Strategic Management: Analysing Tesco's Process and Impact of Internal and External Factors

This report discusses Tesco's strategic management process, including the steps they take to determine their strategy and the impact of internal and external factors on their strategy. It also covers PESTLE analysis, Porter's Five Forces, and more.

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Strategic Management

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Analysing the definition on strategic management......................................................................1
Analysing the process used by the organisation in order to determine their strategy..................1
Evaluating the impact of internal and external environmental variation on organisational
strategy.........................................................................................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6
Appendix..........................................................................................................................................7
Analysing business plan for the company...................................................................................7

EXECUTIVE SUMMARY
Strategic management is an effective method that help company to manage their resources
for achieving their goals in better manner. The report is about the Tesco, an international
organisation of UK. The report covers the steps that are required in determining their strategy
that helps them to increase their competitive growth. The report also analyses the external factors
of the company in order to analyse the factors that affects its competitive growth. The report also
covers the business plan of the company that helps in achieving their objectives with the help of
reduction in product price.
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INTRODUCTION
Strategic management refers to the process of managing company's resources in order to
achieve their objectives as well as goals in effective manner. It involves analysing the
competitive environment, setting objectives, evaluating strategies, analysing internal
organisation as well as ensuring that management in order to rolls out the strategies across the
organisation (Lynch, 2018). For the following report, selected company is Tesco which is an
multinational company of UK and providing retailing service to their potential customers. It is
founded by the Jack Cohen in 1919 and its headquarter is in Welwyn Garden City, Hertfordshire,
England, UK. The report covers definition of strategic management along with the process used
by organisation in order to determine their strategy. It further includes the impact of internal and
external environmental variation on organisational strategy. It also analyse the organisational
strategic plan by providing action plan for the organisation on the basis of a change in either the
internal or external environment.
MAIN BODY
Analysing the definition on strategic management
Strategic management describes the process of creating procedures, objectives and goals
of the company in order to make their organisation more competitive from their competitors.
This makes company to look in deploying their resources and staff in order to achieve their goals
effectively (Henry, 2021). Company's strategic management consist internal organisation
analysis, strategy evaluation as well as strategy execution in all over the company. Flexible
organisation may determine easier in order to make changes in their plans or structure as well as
inflexible company faces challenges in their changing environment (Makadok, Burton and
Barney, 2018). It is most important for Tesco because it allows them to analyse certain areas for
their operational improvement. This also help them to enhance their competitive growth in the
market more effectively.
Analysing the process used by the organisation in order to determine their strategy
The strategic planning process is an effective method that an organisation may use in
order to develop their plan for achieving their overall and long-term organisational goals more
effectively (Westney, 2021). This will help company to determine their vision, mission and
goals of the company. It is also a most essential role for the manager of company that help in
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meeting the organisational goals more effectively. This will also help in creating the roadmap for
their strategic objectives that assist company for putting their efforts for achieving them. In
context of Tesco, its certain steps need to follow in order to determine their strategy are
described below:
Understand the need for a strategic plan- This refers to the first and most important
step of the planning process that makes company aware about their industry environment in
which they operate their business for analysing opportunities for their development (Kemp,
2018). The company also need to aware about business's internal operation that help in knowing
the problems which is need to be solved. This will help management of Tesco to analyse their
internal market for determining the opportunities that help company to operate their business in
effectively as well as gain more and more competitive advantages.
Set goals- This is the second step of this process to set goals not only for their business
but also for their every department in order to influence them to achieve them effectively
(Bryson, 2018). The goals are most important for the strategic planning process because it allows
the management of Tesco to direct their employees more efficiently. This help in providing
common purpose to the employees to work which makes their daily activities more focused.
Develop assumptions or premises- When the company is making plan for their business
they need to considered future outcomes in their mind (Mallon, 2019). The future is
unpredictable which makes company to makes their plan on the basis of their future assumptions
or premises. This makes management of Tesco to understand that their company has potential in
order to achieve their future goals more effectively. This makes company to analyse their
internal and external environment for creating their plan that helps them to increase their
competitive advantages more effectively.
