the recent data Gearing, 3.4.8 P/E ratio of TESCO is (22.6x, +12.3%) in the year
2020.
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4. SWOT Analysis
4.1 Definition of SWOT Analysis
The term SWOT is the abbreviation of the Strength of the business, Weakness of the
business, Opportunities in the business, and finally the associated threats in the business. The
SWOT is considered the analyzing tool that helps to assess the four above-mentioned
conditions or phases of the business of the organization (Soegoto, 2021). Therefore, based on
the SWOT analysis further strategy to develop the business can be formed. However, in this
section SWOT analysis will be done on the selected organization that is TESCO (Moura,
2021).
Figure 5: SWOT analysis
(Source: Soegoto, 2021)
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4.2 SWOT Analysis of TESCO
Strengths Weaknesses
● The largest retailer of groceries in the
UK.
● Positioned among the four large
supermarkets.
● Geographically diversified
● Increasing stores numbers
● Diversified stores
● Achievement in international awards
● Elimination from the market of the US
as well as Japan.
● Fraud Trial
● Accounting Scandal
● Reduction of operating profits
● Penalty for selling food with an
expired date.
● Low-cost strategy
● Inadequate operational performance
● Unsportsmanlike business practices
● Exploitative labor
Opportunities
Threats
● Arguments Jacks' business
● Strategic amalgamation with other
companies
● Joint ventures
● Emerging markets
● Cashless stores
● “One Hour Delivery”
● Controversy regarding Christmas ad
● The legal threat of 'Fake Farm'
● Brexit Referendum
● Presence of strong competitors in the
market.
● Rising costs
● Issues regarding supply chain
● Issues associated with Hygiene and
sanitation.
Table 3: SWOT analysis on TESCO
The SWOT analysis of TESCO is based on the analysis of the threats of the present business
of this company, strengths of TESCO, weaknesses, and opportunities of TESCO. The study
based on the evidence suggests that TESCO is the leading Grocery retailer in the present
market in the UK, therefore this company also has a 27.9% leading share of the market in the
UK. Therefore, the SWOT analysis of TESCO also suggests that the diversity in the division
of the stores is the strength of TESCO (ZHAO, 2020). On the other hand, the SWOT analysis
of TESCO suggests that the failed operation of export impels this company from entering the
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market of Japan as well as the US which is considered the major weakness of TESCO (Xiao
et al. 2021). Therefore, the SWOT analysis on TESCO suggests the Low-Cost Strategy leads
to a reduction in the profit margin of TESCO, the poorest performance of the several outlets
is considered as one of the weaknesses of TESCO.
The unfair business practice and poor operational performance is the major weakness of
TESCO as per the SWOTanalysis (Dakhliet al. 2019). As per the SWOT analysis, it has been
found that the Joint Ventures, strategic amalgamation with the other brands, emerging market,
price matching, and cashless and cardless payments are the opportunities for TESCO to grow
their business. As the SWOT analysis on TESCO suggests the "Fake Farm", controversy with
the "Christmas ad", Brexit Referendum, competitor companies in the market, supply chain
issues, and rising costs are the threats to TESCO. The table of the SWOT analysis of
TESCO is referred to as the Appendices.
5. Strategic Options Analysis
5.1 Business Strategy
The business strategy of TESCO is defined as planning and taking action to mitigate the
business goal to sustain in the present market. The findings suggest that the main motto of the
TESCO is “Every Little Helps”. TESCO has chosen several strategies to grow their business
such as the “Greenfield strategy” to expand their market globally. The Generic strategy is also
followed by TESCO to develop their cost leadership in the business.
5.1.1 Business model – Porter’s Generic strategy
“Porter’s Generic strategy” is considered an effective business model that serves the
competitive advantages of the business organization by developing the and innovating the
business performance along with the business strategies. As per the study, the key elements of
Porter's Generic are Cost leadership, Differentiation, and the Focus of the business. Cost
leadership is based on the management of the cost, and reduction of the supply chain costs in
order to increase the economic growth of the business (Firoz Suleman et al. 2019). The
strategy of cost leadership includes the profits of TESCO are increasing due to the reduction
in the cost and the charging the average prices of the company. The market shares of the
company are increasing with providing low cost for the charges. Receiving profit on each sale
of the company with a decrease in production cost. Therefore, another tool, suggests the
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Differentiation of the business via innovation in the product and the service through effective
