Strategic Planning for Tesco: Impact of Internal and External Factors on Organisational Strategy

This report focuses on Tesco's strategic planning process, including the impact of internal and external factors on organisational strategy. It includes a critical assessment of the process used by organisations to determine their strategy, a review of Tesco's strategic plan or business plan, and more.

Name:
Module: Strategic Planning
Chosen company: Tesco
Instructor Name:

Executive summary:
Strategic planning helps in predicting the future scenario by defining the vision and
mission of the company. This helps in achieving objectives and goals in effective manner by
reducing the risk and threats. Company can achieve opportunities and competitive advantages
with the help of strategic planning. It is critically assessed that strategies were very beneficial in
the growth of organisation. Impact of internal and external factors are also evaluated so that
company can identify the working environment. Strategic business plan is also carried out on the
basis of all the factors.

Table of Contents
Executive summary:.........................................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
TASK 1............................................................................................................................................4
An introduction including a definition of strategic management...........................................4
A critical assessment of the process used by organisations to determine their strategy........5
A critical evaluation of the impact of internal and external environmental variation on
organisational strategy............................................................................................................6
A review of an organisation’s strategic plan or Business Plan..............................................9
CONCLUSION..............................................................................................................................11
REFERENCES: ............................................................................................................................12
Books and Journals...............................................................................................................12
Appendices.....................................................................................................................................13

INTRODUCTION
Strategic planning refers to the identification of direction, strategies, decisions and vision
for the accomplishment of targets in an organisation. It ensures proper allocation of resources
and their utilization which helps every organisation in achievement of goals in effective manner.
Managers predicts future conditions and formulate strategies which help them in smooth
operations (Hanlon, 2021). This report is based on Tesco which was established in 1919. It is
headquartered in England, UK and offer products like food, clothes, supplements, nutrition and
personal care products. This report will include definition and importance of strategic
management. Strategy which is used by organisation is critically assessed in this report.
Evaluation of the impact of internal and external environmental factors on organisation. This
report also includes review of Business plan on the basis on change in their external or internal
environmental factor.
MAIN BODY
TASK 1
An introduction including a definition of strategic management.
Strategic management refers to the selection of objectives, goals and objectives in order
to make organisation more profitable. It includes internal business analysis, strategy evaluation
and their implementation so that organisation can achieve their goals in best possible manner
(Huxley, 2020). Tesco focus on their management which improves the efficiency and
performance of their employees. It ensures that resources are equally distributed in each and ever
department according to their requirements so that they maintain quality of their products and
reduce excess wastage. With the help of strategic management, managers of Tesco evaluate the
upcoming environmental and other risk and make strategies to control those factors. This helps
them in identification of better opportunities which help them in maximization of profits. Proper
guidelines, rules, regulation, procedures and policies are formulated so that employees maintain
uniformity in their operations.
Strategic management helps in making operations proactive in Tesco which results in
better growth and development. It makes organisational structure more strong and promotes team
work which reduces conflicts in organisation. Team work helps in reduction and stress of

employees and improve their mental health. Competitive advantages are easily identified with
the help of strategic management which make Tesco a successful multinational company. Better
coordination among employees and decision making is improved when managers create strategic
plans for their operations (Ahmadi and Abadi, 2020). It provide sense of direction which guide
employees how to perform in effective manner so that they can increase revenue generation. It
helps Tesco in increasing their market share and brand image because of their best services and
quality products. Strategic management set appropriate values and assign roadmap which every
employee of Tesco follows without failure. Due to the improved performance of workforce,
employee retention can be seen in organisation with the help of strategic management.
A critical assessment of the process used by organisations to determine their strategy.
It is critically evaluated that strategic planning is used by organisation for their growth
and development (Falqueto and et.al., 2020). Strategic planning helps mangers in evaluating the
factors which affect the business environment. Tesco prepare strategic plans in order to detect
the negative aspects and identify better opportunities so that they generate more profits. A
particular process is used by Tesco to determine their strategy which is as follows:
Determining the strategic position: This is the first stage of strategic planning process
which defines various short term and long term objectives which company have to achieve in
future (Hanlon, 2021). It evaluate all the external and internal factors which are used in the
production process of Tesco. Managers also identify various factors like employee turnover,
customer insight, technological issues and collection of data at this stage.
Prioritize your objectives: After analysing the current market factor and position of
company, next step is based on determining the objectives. Measurement of objectives helps
organisation in planning operational procedures which have to be followed for smooth
operations. Tesco creates outline which have to be followed by employees in order to achieve
objectives without any difficulty. Objectives may include improved quality, up gradation of
business website, generation of new leads and improvement of email open rate.
Develop a plan: At this stage, managers prepare plans which help organisation in
achievement of success (Hayes and et.al., 2022). Various strategies and policies are developed in
order to carry out the performance. Tesco mapping the process and create path which is more
easier for employees to follow them. It reduces risk and cut down excess cost which enhance the