Research different ways in order to achieve their objectives- In business environment,
there are many methods exist that helps company to achieve their goal (Oyewo, 2021). This
makes important for the management of Tesco to take time for conducting research about the
various methods that their employees could work effectively in order to achieve their objectives.
After analysing some methods that helps in achieving their goals, the company need to examine
all these solutions in order to find best methods from all of these.
Choose organisational plan of action- Once the company set their objective, evaluate
their assumptions as well as identifies different methods in order to complete their goals, after
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this company need to analyse their action plan for this. The ideal strategic plan that the company
select is the one that help them to earn more profit (Bryson and Edwards, 2017). While making
plan of action by the management of Tesco they need to avoid those plan that can possibly affect
their business money. They have to select those plans which has least number of negative
consequences and that create problem for the company in order to achieve their goals. They
should choose those plans of action which can adapt by the company.
Develop a supporting plan- After analysing most suitable and adaptable plan of action
for the company, they also need to develop a secondary plan in order to help their primary plan.
This makes management of Tesco to keep their goals in mind while creating their secondary plan
because this will help company to achieve their goals in most effective manner (Irawanto, 2017).
If the company is planning to enter in another country market, then the company need to conduct
research about another country, create a marketing plan as well as select best method in order to
move towards it. Their secondary plan includes all those steps in order to support in
implementations of their main plan.
Implement the strategic plan- This refers to the final step of their strategic planning
process which makes company to implement their plan (Gambardella, and Helfat, 2018). This
makes manager of Tesco to evaluate skills and experience of their employees to ensure that their
organisational plans run smoothly as well as meet their goals more appropriately. The managers
also ensure that their all-team members will properly understand their roles and responsibility in
the organisation in order to help company for achieving their goals.
Evaluating the impact of internal and external environmental variation on organisational strategy
The impact of internal and external environment of the company can be analysed with the
help of PESTLE analysis. PESTLE analysis refers to the framework of certain factors that
includes Political, Economic, Social, Technological, Legal and Environmental that affects the
business environment of the company. Tesco is an international food retailing company and it
was the second largest retailer after Walmart on the basis of their revenues (Alfon, 2018). The
company generally knows as the seller of food and non-food products but it also provides
various service which includes insurance, finance, mobile, hardware services and many more. In
order to understand the impact of its internal and external environment for changing its
organisational strategy are described below:
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Political factors- This refers to the those factors that has a great impact on the business
environment of the company due to the influence and intervene of government in the industry or
economy. As the Tesco provides its products and service in many country therefore global
political factors has the great influence in the performance of the Tesco (Friesendorf, and
Uedelhoven, 2021). The factors includes legislation act, tax rates or the stability of the
government of the country where they operate their business. By the increase of financial
instability in all over world, the government of developing country encourage them in order to
expand their business for creating job in their country.
Economic factors- The factors that affects the business environment of the company due
to the changes occurs in the economy because it directly affects the demand and supply of their
product or service. As this factors has the direct impact on Tesco's leverage costs, profit, demand
and price, its management need to aware about the changes in taxation or any other economic
factors which may affects the accessibility of their finance (Bees and Williams, 2017). The
company make their focus on their two important strategies that are diversification and
internationalisation in order to increase their competitive advantage effectively. By the reduction
on disposable income and household incomes makes management of Tesco to focus on
advertising their value brands instead of providing most luxurious products.
Social factors- This implies those factors that the business environment of the company
may impacted due to the changes and trend in the society. There are many variety of changes and
trends in the society that makes worldwide customers of Tesco to move towards the one-stop
shopping and bulk shopping. This makes Tesco to increased the number of non food items that
offered the sales. The kind of product and services desired by the consumers influenced their
attitudes and beliefs which also affects the business environment of Tesco (Ulubeyli and
Kazanci, 2018). After the impact of COVID 19, people are more focus on purchasing more
healthy and organic products this makes company to makes their focus on providing more
healthy and organic products to their customers.
Technological factors- It describes those factors that affects the business environment of
the company due to the daily development and improvement of technology (Ethiraj,). The
advancement and development in technology creates more and more opportunities for the Tesco
in order to increase their competitive advantage more effectively. By the enhancement and
development of online shopping makes easier for the customers to purchase goods and service
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more effectively that provides opportunities for the company in order to operate their business
more efficiently. The company make their focus on providing home delivery service for the
customers in order to make their customer satisfaction more effective.