research and planning to increase the effective sales, marketing, and production of high-
quality products. Moreover, the Focus of the generic strategy suggests that the concentration
on the market, and understanding the several dynamics of the business are the essential
measures (Islami et al. 2020). Therefore, based on the findings, the innovation of the service
and the products along with the medium to low cost make the strategy attractive more than
that of the present competitor in the market.
Figure 6: Business model – Porter’s Generic strategy
(Source: Firoz Suleman et al. 2019)
5.1.2 Application of the model to TESCO
The application ofPorter’s Generic strategy is based on the incorporation of the three
essential tools or measures in the overall business method to innovate the business model.
The cost leadership theory can be incorporated into TESCO through the management of the
overall cost of the business including production costs, and supply chain costs to reduce the
service cost to attract more consumers (Keiningham et al. 2022). Therefore, the
Differentiation strategy can be applied in TESCO via innovation in the process of production,
innovation in the products, and innovation in the service and packaging (ISA et al. 2022). The
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strategy to focus on the satiating market can be adopted via the development of the research
by the formulation of the research team in the organization. The important aspect of the
application of Porter's generic strategy for the development of the business model of the
TESCO widely depends on the analysis of the strength, weaknesses, opportunities, and
threats of the associated business process. Therefore, the above section of the study describes
the strength and weaknesses of TESCO by performing a SWOT analysis. Therefore, the
study based on the evidence suggests that that is the major step for the application of the
generic strategy to develop the business model (Guo et al. 2019). The application of Porter's
generic strategy is based on the development of a strong leadership team followed by the
leadership theory to manage the business and the management team to analyze the needs and
the demand of the service and the products of the TESCO in the existing market.
5.1.3 Critique of the theory
The application of Porter’s generic in TESCO will resolve the threats and the weakness of the
business. The innovation in cost leadership will improve the operating profits of TESCO via
the development of a low-cost strategy and the global extension of the business. Cost
leadership will also improve the quality of the product and the service through the
management of the supply chain and market strategies of the business (Krummel, 2022). The
Differentiation will improve the business innovation of the business and impact the
mitigation of the supply chain issue, product issues, and strategic issues of the
TESCO(Greckhamer et al. 2021). The strategy of differentiation that is introduced by
TESCO is introducing good development and research with innovation. The strategy involves
delivering high-quality products to the customers. Helping the customers of the market
understand the offering about the different offerings.
The implementation of the generic strategy will improve the value chain of the business of
TESCO which is adversely affected by the Covid context through innovation in the
production, and the cost management of the service and the production (Monte, 2021).
Therefore, the study based on the evidence suggests that the application of the generic
strategy will improve the customer's satisfaction, and development of the market
opportunities (Rosnizamet al. 2020). This can be developed through the application of the
innovative technology in the production unit of the business and the innovation of the service
to provide quality service (YIH et al. 2020).
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5.2 Strategic Direction & Methods
The strategic direction can be defined as the process of maximizing the strategic benefit
through the development of the products, services, and market strategy of the business
organization. The method is scientific documentation of the existing service, market strategy
of the business organization, and theological analysis of the collected data (Ivleva et al.
2019). The strategic model determines the vision of the TESCO, developing a plan for the
development of the company, and determining set goals for the company. The goals that are
determined for the company are required to be quantified. The ideas and goals determined are
considered to be better processed and approached by the company employees.
Figure 7: Strategic Direction & Methods
(Source: Ivleva et al. 2019)
5.2.1 Definition Ansoff
The Ansoff is the product and the market growth and the development matrix which suggest
that the growth of the business depends on the existing market, innovation of the product, and
the penetration in the existing market. The important direction of the Ansoff matrix is as
follows;
● Consolidation
● Market penetration
● Market development
23

