Strategic Management of Tesco PLC

This report discusses the strategic management of Tesco PLC, including its objectives, SWOT analysis, core competencies, cultural web, PESTLE analysis, Porter's Diamond, Porter's Generic Model, Ansoff's matrix, SAFE framework, strategic changes, and conclusion.

Running head Tesco 0
Tesco PLC

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Executive Summary
Current strategy and position of business helps in analyzing the efficiency and capabilities which
helps in creating more values of the company. Tesco has many competitive advantages because
of its internal strengths and external opportunities. Tesco has expanded their business in different
Asian markets and that helped them in developing opportunities. In retail market, Tesco has to
focus on the cost leadership and product differentiation so that it helps in creating more
customers. Tesco PLC is a leading firm in retailing market and they had established their
position in market by creating values and satisfying customers as compared to their competitors.

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Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................3
Company profile..........................................................................................................................................3
SWOT analysis............................................................................................................................................3
Core Competencies......................................................................................................................................4
Cultural Web...............................................................................................................................................4
PESTLE analysis Issues faced by the Organization in the chosen market..................................................5
Porter’s Diamond........................................................................................................................................6
Porters Generic Model.................................................................................................................................7
Ansoff’s matrix...........................................................................................................................................7
SAFE framework.........................................................................................................................................8
Strategic changes.........................................................................................................................................8
Conclusion...................................................................................................................................................9
References.................................................................................................................................................10

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Introduction
In this report, the strategic management of Tesco PLC will be discussed along with the
objectives and overview of the organization. The SWOT analysis will be done for identifying the
capabilities of TESCO. The external analysis of the report includes the PESTEL that affects
TESCO. In this report, 5 forces of porter will be explained for analyzing the retail and super
market position of the industry along with the core competencies and evaluation of future
strategies will be done by SAFE framework. Stakeholders of TESCO have a great impact on
growth of the business. It also includes the strategic analysis which reflects its external and
internal analysis of resources. The future strategies will be discussed which will help in growing
business.
Company profile
Tesco Plc. deals in multinational grocery and merchandise retail. It has its operation in almost 12
countries and has 2500 stores and almost 350,000 employees in the world. They had their
operation in four banner of Extra, Superstore, Metro and Express. The mission of the company is
to help the customers so that they enjoy the better quality of life and to ease the way of living.
Vision of the company is to make the business highly valued by the customers. The objective of
the TESCO is to become a pleasant workplace so that the employees get a chance to of being
themselves (Okumus,2003). Their main objective is to expand their business in organic products
all over the world.
SWOT analysis
SWOT analysis helps in analyzing the issues and capabilities of the business which impacts on
the strategy development. It helps the organization to follow the strategies in future.
Strengths
Tesco is the one of the biggest retailer who deals in grocery and leading supermarket and market
share in the UK. It has an efficient supply chain network and also maintains a profitable

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relationship with their suppliers. It also offers huge job opportunities to people and in worldwide
have more than 743k employees. They are growing in number of retail stores and increasing their
revenue every year.
Weaknesses
Tesco Plc has performing a poor operation in various countries and market research is important
before entering into new market but they lack in market research before entering in new market
and it causes a failure of business in some specific markets (Gurel and Tat, 2017). They had a
financial errors in business because of high debts and liability of credit cards. There low cost
strategy of products leads them in reducing their profits annually.
Opportunities
Tesco has an opportunity for joint venture where the stores are underperforming. They can
upgrade their business by commencing online shopping and home delivery services in market.
They had an opportunity to expand their business in emerging countries.
Threats
Tesco has many competitors in supermarket like Wal-Mart and Aldi, there market can be
threaten with competitors. They had an economic crisis and credit crunches in some regions
because of rules and regulation as they affect their operation activity (Gurel and Tat, 2017). They
had an issue of fake farm legal threat by misleading customers with fake brand names.
Core Competencies
The management of Tesco focuses on the competencies which really affect the competitive
advantage. The core competencies of Tesco are the employees and customers. Competence helps
in analyzing the level of performance which is better than the competitors (David , 2016). Tesco
can adopt the new changes in circumstance and opportunities as it will help in core
competencies. They had achieved the core competencies by increasing the efficiency,
capabilities and performance of the business (Wheelen and Hunger, 2011). In order to satisfy the
customers, they spend more time to do research in market so that they can serve customers in
better way than competitors.

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Cultural Web
Cultural web helps in analyzing the Tesco’s political, symbolic and structural aspect. It is
important to analyze the culture of an organization. Tesco’s culture is friendly and supporting
towards the employees. Staff’s efficiency and manager’s decision are reviewed and controlled by
the management. Tesco has a strong internal environment by having a proper communication
between the management (Palmer, 2005).
Stakeholder Analysis
Stakeholders are those who have position in business directly or indirectly. They can be person,
group or organization. Few stakeholders of Tesco are consumers, employees, shareholders,
competitors and Government of UK. Tesco has a solid customer base in UK and they also have
unique customers. Tesco also consider and keep their employees on priority. They make the
effective strategies to uplift the employee’s quality of life. For Tesco PLC, employee factor is the
most valuable factor to grow and attract customers in market (Lowe, et al., 2012). Tesco PLC
exists because of the shareholders. For the purpose of finance, it is the most important
stakeholder group for the business. Tesco has a more competition in market because of food and
non-food retails industry. They have competitors like ASDA, Sainsbury and Waitrose in
domestic market and they have many competitors in international market also.
PESTLE analysis
Company has to face the several issues to perform better in market.
Political factors- Company have to consider and face the political issue like political stability,
legal framework, laws, price regulations, taxation, tariffs, product labeling. Economic factors- It
is important to consider the economic conditions and company faces the issues like inflation rate,
interest rate, exchange rates, quality of infrastructure in retail industry. Social Factors- Social
issues faced by the company are demographic changes, customers behavior and attitude.
Technological factors- technology change is the major issue faced by the company. Technology
changes have an impact on product offering, structure of cost, value chain and difference in
technological diffusion (De Toni and Tonchia, 2003). Environmental factors impact on the sale
of the Tesco business. Company have to consider the weather change, recycling of waste
material, attitude of management towards renewable energy and have to face the laws of