Legal factors- The factors that affects the company due to certain laws and legislation in
the country. The Tesco operate their business in many countries and their various laws and
legislation affects its performance appropriately. In order to maintain consumer protection law in
every country which makes company to reduce the price of their product in order to make them
purchase. The company follows health and security laws of every country by providing fresh and
healthy to their customers as well as healthy and safe environment to their workers also (Bonsu,
2019).
Environment factors- The changes in environment and climate also impacts certain
company. By the increase in environment issues the pressure increased to the Tesco to use
effective strategy in order to maintain the environment protection in all over the world more
effectively. It also committed for reducing its carbon step by 50%. The company is also focus on
reducing the waste produced in their different stores by raising social conscience in their
customers (Rugman and Douglas 2018).
Porter's Five forces model-
Porter's five forces refers to a model that help company to analyse as well as identifies the
five competitive forces in the industry as well as determine strengths and weaknesses of an
industry. In respect of Tesco, its five forces are described below:
Competition in the industry- There are many competitors exist in UK for Tesco which
reflects greater threat for them. These competitors spend more in marketing and advertising
which may affects them.
Potential of new entrants into an industry- This describes that the Tesco is one of the
largest retailers in UK which makes strong barriers for the new entrants. This results low
potential of new entrants into an industry.
Power of suppliers- The power of suppliers is low for Tesco as it works with more than
2500 suppliers in UK and thousands of more in all over the world. This makes them competitive
in the retailing industry.
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Power of Customers- The power of customers is Low for Tesco as its provide quality
service in reasonable price that help Tesco to attract more and more customers towards the
Tesco.
Threats of substitutes- Tesco provides different variety of products as well as sells
highest majority of products that help them to operate their business effectively in the industry.
Threats of substitutes for the Tecso is low as its strong competitors also offering similar products
in the market.
As per the above discussion, it has been analysed that Tesco is highly competitive
company is UK market that provides effective and quality products to their customers in to make
them satisfied in the organisation.
CONCLUSION
From the above-mentioned report, it is concluded that strategic management is most
important for the company that helps them to identify the most profitable opportunities, prepare
for the future, be action-oriented as well as strengthen their organisational structure. Strategic
planning process is an effective method that contain various steps that help company to achieve
their goals effectively and increase their competitive advantages. Most of the company used
PESTLE analysis that help company to analyse their internal and external environment that may
create possible opportunities or threats for the company.
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REFERENCES
Books and Journals:
Lynch, R., 2018. Strategic management. Pearson UK.
Henry, A., 2021. Understanding strategic management. Oxford University Press.
Makadok, R., Burton, R. and Barney, J., 2018. A practical guide for making theory contributions
in strategic management. Strategic Management Journal, 39(6), pp.1530-1545.
Kemp, R.L., 2018. Strategic planning in local government. Routledge.
Bryson, J.M., 2018. Strategic planning for public and nonprofit organizations: A guide to
strengthening and sustaining organizational achievement. John Wiley & Sons.
Mallon, W.T., 2019. Does strategic planning matter?. Academic Medicine, 94(10), pp.1408-
1411.
Bryson, J. and Edwards, L.H., 2017. Strategic planning in the public sector. In Oxford Research
Encyclopedia of Business and Management.
Irawanto, D.W., 2017, May. Indonesia Human Resource Management Practices: Cultural
Dimension and PESTLE Analysis. In Conference Proceedings International Conference
on Social Science and Management ICSSAM (pp. 574-590).
Alfon, H.B., 2018. Development of Metrics for the Functional-level Strategic Program
Designing of Interventions for Marginalized Communities and Vulnerable
Groups. Ascendens Asia Journal of Multidisciplinary Research Abstracts, 2(1).
Friesendorf, C. and Uedelhoven, L., 2021. Macro-Environment of Mobility. In Mobility in
Germany (pp. 11-17). Springer, Cham.
Bees, A.D. and Williams, I.D., 2017. Explaining the differences in household food waste
collection and treatment provisions between local authorities in England and
Wales. Waste Management, 70, pp.222-235.