● Product development
● Diversification
● Withdrawal
5.2.2 Methods of Ansoff
The methods of the Ansoff matrix are Market penetration, Market development, Product
development, and Diversification.
F
igure 8: Ansoff matrix
(Source: Hanlon, 2021)
5.2.3 Application of Ansoff and methods to TESCO
The application of the Ansoff in the TESCO can be done by increasing efforts in the
marketing and the process of distribution, reduction in the price of the product in different
segments of the market, developing the various customer segments, and regional and
international expansion of the market (Hanlon, 2021). Therefore, the investment in the R & D
to innovate the products, innovation of the selling segment of the marketing, and
development of the diversification in the outlets of the TESCO worldwide apply the Ansoff
Matrix in the business of the TESCO.
24

5.2.4 Critical evaluation of the theory
The model of the Ansoff matrix is composed of the 4 different marketing factors that can be
able to directly affect the overall business of TESCO. It will be beneficial to TESCO to
determine the 4 different factors of the market expansion and the business strategies (Tuten,
2019). This will result in the innovation of the products, and the development of the
production of the product in the production plant by the application of the new and advanced
technology in the market segment. On the other hand, the importance of the Ansoff Matrix on
the TESCO will impact the development of the product line of the business. In addition, the
other importance of the Ansoff matrix is based on the development of the export operation
and the market penetration and the formation of the new outlets in the market. Moreover, the
business practice will be developed as a result of the formulation of the new stores in the
market (Kreutzer, 2019). Therefore, the market development and the market penetration will
result in the mitigation of the sustaining economic crisis in the present market of TESCO.
6. Conclusions and Recommendations
6.1 Definition of TOWS
The TOWS is the acronym tool of the SWOT analysis. This considers an extension of the
SWOT tool. This is the analytical tool that mainly emphasizes the formulation of the external
factor of the business rather than the internal factors of the business. This is considered as a
beneficial tool for the determination of the external opportunities of the business to minimize
the threats associated with the business.
6.1.1 Application of TOWS
The application of the TOWS matrix over the business of the TESCO is based on the four
consecutive steps of the business which are as follows;
● The 1st step is the formulation of the SWOT analysis and the accumulation of the
findings (Henry, 2021).
● 2nd step is the transformation of the findings through the TOWS matrix
● 3rd is the linking with the strategic model of the business and the assessment of the
expected outcome of the business (Richardson, 2019).
25

● 4th is the evaluation of the strategic option for the development of the business of
TESCO.
Figure 9: TOWS Matrix analysis
(Source: Henry, 2021)
6.1.2 Critical evaluation of the model
As per the findings, the critical evaluation of the application of the model suggests that the
TOWSwill be beneficial for development of the marketing strategies to mitigate the targets
which are identified by the SWOT analysis of the TESCO in the above section of the study,
this will also provide protection against the existing threats of the business. Therefore,
another benefit of the TOWS is based on the development of the decision-making capability
of the leadership to reduce the rising cost of the sales of the TESCO (Richardson, 2019).
6.2 Definition of SAFe
The abbreviation of the term SAFe is"Scaled Agile Framework". This is considered as the
set of patterns for organization and the workflow of the business for executing elegant
26

traditions at an industrial scale. The consecutive 4 levels of SAFe are"Team, Program,
Large Solution, and Portfolio". The 4.5 of the SAFe is the latest version of SAFe
(Soltanifaret al. 2021).
6.2.1 Application of SAFe
The application of SAFe is based on Advancing the "Tipping Point", training the "Lean-
Agile Change Agents", forming of Lean-Agile Center, and the formation of extreme
programming, and the give proper training for the leaders.
6.2.2 Critical evaluation of the model
The application of theSAFe will result in the development of the alignments among the
several teams of the TESCO to develop the coordination among the several departments in
the business(Atwal, 2019).
6.3 Conclusion
Here the study can conclude that Porter’s Generic strategy and Bowman's strategy are the
business models that are useful to analyze the current position of the organization in the
present market as compared to the competitive business organization in the market. Based on
the identification of the position and the demands the business strategy can be developed for
the development of the business. However, the development of the production scale and
incorporation of the advanced technologies in the production segment of the business is the
basic measure for applying the generic strategy in the business of TESCO. On the other
hand, the importance of the TOWS is associated with the development of the decision-
making capabilities in the leadership management of TESCO. Hence, that will positively
impact the development of the supply chain of the management. Therefore, the study can also
conclude that SAFewill also help in the mitigation of the threats to the business.
6.4 Recommendations
The formulation of the recommendation is based on the development of cost leadership in the
form of cost leadership to innovate the business process.The importance of the
recommendation is based on the strengthening of the legal departments to solve legal threats.
The innovation in the new technology to cross-check the quality of the product to gain
27