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environment pollution. Legal factor- for entering into new market company have to face the
issue of discrimination law, employment law, data protection, and health and safety law. It is
important for them to consider the consumer protection and e-commerce in business.
Porter’s Diamond
Porter’s five forces analysis helps in determining the competitors of Tesco.
Threat of new competitors- In UK, Tesco is one of the leading brand in grocery market and
threat of new entrants are low in grocery market because it require huge capital investment to set
up and obtain brand name in market. it is difficult for the competitors to enter and compete with
Tesco.
Bargaining power of buyers- Customers play an important role in any business. Tesco has many
competitors in market and it is important for them to satisfy the needs of customers by lowering
prices, customize services and by providing good variety of products. Tesco adopted a Club card
strategy to control and retain their customers.
Bargaining power of suppliers- the suppliers of Tesco has a low bargaining power as Tesco
provide a better price to their supplier to prevent the new competitors in market (E.Dobbs, 2014).
They are benefited because of the positive negotiations.
Threat of substitutes- Substitutes who offer the same products or services in competitive prices.
Tesco has high threat of substitute in food items and average in non-food items and other
competitors also offer the same products to customers and also having the same format of retail
stores in UK.
Rivalry- Competition between the existing firms who deals in same products and having same
customer group. It is relatively high in food retail industry as Tesco face the huge competition in
market with competitors. Competitors of Tesco are ASDA and Morrison.

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Porters Generic Model
To provide the best services to its customers, Tesco can follow the generic strategies which
include differentiation and cost leadership. First is Cost leadership strategy which can be
adopted by TESCO by offering the products and services to customers on lowest costs than
competitors. It is important to control their operating cost so that they will able to manage low
pricing and will able to generate high profits by having a competitive advantage (Potter, 2007).
Second strategy is differentiation in which Tesco has to provide the unique products to
customers. Differentiation in products can be done by special features, new technology
adaptation, and bettering customer services.
Ansoff’s matrix
Future strategies Tesco can adopt for the development with the help of Ansoff’s matrix which
includes existing products and new products in market.
Existing Products New Products
Existing Market Market Penetration Product Development
New Markets Market Development Diversification
Market penetration- Market penetration helps in securing and growing market and help in
restructuring the market by analyzing the customers and it helps in increasing the usage by the
existing customers. New product development- it can be done by developing new products by
targeting in market segment. Tesco future strategies can be developed by new product
development strategy as it helps in exporting it goods to the country in which they want. New
product development- Tesco can grow in market by targeting its existing products by improving
in the market (Hussain, et al., 2013). It is important to segment the market for the product
development. Diversification- Tesco can expand their business by increasing their new products
in new market. Example they can start a home delivery services it will help in increasing their
revenue.

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SAFE framework
It is important for any business to analyses the future strategy to be adopted for the growth and
development. SAFE framework includes the Suitability, acceptability and feasibility of the
business.
Market penetration strategy can be adopted by the company as it is suitable for them to adopt and
it will help in reducing the order processing time and it will display the entire portfolio of any
product. It is also acceptable by the company as it will help them in sharing the growth and help
in improving the loyalty of customers (Cravens and Piercy, 2006). Feasibility is also important
and market penetration is feasible for the company as it will help in identifying the different
formats for opening store outlets in different countries.
Strategic changes
Tesco has adopted the strategy to increase the sales and profits by focusing on the existing
customers rather than focusing on the new customers. For the success of organization they
considered the three factors: Structure, process and relationship (Doh, 2005). They managed the
employees and increased their participation and flexibility in work by decentralizing the power.
They adopted the democratic style of management to become the leader in grocery market. to
assess the various business situation they made the strategy framework and structure. They also
adopted the strategy of new product development in market. Their technological invention has
increased their profits and market sharing (Rowley, 2005). In future, Tesco is expecting to
change the management strategies to grow and expand their business in marker. They had
committed to use 100 percent renewable electricity so that they can sustain in market for longer.
They can opt for diversification strategy in future for the product development. It will help in
increasing the sale of Tesco and will benefit the stakeholders and employees can bring the
innovative and can become more productive.

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Conclusion
In order to conclude the report, Tesco PLC is the major retailer of grocery products in UK. For
increasing the overall value of the company they had adopted and implemented the strategic
management for increasing the sales and profits. Tesco has many opportunities to expand their
business, they can focus on the growth of the health and beauty ranges in the UK. They can also
manage their threats by offering products in low prices and they can also give special offers to
customers. To sustain in market, Tesco has adopted the strategies at right time for product
diversification. Tesco PLC follows the more effective strategic plan than its competitors in order
to expand and grow in market for increasing the sales and satisfying the customers. They had
places their strategies in business to lead in terms of profits and sustainability in market.

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