Organisational Strategy of Tesco: Evaluation of Current Strategic Situation and Future Options

BMA6104
ORGANISATIONAL
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Macro environment factors..........................................................................................................3
Industry Position..........................................................................................................................6
Internal capabilities and stakeholder perspectives.......................................................................8
Individual future options............................................................................................................10
Collaborative future options linking with other businesses.......................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Organizational strategy can be defined as the sum total of all actions that a concern
intends to take in an attempt to achieve their end goals in the long run. All these actions meant
for achieving long run goals together make up a plan and is known as strategic plan of the
company. To perform strategic analysis of an organization, the various steps to be followed are;
scanning environment, formulating and implementing strategy and evaluating the success and
failure of the current strategy, so that appropriate modifications can be done in future strategic
options (ul Musawir, Abd-Karim and Mohd-Danuri, 2020). The present report is based on the
evaluation of current strategic situation and availability of future strategic options will be done
with reference to Tesco which is a UK based leading supermarket chain of the retail industry.
The various areas that would be covered in this report include; macro environment factors,
industry position, internal capabilities and stakeholders perspectives, individual future options
and collaborative future options which is linked with other businesses of industry.
MAIN BODY
Macro environment factors
Factors associated with external environment of the business and over which the latter have no
control are known as macro environment factors. The forces of this environment involves
political, economic, social, technological, environmental (nature & culture) and legal. To study
the current strategic situation with respect to macro environment factors, the PESTEL model will
be used in order to identify Tesco’s strategic performance and future strategic options. In
addition to this, guidance and recommendations could be made for strategic decision making to
senior management and professionals responsible for strategic planning within Tesco (Masud
and et.al., 2019).
Political factors
Having operations around the globe, Tesco is highly impacted by the political and legal
environment of countries, ranging from Asia to Europe.

Under employment laws, retailers are encouraged to provide employment opportunities from
flexible, localized and low paying jobs to skilled, centralized and high paying jobs. Also, to cater
to the demand from population groups such as students and senior citizens.
Tesco understands that retailing being labor-intensive sector and localized, employment and
people factors are greatly impacted (Hanelt and et.al., 2021).
In 2011, the government of UK raised the VAT rate from 17.5% to 20% which led to lower
consumer spending and hence negatively impacted the sales by Tesco.
Economic factors
Tesco is also concerned about economic factors as these factors are very influential in driving
demand, supply, costs, prices and profits. Factors such as unemployment, recession etc. impacts
the demand in general, thereby affecting production levels and prices.
These factors have a profound impact on the marketing and performance of the business, and
they are outside the control of the company. Although Tesco’s having a growth in international
business and expectation of greater contribution to profits over the next few years, the company
is still having a high dependence on the UK market. Hence the slowdown in the UK food and
retail market may badly affect the company and expose it to risks of market concentrations.
Social factors
Trends such as the British customers move towards bulk shopping and one stop shopping, have
caused Tesco to increase the amount of non-food items.
Demographic changes like increased number of females in workforce, and decline in the
preparation of meal at home, aging population etc. implies that retailers in UK ought to focus on
value added services and products (Dakhli and et.al., 2019). Along with that the focus is also on
the own label share of the product mix, supply chain management and other improvements in
operations, cutting down the costs. Retailers are hardly taking on new suppliers.
The social conditioning of customers and the resultant attitudes and beliefs play an important
role in the type of products and services demanded by them. Today’s consumers are becoming
more and more health conscious and hence changing their food habits. Tesco for example has