performance of productivity. Different innovative ideas are developed so that employees can
maintain quality in long run.
Execute and manage the plan: After development of plan, managers implement the
plans on this stage. Plans are discussed with all the employees in organisation and proper
documentation of plan is carried out (Antipov and et.al., 2019). Employees of Tesco work
according to these plans which improve their performance. Responsibilities and authorities are
divided equally which ensure the correct implementation of these plans in organisation.
Review and revise plan: It is the last stage of strategic planning which focus on the
review and revision of the plan which is implemented. Tesco measure the performance on the
basis on these plans whether the operations are effective or not. If plans are not proved
successful then required changes are implemented in the existing plan.
A critical evaluation of the impact of internal and external environmental variation on
organisational strategy
Internal and external environmental factors affect the operations of organisation which
can impact their profitability. Tesco uses various models for evaluation of these factors which
are as follows:
SWOT analysis
This technique helps businesses in assessing their strengths, weaknesses, opportunities
and threats (Mosadeghrad and Isfahani, 2018). It helps in identification of competitive
advantages and helps in formulation of policies which results in smooth operations. SWOT
analysis of Tesco in discussed below:
Strength Weaknesses
Strengths of organisation are positive aspects
which results in profit maximization. Tesco is
a largest multinational grocery store in UK.
They have captured market area in effective
manner which promotes their brand image.
Relationship of Tesco with their suppliers are
very good which help them in maintaining
effective cost (Kemp, 2018). Raw materials
In some of the stores of Tesco, workforce is
not properly trained which affect the
operations. Proper training is required in order
to compete in the market (Bryson, 2018). Lack
of training results in various mistakes like
financial errors, less operational profits and
and accounting scandals.
Tesco uses some of the techniques in their

and other inventories are easily sourced by
Tesco in low cost which help them in making
quality products in effective and efficient
manner. This reduces wastage in production
and increase performance of employees.
operation to acquire the large market share
which results in low revenue generation.
Maintaining quality and offering products at
lower prices at a same tome result in less
profits.
Opportunities Threats
Tesco is offering services on the global
platform but they are planning to expand their
presence by increasing number of stores in
several countries (Bryson, 2018). This will
help them in growth and development in
effective manner.
Tesco has created their website which help
customers in online shopping. During
pandemic, they generate revenues because of
their online presence. They also offer home
delivery services which increase their sales.
New competitors are emerging in market
which offer same products which Tesco is
already selling in relatively low cost. This can
influence the mind set of customers and shift
their interest toward competitors. Some of the
companies like Aldi, Carrefour and Walmart
are the competitors of Tesco.
Some of the economical changes affect the
revenue generation of Tesco. Government
rules, taxation and regulations hamper their
operations in negative aspect.
Pestle Analysis
It is a tool which helps the organisation to under the factors which affect the industry
environment. On the other hand, Tesco is a retail supermarket outlet. They are famous for
providing different grocery products and services to the customers (Bryson and Roering, 2018).
The main USP of the company is to provide these services at low cost. This helps them to gain a
competitive edge in the market.
Pestle analysis stands for several environmental factors which are described below:
Political Factor – There are certain Political factors which affect the organisation
business in the market. It includes Tax policy, trade restrictions, tariffs etc (Globocnik and et.al.,
2020). The company has to practice their operations by analysing all different factors. For
example when the company shift their business in new regions. They had to follow all the

