Strategic Management of Tesco :An In-Depth Analysis

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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