Strategy Report for Tesco: Impact of Macro Environment, Internal Capabilities, and Porter's Five Forces Analysis

This report analyses Tesco's business strategy by evaluating the impact of macro environment, internal capabilities, and Porter's Five Forces Analysis. It includes PESTLE analysis, SWOT analysis, McKinsey model, value chain analysis, and critical evaluation of internal environment. The report also applies Porter's Five Forces model to evaluate Tesco's competitive edge in the market.

Strategy Report

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Applying appropriate frameworks analyse the impact and influence of the macro
environment ................................................................................................................................3
M1 Critically analysing the macro environment and inform strategic management decisions. .5
TASK 2 ...........................................................................................................................................5
P2 Analysing the internal environment and capabilities of a given organisation.......................5
M2 Critically evaluating the internal environment to assess strengths and weaknesses............8
TASK 3 ...........................................................................................................................................8
P3 Applying Porter’s Five Forces model....................................................................................8
M3 Devising appropriate strategies to improve competitive edge and market position.............9
TASK 4 ...........................................................................................................................................9
P4 Applying a range of theories, concepts and models, to devise strategic planning.................9
M4 Producing a strategic management plan.............................................................................12
D1 Critically using data applying environmental and competitive analysis.............................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategies could help the organisation to perform better with the changing
marketing conditions. The targets cam also be fulfilled which is been set by the management in
an effective manner. There is a room for improvement which could help the firm in order to
become better in every manner. The profitability could use in order to improve the areas which is
critical and the organisation is lacking (Azevedo, and Budish, 2019). This report aims to analyse
about understanding the strategy of business environment and strategy of the particular company.
Tesco is one the most reputed supermarket chain which provides various products and services to
the consumer. It is the British multinational chain which is expanded their business in various
regions. On the other hand, the main focus of this report is to evaluate the dynamic forces which
is affecting the company's performance in the market. There are various vanadates which can be
taken by the company in a strategic manner. Along with that, the use of Porter five forces model
will help the firm to gain a competitive advantage in the industry and provide the desired
products and services to the customer. For further instance, the strategic management plan is also
prepared which includes all the details and the strategic process could be implemented in order to
capitalise and become more sustainable towards the upcoming future.
TASK 1
P1 Applying appropriate frameworks analyse the impact and influence of the macro environment
The organisation gets affected by multiple factors. They need to use the right strategies
which will help them to focus on better in multiple uncertain situations. In relation to Tesco they
are one of the fastest growing companies due to their work ethics and experience which they
have collected over a period of time (Barambu, and et.al 2019). It is the framework which is been
chosen by most of the companies to understand the evolving factors. Pestle analysis in relation to
Tesco is been described below:
 Political factors – This is the factor in which the government interfere when the
organisation carry out the operations. There are various factors which can affect the
performance of the organisation. In relation to Tesco there are various advantages which
they can taken in order to achieve new results and become more profitable in the market.
 Economic Factors - There are multiple components which is been used in order to solve
various problems which is monetary factors, growth rate etc. The organisation needs to in

order to fulfil the basic factors which helps them to gain competitive advantage in the
market.
 Social factors – There are various individuals which is the market. In context to Tesco
they need to fulfil the needs and desired of the customers. They need to provide better
products and services in order to enhance the overall sales volume in the market.
 Technological factors – Most of the organisation heavily invest in the technology. There
are various advantages which could help them in order to get better results. The new
innovations could help them to achieve new heights in the market (Biscop, 2019). Tesco
is investing in the technology to provide better services and products to the consumers.
They follow a systematic process in order to achieve a specific growth in the market.
 Legal factors – These are the laws and legislations which is used by the government.
Tesco is expanding their business in multiple regions. The organisation is using multiple
factors in order to become more profitable and achieve a superior growth in the industry
over other individuals.
 Environmental factors – The organisation needs to carry out the objectives as it benefits
to the environment. They need to focus on the environmental conditions which could help
in order to preserve the nature (Espahbodi, and et.al 2019). Tesco has plan to reduce the
carbon emissions in order to achieve an effective growth and could attain a positive brand
image in the market.
SWOT Analysis
This is the framework which is been used in order to improvise the sales in the market.
The swot analysis in relation to Tesco is been described below:
 Strengths – Tesco is the well established company they need to provide various goods
and services to the consumers which will help them to achieve better results in the future.
The management has formularise various plan and strategies which will help them to
carry out better results.
 Weakness – This is the stage which helps the organisation to identify multiple weak
areas in which they are lacking. Tesco needs to invest in the technology to gain a
competitive advantage. There are various innovative ideas which can arise with
technology (Gobble, 2018). Through this Tesco can improve the quality of their products