governmental policies in the particular region. On the other hand, while entering in the new
market. Tesco follows a strategic plan to expand their operation in different regions.
Economic Factor – It helps the organisation to understand various economic aspects of
the economy. There are certain economic factors which affect the business. For example, High
unemployment rate, Interest rates, Labour cost etc. Tesco is also getting affected by these factors
due to Covid situations. The company is facing lot of challenges in supplying their products.
They are not able to fulfil the customer needs in the market.
Social Factor – Social norms and values are important for an organisation. It helps the
company to carry out their operations smoothly in the market. There are certain social factors.
For example Cultural aspect and perceptions, age distributions etc (Andrade and Loureiro, 2020).
Tesco positive attitude and sustainable business practices helps them to fulfil all these social
factors. In the market as well as in the organisation. The company build a healthy relationship
with its employees and this makes their staff more productive. Due to this the organisation attain
their future goals and objectives in a systematic way.
Technological Factor – This factor help the organisation to achieve new technological
growth in the market. There are certain factors which are included in technological factor. For
example Research and development activity, the rate of change in technology, Automation etc.
Due, to dynamic market situations and digitalization Tesco is doing huge technological
improvements in their organisation. The company has introduced a shop and go feature which
helps the customers to scan and pay for their groceries and products on the smartphone. This
technology could revolutionise the market in the future.
Environmental factor – There are certain environmental factors which create a
ecological impact on the business. It includes weather conditions, temperature, climate change
pollution etc (Dowsett, 2020). Tesco do their business in a sustainable way. They fulfil the basic
values and ethics towards the environment. In today's world there is increasing importance of
environment friendly operations. On the other hand, Tesco plan includes to eliminate
deforestation and make their products packaging fully recyclable by the year 2025. These values
makes the company different from its competitors in the market.
Porter 5 forces model
This model analyse the various competitive factors which affect the operations of
organisation. It helps in identification of strengths and weaknesses of businesses and provide

ideas for their improvement. Tesco uses this model to identify their external and internal factors
which is mentioned below:
Competition in the industry: It includes the competitor of organisation which affect the
profit generation of company (Pierce and Goldstein, 2018). Competitors of Tesco try to acquire
the market share with different marketing and advertising techniques. Some of the competitors
like Lidl and Aldi are offering same products in lower prices but Tesco maintain their brand
image by capturing largest share of market.
Bargaining power of buyers: Large number of market share is captured by Tesco to
offer their products. Customers can bargain and switch their interest towards other companies but
Tesco maintain quality of their products. Competitors such as Sainsbury and Asda try to attract
their customers but they can not match the quality which Tesco offer to their customers.
Bargaining power of suppliers: Suppliers plays important role in the production
process. Tesco maintain good relationship with their suppliers which results in low cost of raw
material. Bargaining power is slightly lower of suppliers because Tesco have more then 2500
suppliers (Bryson and Roering, 2018). Negotiation is reduced because of the healthy relationship
between Tesco and supplier which help them in cut down of extra cost.
Threat of new substitutes: Various other companies also manufacture same products
like Tesco. They provide substitutes and alternatives in the market which can affect the sale of
Tesco. They offer products in wide ranges and also maintain quality which lowers the threat of
other substitutes. The quality of their products justifies prices which attract more customers to
buy them.
A review of an organisation’s strategic plan or Business Plan
Business plan refers to the formal document which includes the targets and goals of an
organisation. It is a proper guideline which suggest employees how to do and what to do in
efficient manner (Tang and et.al., 2020). Tesco prepares business plan which includes every
department like finance, marketing, operational and human resource. Tesco is using obsolete and
slow technological tools which slower down their operations. Managers are planning to
implement advanced technological changes so that they save lot of time and improve
performance of their workforce.
Tesco used Ansoff matrix to analyse the requirement of technology which help them in
capturing the large market area. It involves four strategies which are market penetration, product

development, market development and diversification. Among these four strategies Tesco used
market development strategy which help them in growth and expansion. The objective of Tesco
is fulfilled with the implementation of shop and go because it attracts large customer base which
results in higher profits. Other technologies are also used which enhance the performance in
lower cost.

CONCLUSION
From the above report it can be concluded that every business needs strategic
management to their business smoothly. Planning and management provides particular
guidelines which have to be followed by employees. Performance improvement can be done with
the help of strategic planning as it identifies various risk factors which affect the operations. It
provides measures to control the risk and threat with the help of various models. Those models
identified the external and internal environmental factors which directly or indirectly affect the
profitability. Strategic planning process is used by an organisation to determine their strategy of
operations. Strategic management up grade business performance and implement innovative and
creative ideas which help business in acquiring more customers.

