Strategic Management Plan of Tesco Plc using SOSTAC Model

This report analyzes the macro environment factors affecting Tesco Plc using Pest and Steeple theory, evaluates the internal environment using SWOT and VRIO model, presents Porter Five Forces Analysis of Retail industry, and presents a strategic management plan using SOSTAC Model.

UNIT 32 ASSESSMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
Macro environment factor that affect the business......................................................................3
Presenting Porter Five Forces Analysis of Retail industry or market.........................................5
Evaluation of Internal environment of organization using SWOT and VRIO model.................6
Strategic Management Plan of Tesco Plc using SOSTAC Model...............................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic Management Plan of a business plays vital role towards the success and
improve brand reputation. The report is based on Tesco Plc which will discuss and analyse the
macro environment factor using Pest and Steeple theory. Further, to analyse the internal
environment of Tesco, the report will use SWOT and VRIO theory. In addition, to analyse
competitive edge and retail market position, the report will use Porter five forces model. Lastly,
the report will present the strategic management plan of Tesco plc using SOSTAC model.
Macro environment factor that affect the business
In order to determine the macro factor Pest analysis has been chosen which in turn assist
to determine the factors that affect the business performance. This is as mentioned below:
Political factor: The company is operated at global level and that is why political factors
influence the business performance. This include tax rate, Brexit such that the country suffer
instability in its finance and that is why, performance of the Tesco has also affected negatively.
This also affect the demand of the customers and affected financial stability in negatively. Thus,
Tesco has to make effective measures in order to improve the business performance and sustain
brand image.
Economic factor: This factor deals with the inflation and economic stability of the
country and that is why, Tesco suffer the most. However, in pandemic time, company also make
changes in its operations in which it start offering online delivery services to the customers so
that it helps to generate a better outcome and that is why, decline in disposable income is
managed by the firm.
Social factor: There is a drastic change identified within the customer behavior because
most of the people changes their shopping behavior towards online and that is why, quoted
company also offer the same like herbal beauty products, online clothing (Pest analysis of Tesco,
2021). Moreover, the types of goods and services also demand by customers is mainly influenced
by the beliefs and attitude so to meet the same Tesco make effective efforts as well.
Technological factor: This is deal with the advance technology and the same has been
adopted by the company which includes AI, virtual reality. Though there are many negative

impact over the business by complying with technological aspects like cybersecurity. Moreover,
company has also invested a lot in the emerge efficient projects that further assist to smoothen
the business operations. On the other side, self-service checkout points are also provide ease to
the customers that helps to improve the business performance.
STEEPLE Analysis of Tesco Plc
Social factor: Due to Covid-19 there is a drastic change has been identified that
consumers of Tesco plc are moving towards basic need products rather than luxury products. It is
because of decrease in individual salary and change buying pattern.
Technology factor: Due to fast changing technological innovation, Tesco company need
to update its employee in order to stay relevant in present time (Tesco: A STEEPLE Analysis.
2021). For grasping this opportunity, Tesco company should provide proper training and
development session to its employees regarding the software, systems etc.
Economic factor: The unstable economic condition of UK after pandemic has affected
Tesco in large extent. Thus, in case of under pressure economic and high inflation, Tesco need to
price its basic needs products accordingly so that people of UK can easily afford it. This is an
opportunity for Tesco to improve its brand image.
Environmental factor: Tesco comply with sustainability act in which it mainly focuses
upon the environmental issues. Such that it focusing upon reducing 50% to the carbon footprints
by 2025 and this in turn causes positive impact over the business and sustain the brand image at
global level. That is why, it also focuses upon waste management so that the stores will increases
their social conscience in customers and generate a better outcome for the future. Through this, it
creates a good impression over the society so that they can also aware with the same.
Political factor: The political stability of UK is an opportunity for Tesco company
because they follow all the rules and regulation imposed by UK government. But after Brexit,
Tesco unable to deal with EU customers which has leads to drastic decrement in their sales and
high tariff cost. So, this is a threat for company.
Legal factor: Being a global company, it comply with effective laws and legislation that
helps to sustain the brand image without any issues. Like, it provides equal pay to their