and become more customer oriented. They are bale to create a valuable customer base in
the market.
 Opportunities – The organisation is working in regards to achieve a better growth over a
period of time. They plans to capitalise on multiple opportunities which arises in the
future. Tesco has reduced the carbon emissions to implement the sustainable change in
their way of carrying out the operations. There are multiple new services which is
provided by the company. This will help them to become more superior in the market.
 Threats – The organisation needs to improve their products and evolve them in a
significant manner. In relation to Tesco, the main threat for the company is increased
competition in the retail industry. They need to improve various areas in an effective
manner (Guillen, and Veszteg, 2021). There are list of competitors which is present in the
market. It includes Asda, Morrisons, Sainsbury's etc. On the other hand, another major
threat for the organisation is to create a valuable customer base due to the changing
demands of the customers. They need to offer better and enhanced quality services.
M1 Critically analysing the macro environment and inform strategic management decisions
The appropriate frameworks will help Tesco to identify multiple capabilities in an
effective manner. There are various advantages which could be utilised by them to provide better
services in the market (Karasov‐Olson, and et.al 2021). The organisation could use the pestle
analysis to evaluate different factors which is affecting their growth. On the other hand with the
help of swot analysis they can identify their strengths and weakness in the market.
TASK 2
P2 Analysing the internal environment and capabilities of a given organisation
The organisation needs to adapt with the new challenges in order to fulfil the customer
needs and wants. They need to focus on providing the excellent services to the customers. In
relation to Tesco the organisation study the marketing dynamics more significantly. The use of
McKinsey model will help the organisation to understand the internal capabilities in a better
way. It is as follows:
 Strategy – Tesco uses the cost leadership strategy which is best marketing condition for
them. The organisation has also planned a suitable message which is Every Little helps
(Kuhns, and Touron, 2020). This is the strategy which helps them to perform better and

they are able to exploit multiple benefits with the new marketing conditions. The
organisation is providing the products at low costs which is the general strategy for them
to achieve success.
 Structure – Tesco organisation structure tends to be become flexible in various
situations. They follow the hierarchical structure in which various levels of management
become more productive. This is the simplified organisational structure which helps them
to perform better in multiple conditions.
 Systems – In this new retail industry the supermarket chain tends to focus on carrying out
the operations effectively. The management of Tesco has excellent vision on achieving
the desired targets and make new ways in carrying out the operations.
 Shared values – The more core values and ethics helps the organisation function in a
better way. There are various values which is been implemented by Tesco there are
various advantages through which they are bale to carry out the operations smoothly and
achieves a better reach towards the desired audience.
 Style – The style of carrying the operations plays a vital role for the organisation growth
and success in the market. Tesco follows the democratic style of leadership in which the
employees are involved while making several decisions for the company (Lawson,
Finbow, and Marçal, 2019). This helps the Tesco to maintain a healthy working
environment in which the employees could see their growth in the workplace.
 Staff – The staff of Tesco is skilled they focus on carrying out the targets which is set by
the management. This is the major factor through which the company is able to achieve
better sales volume in the market.
 Skills – There are critical skills which help the individual to work in a uniformed way.
Tesco major growth process is provide the right training to the candidates which make
them more skilled.
Value Chain Analysis
This is the model which is been used by the organisation in order to evaluate the areas in
which there is room for improvement. This is the area which is been used in order to capitalise
on multiple opportunities. The analysis in context to Tesco is been described below:
Primary activities
These are the activities which considers various factors it is as follows:

 Primary activities – Tesco primarily target is to collect raw material at low costs. They
focus on developing a healthy relationship with different individuals. This helps them to
provide the products at low costs to the customers.
 Inbound logistics – Tesco maintains the inventory in a systematic way. The organisation
has various areas to brought the goods in the workplace (Leoni, 2019). There are various
which is been followed by the organisation.
 Operations – Tesco tends to carry out the operations in significant manner due to their
skilled workforce.
 Outbound logistics - This is the stage which has the major focus on fulfilling the
demand of the goods and services in the market. Tesco stick their goods to balance the
equation in the market.
 Marketing and sales – Tesco uses various ways to promote the products to the
consumers. They use multiple channels which includes social media platforms and other
ways of advertising the products. On the other hand the organisation sales has been
analysed at the end of every financial period.
 Services – Tesco uses multiple ways to provide the best services to the customers. The
organisation fulfils the needs and wants of the customers with the help of their quality
products.
Secondary activities
 Procurement – There are various activities which is been regulated in Tesco in an
effective manner. It includes the procurement of raw materials, and maintaining the
relationship with other suppliers.
 Technological advancement – Tesco is using the new technological advancements
which helps them to become more better in achieving great results in the market.
 Human Resources Management – Tesco human resource department hires the skills
candidates (Magerakis, and Habib, 2021). There are multiple employees which is skilled
they enhance the organisation performance in a significant manner.
 Infrastructure – Tesco infrastructure is flexible they are investing in the technological
advancements to achieve great heights in the market.

M2 Critically evaluating the internal environment to assess strengths and weaknesses
There are various models which is been used by the individual which helps the
organisation to identify their strengths and weakness (Meidan, and et.al 2020). Tesco needs to
adapt towards to the new working condition and needs to assess them properly in order to
capitalise on their strengths and achieve better growth in the market.
TASK 3
P3 Applying Porter’s Five Forces model
There is immense amount of competition present in the industry. The organisation needs
to become more customer oriented and provide better quality products and services in the
market. The main crucial role for the organisation is to gain competitive advantage in the market.
Porter five forces model could be used in order to evaluate the organisation performance in the
market. In relation to Tesco it is been described below:
 Threat of new entrants – This is the stage in which the organisation evaluates the
performance improve their products and services and minimise the threats of new
entrants (Migdadi, 2018). In 2022 Tesco has been significantly improving their products
and services. The organisation has implemented new technological advancements to cut
down the necessary competition form the retail industry in an effective manner.
 Bargaining power of suppliers – This is the factor in which the organisation understand
the power of suppliers. In order to achieve better results Tesco management has build a
healthy relationship with all the suppliers. Through this they are able to fulfil the demand
and supply of the products in the market. The management is also expanding their
business in multiple regions and the establishing the contacts could help them to become
more better for their future.
 Bargaining power of buyers – This is one of the most important component which
shows the power of the buyers. Tesco is working in uniformed way they have introduced
the feedback system in this new era in order to improve the critical areas. They are also
able to improve the quality of their products and services and has also attracted a new
range of audience.
 Competitive rivalry – There are various number of competitors present in the industry.
The organisation needs to make their goods and products more better in every manner. In

relation to Tesco the organisation is taking multiple advantages. They are improving their
products and chain of line which helps them to become more better in every manner.
 Threat of substitutes – In the retail industry the organisation the threat of becoming new
substitutes is significantly high. Most of the companies use the new ways in order to
make the products and services more improved in every manner. The major focus of
Tesco is to improve the services by taking the desired benefits in the market.
M3 Devising appropriate strategies to improve competitive edge and market position
The organisation could gain competitive advantage by evaluating the market positions.
The use of Porter five forces model will help the Tesco to become more structured and help them
to achieve great results in the future (Sobral, 2020). There are better growth which can be
established by the firm in a strategic manner.
TASK 4
P4 Applying a range of theories, concepts and models, to devise strategic planning
It is important for the manager to devise a strategic plan in order to enhance the
profitability in the market. There are certain range of models which can help the organisation in a
significant manner. Porter generic strategies is the model which Tesco can implement it is been
described below:
Porter's generic strategies
 Cost leadership – This is the strategy which is been used by the organisation. Tesco
focuses on providing the products at low costs which will help them to attract a lot of
new individuals in the market.
 Differentiation – Tesco is focusing on providing the diversified products to the
consumers (Vicknasingam, and et.al 2020). There are various innovative products which
the organisation can develop in order to attract the customers.
 Cost focus – The organisation can target the customers and set the prices competitive.
Tesco is using multiple benefits they are providing the quality products at an affordable
prices.
 Differentiation focus – There are various objectives which can be set by the
management. Tesco outperforms their rivals by using new strategies and techniques
which helps them to achieve an efficient growth over a period of time.