REFERENCES:
Books and Journals
Ahmadi, M. and Abadi, M.Q.H., 2020. A review of using object-orientation properties of C++
for designing expert system in strategic planning. Computer Science Review, 37,
p.100282.
Andrade, H.S. and Loureiro, G., 2020. Comparative Analysis of Strategic Planning Based on a
Systems Engineering Approach.
Antipov and et.al., 2019. Some essential features of strategic planning. Наука и образование:
новое время, (1), pp.178-183.
Bryson, J.M. and Roering, W.D., 2018. Applying private-sector strategic planning in the public
sector (pp. 202-219). Routledge.
Bryson, J.M. and Roering, W.D., 2018. Applying private-sector strategic planning in the public
sector (pp. 202-219). Routledge.
Bryson, J.M., 2018. Strategic planning (pp. 208-229). Routledge.
Bryson, J.M., 2018. Strategic planning for public and nonprofit organizations: A guide to
strengthening and sustaining organizational achievement. John Wiley & Sons.
Dowsett, L., 2020. Global university rankings and strategic planning: a case study of Australian
institutional performance. Journal of Higher Education Policy and Management, 42(4),
pp.478-494.
Falqueto and et.al., 2020. Strategic planning in higher education institutions: what are the
stakeholders’ roles in the process?. Higher Education, 79(6), pp.1039-1056.
Globocnik and et.al., 2020. Bridging strategic planning and business model management–A
formal control framework to manage business model portfolios and
dynamics. European Management Journal, 38(2), pp.231-243.
Hanlon, A., 2021. Digital marketing: strategic planning & integration. Sage.
Hanlon, A., 2021. Digital marketing: strategic planning & integration. Sage.
Hayes and et.al., 2022. Corporate social responsibility & the advertising strategic planning
process: a literature review & research agenda. International Journal of Advertising,
pp.1-23.
Huxley, M., 2020. Administrative coordination, urban management and strategic planning in the
1970s. In The Australian Metropolis (pp. 131-148). Routledge.
Kemp, R.L., 2018. Strategic planning in local government. Routledge.
Mosadeghrad, A.M. and Isfahani, P., 2018. The challenges of strategic planning in Tehran
province hospitals. Management Strategies in Health System, 3(3), pp.184-200.
Pierce, E.M. and Goldstein, J., 2018. ERM and strategic planning: A change in
paradigm. International Journal of Disclosure and Governance, 15(1), pp.51-59.
Tang and et.al., 2020. Online-to-offline mobile charging system for electric vehicles: Strategic
planning and online operation. Transportation Research Part D: Transport and
Environment, 87, p.102522.

Appendices
The business plan is discussed below:
Executive summary: Tesco is a retail multinational company which offer groceries and
various products. It provides various software and financial service on the international platform.
Due to slow operations they face many challenges in their day to day activities. They introduced
shop and go technology which help them in speed up their performances. This technology
reduces the waiting time of customer in the billing line as they can scan and pay from their
phones also.
Background: Tesco is a leading brand who sell goods and products all over the world with the
help of physical store and online websites. They include variety of products including consumer
goods, supplements, nutrition, personal care, furniture and electronics.
Market analysis: It is the assessment of market according to their qualitative and quantitative
elements of market. It identify the buying pattern of targeted customers which help Tesco in
manufacturing of products. Tesco used ansoff matrix which is discussed below:
Ansoff matrix: This framework is used by businesses to evaluate strategies and plans for the
future growth. It help Tesco in gaining various competitive advantages so that they can earn
more profitability. The four quadrants of ansoff matrix is mentioned below:
Market penetration: This involves that organisations sell their existing products and
goods in existing market which is safest from all the options. This helps Tesco a lot because they
already the know the market area which they are serving. Tesco uses marketing and promotional
techniques to enhance their sales.
Product development: In strategy, organisations offer new products in their existing
market which help in attracting more customers. Tesco manufacture goods and products which
are required by their customers so that they can acquire large market area.
Market development: Completely new market is selected to the the existing products. It
help Tesco in expanding their geographic boundaries by adding more targeted customers.
Diversification: This strategy is generally used by new start ups because it involves new
products in new marketplace. In involves research and development with the large amount of
capital.

It is evaluated that Tesco can opt for market development because it helps them to gain
various competitive advantages by expanding their boundaries in new market with same
products.
Objective: The main objective of Tesco is
 To target new customers by expanding their business in effective manner.
 To enhance their sales by 10% in next 6 months
Monitoring and controlling: To commence the operations in effective manner Tesco
implemented this strategy which improves the performance of their employees. Operations
should be monitored and controlled on regular basis so that business environment can be
evaluated easily.