employees in which no employee discriminated on any basis. This assist the firm to sustain the
brand image and attract range of new employees towards it. Further, quoted firm also provides
customer price reductions on the fuel if they purchase that keep retain them
Ethical factor: Following business ethics and implementing CSR practices is an
opportunity for Tesco plc because they contribute towards the society with communal recycling
area. Not only that, Tesco donates around 2.5 million pound earning of there business towards
the education of poor people children. Thus, this factor is opportunity for company (Tesco: A
STEEPLE Analysis. 2021).
Presenting Porter Five Forces Analysis of Retail industry or market
Bargaining power of buyer (Low): There is high competition among the supplier of so
the ability to increase price and reduce quantity of material is low. Thus, bargaining power of
supplier in retail sector is low (Krisnadewi and Soewarno, 2019).
Bargaining power of supplier (Low): Due to the high level of customer of product that
retail sector provides no buyer will have the bargaining leverage. Thus, bargaining power of
buyer of UK retail market is relatively low.
Threat of new entrants (Low): The customers are very loyal towards their existing retail
stores and brands. It is quite expensive for new entrants to enter the retail market and build their
brand image. Thus, the threat of new entrants in retail sector is low.
Threat of substitute products (Low): The ultimate goal of retail market is to provide wide
variety of products to customer at single location. So, there are not many substitute that provide
the same product at low cost and full convenience (Gavrila, and de Lucas Ancillo, 2021). The
impact of which the customer needs to rely on few companies only. Thus, it can be said that
threat of substitute products in retail market is low.
Rivalry amongst existing competitors (High): There are many competitors and E-
retailers that have entered the retail market. It means there is high level of competition in the
retail industry. The impact of which competitors set their own diverse approach and goals which
leads to high force of rivalry in retail market.

Evaluation of Internal environment of organization using SWOT and VRIO model
SWOT Analysis of Tesco Plc
Strength:
 Tesco is biggest grocery retailer in the UK.
 The company has arounds 6966 grocery stores in more than 13 countries.
 They have achieved various awards such as British favourite supermarket, Grocer’s Own
label food and more 25 drink awards (Soegoto, 2021).
Weaknesses:
 In the year 2017, Tesco was charged with fines because of its false trial and accounting
scandal.
 The low-cost strategy of Tesco leads to low profit margin.
Opportunities:
 Strategic alliance with other brand is a expansion opportunity for Tesco.
 Online shopping and home delivery service is also one of the biggest opportunities for
Tesco to enhance its customer base.
 Expanding the business in emerging countries such as South Korea, Turkey, Indonesia is
a profitable opportunity for Tesco company (ZHAO and et.al., 2018).
Threat:
 Due to Brexit, the trade deals and high tariff cost have posted threat on Tesco business.
 The shortage of goods is a threat for Tesco operation due to supply chain issues.
VRIO Analysis of Tesco Plc
Resources/
capabilities
Valuable Rare Difficult to
imitate
Properly
organized

Global
Presence
✓ ✓ ✓ ✓
Relationship
with supplier
✓ ✓
Innovative
sales mix
✓ ✓
Human
resources
✓ ✓
Customer base ✓ ✓
Brand name ✓ ✓ ✓ ✓
Management ✓ ✓ ✓ ✓
Location and
nature of
properties
✓ ✓ ✓ ✓
On the basis of above analysis, it is identified that for Tesco plc the resources such as
location & nature of properties, management, brand name and global presence is a sustainable
competitive advantage. It is because these resources are valuable, rare, Iminitable and
organizationally exploitable (Mahadevan, 2019). However, on the other hand, the resources such
as HR, innovative sales mix and relationship with supplier is partially competitive advantage. It
is because this resource is only valuable and organizationally exploitable.
Strategic Management Plan of Tesco Plc using SOSTAC Model
Situational Analysis:

This is the first stage of model which state the where is Tesco business right now. In the
present situation, the people around the world refer online channel, social media platform as well
as online sites for selecting which product to buy. Thus, Tesco Plc have to enhance its online
presence in order to enhance digital customer base as well as to interact with digital customer.
SMART Objectives:
 To increase the profit margin of company by 25% in the upcoming 1 year.
 To provide better customer service that rivals.
 To increase the customer retention rate by 20% in the next six months with high brand
awareness.
 To generate 30% of revenue from online sales by the end of this year.
Strategy:
The strategy state the path that Tesco company are planning in order to achieve the above
established objectives. Tesco company will conduct STP analysis and identify Value proposition
(unique selling point) to achieve its objectives.
STP Analysis
Segmentation Targeting Positioning
Tesco Plc will comply with
psychographic segmentation
in which the company will
use the values and lifestyles
so that people of all age that
fall under the category of 12
to 60 except small children
and old age people can buy
the products from online
channels and Tesco own
The target market of
Tesco is people of age 12
to 60 that uses internet for
there purchase decision.
The strategy will be use
by Tesco is mass targeting
so that they can target its
group effectively.
Tesco company will
market its product on
social media sites, own
websites and online
shopping channels in order
to gain the large digital
customer attention.

websites.
(Stephenson, 2021)
Value Proposition (Unique Selling Point): The unique selling point of Tesco plc is that the
customer who buy there product online will get the discount coupons which they can use it for
next purchase.
Tactics:
This state the tactic and marketing tools used by company to achieve its determined
objectives.
4Ps Marketing mix:
 Product: Tesco company will offer clothing, beauty and health products to its digital
customer.
 Price: The company will use cost-leadership strategy to set the price of its customer.
 Place: Tesco will provide its products to digital customer using online distribution
channel only.
 Promotion: The company will promote its products on social media platform, own
website and online shopping channel to attract digital customer (Napoletano, 2021).
Actions:
The action that Tesco plc will adopt in order to achieve the above-mentioned objectives is
that they will launch sustainability development campaign on social media platform in order to
improve the image of Tesco in the eye of digital customers (Sharma and Bumb, 2021). Further,
the company will also offer the discounts and EMI payment option to its digital customers in
order to increase sales from online platform.
Monitoring and Control:
In order to monitor and control the whole strategic planning of the business, Tesco
company will set and monitor it key performance indicator such as:

 If the customer retention rate on digital platform of Tesco is increasing it means company
strategic plan are moving in right direction.
 The increase online sales also an indicator for best strategic planning of company.
 Tesco will also monitor its online sustainable development campaign views and likes rate
to identify whether their objective is achieved or not (Sharma and Bumb, 2021).
CONCLUSION
After summing up the above report information, it has concluded that Tesco Plc have
opportunity of online marketing and selling option to attract more digital customers. The report
has identified that strategic opportunity for Tesco using various internal and external
environment framework. Lastly, the report has prepared a strategic management plan using a
SOSTAC model in order to achieve the strategic objectives.

REFERENCES
Books and Journals
Soegoto, F. A., 2021. Product Development using SWOT Analysis. International Journal of
Entrepreneurship & Technopreneur (INJETECH). 1. pp.1-10.
ZHAO, J. K. and et.al., 2018. Research on the Development of Little Red Book—By Adopting
SWOT Analysis. DEStech Transactions on Social Science, Education and Human
Science, (amse).
Mahadevan, K., 2019. TLP for Strategic Management 2019-2020.
Krisnadewi, K. A. and Soewarno, N., 2019. Competitiveness and cost behaviour: evidence from
the retail industry. Journal of Applied Accounting Research.
Gavrila, S. G. and de Lucas Ancillo, A., 2021. Spanish SMEs’ digitalization enablers: E-Receipt
applications to the offline retail market. Technological Forecasting and Social
Change. 162. p.120381.
Stephenson, R., 2021. How to write a digital marketing plan using PR Smith’s SOSTAC®
planning model.
Napoletano, T., 2021. Marketing of Food Ideas: a Digital Marketing Plan for the E-Commerce
Start-up “Da MaMa” (Doctoral dissertation).
Sharma, S. and Bumb, A., 2021. Marketing at the Bottom of the Pyramid: Overcoming the
Challenges through MICMAC Analysis. Journal of Global Marketing. 34(4). pp.292-
307.
Online
Pest analysis of Tesco. 2021. [Online]. Available through: https://pestleanalysis.com/pestle-
analysis-tesco/

Tesco: A STEEPLE Analysis. 2021. [Online]. Available through:
https://mail.google.com/mail/u/0/#inbox/KtbxLthNQSSkSJNNZltDNbHrWbdBSzRTbq?
projector=1&messagePartId=0.1