Bowman strategies
 Low price – This is the strategy which is been used by the firm in order to set the
competitive prices of their products. Tesco is been focusing on different things there are
various diversified products which the organisation is providing to the customers.
Through this they are manage to enhance the overall sales of the organisation.
 Hybrid – With the help of this particular strategy the organisation can add more values
towards their products and services. Tesco is been valued in the market due to their
quality market. The organisation has managed to create a loyal customer base.
 Differentiation – This is the strategy which is been used to create the differentiated
products to the customers (Wise, 2022). It is beneficial for Tesco to provide various
products with different ranges and quality to attract the audience in the market.
 Focused differentiation – This is the strategy which is been made by the organisation to
create something unique and valued in their products and services. Tesco main aspect for
growth is their range of products which is been provided at low costs. It significantly add
more values in terms of other brands.
 Risky high margins – In this particular strategy the company set high prices of their
products. Tesco is not generally taking the risks they set the competitive prices of the
products to gain more advantage in the industry. Through this they are manage to retain
the valuable employees.
 Low price and low values added – This is the strategy in which the price of the products
is reduced in a significant manner.
 Monopoly pricing – It is the pricing strategy in which the monopoly is been created in
the market. Tesco is creating a monopoly in the market by providing the products to the
customers at low prices without any fear of competition.
 Loss of market share – This is the stage in which the company decreases the
organisation share in the market.
Devising strategic Management Plan
Organisation’s resources & capabilities in 2022 compared with their competitors –
Tesco has excellent amount of resources. The organisation is focusing on utilising the resources
in an effective manner. Tesco is focusing on gaining a competitive advantage in the industry.
The organisation is establishing new technological advancements which helps to achieve an

efficient growth over a period of time. In the retail industry the competition is growing at a rapid
pace. The management of Tesco needs to adopt to new strategy which helps to achieve the
desired goals and objectives in the industry.
Organisation should do now – Tesco needs to focus on implementing the new plans
which helps them to carry out the operations in a strategic manner. They need to focus on heavily
investing in the digital infrastructure to fulfil the demand and supply of this goods and services.
Organisation should do in the short term – There are various short term goals which
can be set by the management of Tesco (Wolfe, 2019). It include making the workplace more
flexible, using the new technology to gain the desired results in the market. These are the short
term goals which can be fulfilled by the management.
Business aims (goals) for 2025
 Vision – Tesco pledged to give the hike to plan based sales by the end of the year 2025.
This is the sustainability drives which the organisation plans to achieve in future.
 Mission – The main core mission of Tesco is serving the best quality products and
services to the customers. On the other hand, they are using various techniques to
preserve the environment.
Formulating business strategy
Tesco is been developing the strategy of setting the competitive prices of the products.
This helps the organisation to function in a better way and achieve a strategic growth in the
market. There are multiple actionable steps which is been taken by Tesco in order to achieve
their specific goals.
Organisation values and culture
Tesco is one of the most unique place for the individuals in which they are able to
capitalise on multiple job opportunities. The organisation fosters on attaining team oriented
working culture. The customers is been provided with the quality products and services to the
customers.
Ansoff Matrix
This is the plan which is been used in order to formularise the plans which have multiple
important factors. The analysis in relation to Tesco is been described below:
 Market penetration – This stage helps the organisation to use various strategies in order
to enhance the sales in the market. Tesco provides the products which is been used by the

individual. They are also providing products at a reasonable price which is a big source of
attraction.
 Market development – Tesco is been expanding their business in multiple regions. The
organisation plan to provide the desired products to the consumers to fulfil their needs
and wants.
 Product development – There are various diversified products which is been developed
by Tesco to target specific range groups of audience in the market.
 Diversification – The organisation needs to implement new ideas and create a
diversification in establishing new products with the set of competitive price range.
M4 Producing a strategic management plan
The strategic management plan will help the organisation to become more better. Tesco
needs to adopt to the new technology and use multiple tactics which will help them to become
more efficient in carrying out the operations (Yzquierdo, 2020). There are various advancements
which can help them to become more competitive and using new tactics will help them further in
the future.
D1 Critically using data applying environmental and competitive analysis
The competition in high in the retail industry Tesco needs to focus on devising multiple
strategies. The management needs to provide the quality products to the customers in order to
gain competitive advantage. They can become more competitive with the help of multiple
frameworks and models.
CONCLUSION
From the above report, it has been concluded that the organisation needs to formulate
various plan and strategies in order to gain better results in the market. On the other hand, there
are various models, concepts, models which can be used by the company in order to improve
their capabilities and utilise the resources in a proper manner. Along with that, the organisation
needs to serve the best quality products to the consumers. There are newer variations which will
help them in order to overcome multiple challenges in the future.

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