Ulubeyli, S. and Kazanci, O., 2018. Holistic sustainability assessment of green building industry
in Turkey. Journal of Cleaner Production, 202, pp.197-212.
Akyuz, G.A. and Gursoy, G., 2020. Strategic management perspectives on supply
chain. Management Review Quarterly, 70(2), pp.213-241.
Denning, S., 2017. The next frontier for Agile: strategic management. Strategy & Leadership.
Barney, J.B., 2020. Measuring firm performance in a way that is consistent with strategic
management theory. Academy of Management Discoveries, 6(1), pp.5-7.
Rugman, A.M. and Douglas, S., 2018. The Strategic Management of Multinationals and World
Product Mandating 1 (pp. 90-101). Routledge.
Bonsu, S., 2019. Strategic management: The concept of competing with self. Journal of
Marketing and Management, 10(2), pp.20-44.
Ethiraj, S.K., Gambardella, A. and Helfat, C.E., 2018. Theory in strategic management. Strategic
management journal, 39(6), pp.1529-1529.
Oyewo, B., 2021. Do innovation attributes really drive the diffusion of management accounting
innovations? Examination of factors determining usage intensity of strategic
management accounting. Journal of Applied Accounting Research.
Westney, D.E., 2021. MNCS and cross-border strategic management (pp. 301-318). Oxford
University Press: New York, NY.
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Appendix
Analysing business plan for the company
A business plan refers to the document that contain the list which describes the actions which is
needed in order to achieve their goals or objective more relevantly. In respect of Tesco, its action
plan in order to enhance its competitive growth with the help of reducing its products price for
their customers are described below:
Basis Description
Summary Tesco is an international retailer company that provide service of general
merchandise and groceries product to their customers. The company has
around 4,673 shops in all over world and mainly provide its service in
Ireland, Czech Republic Slovakia, United Kingdom and Hungary. The
company has around 367,321 employees and its last year revenue is £57.887
billion.
Mission The mission of the company is increased its competitive growth in
international market by providing reasonable products to their customers.
Vision The vision of the Tesco see itself as a most competitive company that
provide best service to their customers.
Objective The objective or goals of the company are:
 Attract more and more customers in all over the world
 Make strong customer base
 Enhance its competitive growth
Situation The situation of the company is analysis with the help of SWOT analysis:
Strength
 Tesco acquire largest market
share of UK which is an its
strongest strengths that help
them to achieve their goals.
 The organisational culture of
the company is adaptive
Weaknesses
 Its shortage of production
may create problems in
achieving the goals more
properly.
 Its Quality control is poor
which affects its business
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which helps in achieving the
goals in changing
environment.
 It delivers strong
performance during Covid-
19 pandemic which makes
company to increase their
competitive position.
environment.
 The company faces may food
safety issues which also
create challenges to them in
order to enhance their
competitive growth.
Opportunities
 Raising of online sales of
grocery creates opportunity
for the company to improve
their competitive growth.
 Development and innovation
of technologies is also
beneficial to them.
 High-Unemployment rates
creates opportunity to
increase their sales as well as
employed high skilled
employees.
Threats
 Increase of Competition in
global business environment
may affects its business
environment as well as
competitive growth.
 Relations of UK and
European Union also a
threats for the company.
 Economic recession will
directly affects its sales and
growth.
Tactics Product- It refers to things that the company need to provide its customers
in order to increase their sales.
Prices- This refers to the cost of their products which they are supposed to
provide their customers. The management of Tesco focus on providing their
products in more reasonable prices.
Place- The place company want to sell its product is world wide in order to
make effective growth or position in global business environment.
Promotion- This makes its management to use social media platforms in
order to make it easier for the customers to know about the company's
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products with their reasonable prices.
Budget Particulars Amount (£)
Marketing 10000
Promotional activity 20000
Print media 120000
Plant and machinery 7000
Total 148000
Controlling and
monitoring
The management of Tesco uses KPI (Key Performance Indicators) which is
an effective measuring tool that help company to measure their performance
after implementing their strategy in order to make them more effective for
their future goals.
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