customer satisfaction. Therefore, the other recommendation is based on the innovation of the
supply chain management to mitigate the rising cost issues of TESCO.
6.5 Balanced Scorecard
It is an approach interpretation management model that enables managerial administrators to
maintain a record of the performance of activities by the employees within control.
Corporate Mission: Providing consumers with improved food products
Business objectives Measures Target
Financial The revenue of the
company increases
with an increase in
sales
Revenue is
determined by sales
The improvement of
the sales increases by
15 % with increases
in sales
The cost of
production reduces
Cost of production The cost of the
production reduces by
5 % with the
efficiency of
production
The profits of
divisional improves
Profit of divisional The profit of
divisional increases
by about 9%
Customer Fulfil the requirement
of the customer
Numbering of the
suggestion received
from the consumers
or customers
Fulfilment of the
requirement of the
customer by about
90% and working on
the suggestion
provided by the
customers
Recognizing the Numbering of the Holding of 95%
28

brand loyal customers of the
company and the
variation in the
product sell
customers and 15 %
increase of the sales
of the best sold
product
Refereels from the
customer collected
Number of referrals
received from
customers
Improvement of the
referrals received by
about 12 %
Internal Reduction in the time
of production of the
customers
The time
management skill for
on time delivery of
the products
10 % reduction
occurs in the
production time
Producing products
within time and with
low production of
waste for the orders
Maintaining the
uniformity of the
produced product,
calculating the waste
production per unit,
and maintaining
control
Waste production
decreases by 10 %
Improvement towards
better environment
The efficient bulbs
used are replaced and
technologies are used
replacing papers
80 % of efficient
bulbs are using,
decreases in the water
usage by 8%, and 75
% paperless functions
Learning and
growth
Processing of new
improved product
Introduction of new
products and
improvement of the
existing products
15 % introduction of
new launches and 10
% improvement of
the existing products
Empowering and Providing employees 25 % employees
29

motivating the
employees
training with
certificates
completed training
planned and received
certificates and award
for it.
The retention of the
employees to the
company increases
Processing surveys of
the employees
regarding working
satisfaction
85 % of the
employees rated their
satisfaction with the
company and 40 % of
the employees are
using policies of the
open door
Table 4: Balanced Scorecard
(Source: TESCO 2022)
TESCO may employ strategies that are involved with the marketing business along with its
development. The company is required to finance and promote the employees. The existing
employee is required to be motivated by providing required training to their employees. The
employees must practice their personal development for a better position in the market. The
company can improve their products based on the reviews and suggestions received by the
consumers and loyal customers. The company provides proper safety and health measures for
their employees will increase their efficiency and overall development.
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Appendices
Appendix 1: History of TESCO
Jack Cohen, the son of Jewish emigrants from Poland, founded Tesco in 1919 when he began
to sell surplus groceries from a stall at Well Street Market, Hackney, in the East End of
London.[14] The Tesco brand first appeared in 1924. In 1994, the company took over the
supermarket chain William Low, successfully fighting off Sainsbury’s for control of
the Dundee-based firm, which operated 57 stores. This paved the way for Tesco to expand its
presence in Scotland, which was weaker than in England. In 2006, Inverness was branded as
“Tescotown”, because well over 50p in every £1 spent on food is believed to be spent in its
three Tesco stores.
(Source:Tesco, 2022)
Appendix 2
35

Strengths Weaknesses
● Largest retailer of groceries in the UK.
● Positioned among the four large
supermarkets.
● Geographically diversified
● Increasing stores numbers
● Diversified stores
● Achievement of international awards
● Elimination from the market of the US
as well as Japan.
● Fraud Trial
● Accounting Scandal
● Reduction of operating profits
● Penalty for selling food with an
expired date.
● Low-cost strategy
● Inadequate operational performance
● Unsportsmanlike business practices
● Exploitative labor
Opportunities
Threats
● Argument Ing Jacks’ business
● Strategic amalgamation with other
companies
● Joint ventures
● Emerging markets
● Cashless stores
● “One Hour Delivery”
● Controversy regarding Christmas ad
● Legal threat of ‘Fake Farm’
● Brexit Referendum
● Presence of strong competitors in the
market.
● Rising costs
● Issues regarding supply chain
● Issues associated with Hygiene and
sanitation.
Table: SWOT Analysis of TESCO
36