Business Strategy: Analysis, Competitive Advantage, and Growth Strategies of Tesco

Business Strategy

Table of Contents
Introduction......................................................................................................................................3
Main Body.......................................................................................................................................5
Part A...............................................................................................................................................5
1. External and Internal environment analysis............................................................................5
2. Competitive environment analysis........................................................................................11
3. Tesco existing and/or potential competitive advantage.........................................................13
4. Strategies and tactical objectives of Tesco............................................................................14
Task B............................................................................................................................................16
1. Strategic directions available to Tesco..................................................................................16
2. Justification and recommendation of growth strategy of Tesco............................................17
3. Ways by which the chosen strategies can be monitored in order to ensure success..............18
Conclusion.....................................................................................................................................18
References......................................................................................................................................19

Introduction
Business strategies are ideas, plans and actions which are made by companies to achieve their
organisational goals. Strategies are made to work effectively and efficiently within an
organisation (Park and et. al., 2017). A good strategy also help to maintain employee’s
performance and it also help to manage competitive advantage by analysing external and internal
factors of an organisation. It helps to show the direction to employees that in which way they
must pursue their work to get success. Tesco is a chain of supermarket in UK which is founded
by Jack Cohen in the year 1919. It is headquartered in Welwyn Garden City, Hertfordshire,
England, and UK. The following report covers external and internal environment analysis,
competitive environment analysis, Tesco’s existing and potential competitive advantage,
strategies and tactics objectives, evaluation of different types of strategic directions, justification
and recommendation on growth strategies, evaluation of strategies opted for success of company
and conclusion of the study.
Company overview
Tesco is considered as the largest British retailer and the world's third largest grocery retailer,
with locations in Europe, the United States, and Asia. In 1924, Cohen purchased a container of
tea from T. E. Stockwell and combined three initials with the first two letters of his surname to
form the Tesco name. The revenue generated was £64.760 billion in 20202 with an operating
income of £3.005 billion. The numbers of employees working under Tesco are 423,092.
Strategic management:
The management of a firm's assets to meet its goals and objectives is referred to as strategic
management. The goal setting, examining the competitive environment, studying the internal
organisation, reviewing strategies and assuring that management implements the plans
throughout the company are all part of strategic management.
There are three different level of strategy which is mentioned below:

Source: Business to you, 2020
Three Levels of Strategy: Corporate Strategy, Business Strategy and Functional Strategy, 2020
Corporate strategy: Company strategy is a defined, long-term vision that firms establish in order
to build corporate value and drive employees to take the necessary steps to attain consumer
fulfilment. Furthermore, corporate strategy is a continual operation that involves a consistent
effort to attract investors to entrust the firm with their capital, therefore expanding the firm's
equity.
Business strategy: Business strategy is the aggregate of all choices made and actions done by a
company in order to achieve business objectives and maintain a competitive position in the
market (Monnier and et. al., 2018). It is the firm's backbone since it is the plan that leads to the
planned goals. Any inaccuracy in this path might lead to the company becoming lost in a sea of
competing opponents.
Functional strategy: Functional Strategy is the organisational plan implemented by each
functional area in the value chain, such as production, marketing, information technology, human

resources, finance and many more to execute the entire company strategy or vision in order to
achieve organisational level purposes.
Main Body
Part A
1. External and Internal environment analysis
PESTLE analysis
PESTLE analysis is considered as a framework to analyse and track macro environmental
factors which affect an organisation. Since the analysis is capable of adapting, organisations can
use it in a variety of situations. In context to Tesco, PESTLE analysis is mentioned below:
Political factors: These elements decide how much a government will control the economy or a
specific sector. Tesco, being a global company, must be alert of changing political situations in
all the economies. Political stability is a significant consideration. The more the opportunities for
trading, the much more stable the political atmosphere. Brexit is one example of this (Ogawa and
et. al., 2018). With Brexit, there is a dilemma concerning new regulation that may emerge and
cause a drop or boost in sales. These factors can create a huge impact on the performance of the
organisation these factors may stop the firm to expand its business as well as delivering
commodities to the people.
Economic factors: These elements are indicators of an economy's success that have a
major affect on a business and have long-term consequences. The organization should be careful
and aware of the multiple taxation policies in order to take advantage of them. The United
Kingdom generates the highest share of sales. Some changes in UK rules may need a
considerable shift in the firm's distribution model, with the extra expenses associated with
altering the firm potentially being considerable. This can lead to halt the functions performed in
countries where there are multiple taxation policies.
Social factors: These factors explore the market's social environment and assess factors
that contribute such as behavioural patterns, geography, population and many more. Customers'
opinions regarding natural products are evolving, and Tesco has tried to catch up by modifying
its strategy to promoting natural products in order to please its customers. Tesco emphasizes on
giving back to the community and recruiting locals and as a response, it has produced

opportunities in a variety of fields. Small deliveries are regarded as inefficient and costly to the
organisation and in return, effecting the organisation.
Technological factors: These factors are related to technological developments that can have a
positive or negative impact on the company's and market's functions. This adds to automation,
research and development, and the amount of technological expertise in an industry (Monnier
and et. al., 2017). Internet shopping, social media commercials and other methods of influencing
clients by providing various technical advantages are all examples. With 43% of its consumers
now purchasing from the internet site and receiving their things transported to their homes, the
company has managed to shift retail patterns to an online one. Tesco's recent announcement of a
cooperation with Amazon Go to explore revolutionary technology for cashier less billing marks a
significant milestone that might transform the way consumers buy for goods. This would allow
shoppers to skip large lineups and preserve time for quick billing. Due to COVID-19, initially
organisation was not able to run as people were not allowed to step out of their house which
leads in loss to the firm but due to their ecommerce platform, people are able to purchase
commodities.
Legal factors: These factors have both external and internal dimensions. Certain rules influence
the economic environment of a particular nation, whereas some regulations are maintained by
businesses by themselves. Legal analysis examines all of these aspects and then develops
approaches in terms of these laws (Hawking and Sellitto, 2017). The Food Retailing Commission
has developed such guidelines and restrictions, which must be followed by all retail operators.
Many allegations were lodged against Tesco in 2016 over age and gender inequality in the
working. Tesco has recently been there in the news for a criminal probe that resulting in a $12
million court settlement.
Environmental factors: Many of this categories includes elements that are impacted by
the surrounding environment. A firm environmental study includes weather, temperature,
geographical location, and other aspects. Tesco has developed a variety of projects aimed at
improving the environment and creating a more healthier society. Tesco just launched the second
part of its Remove, Reduce, Reuse, and Recycle campaign. The group has conducted a variety of
efforts to reduce and eradicate all non-recyclable plastic, as well as to create innovative methods
to utilise the residual plastic that is already in use.
SWOT analysis