Analyzing the Impact of Macro Environment on Tesco

Unit 32: Business Strategy

Table of Contents
INTRODUCTION ..........................................................................................................................3
P1: Analyse the impact of macro environment................................................................................3
Environmental analysis: PESTLE..........................................................................................3
SWOT analysis ......................................................................................................................4
P2: Analyse the internal environment and capabilities of Tesco ....................................................5
Resource based view..............................................................................................................5
McKinsey 7-S framework......................................................................................................5
VRIO framework....................................................................................................................6
P3: Applying Porter's Five Forces model .......................................................................................7
Porter's Five Forces................................................................................................................7
Balanced Scorecard ...............................................................................................................8
P4: Theories, concepts and models, interpret and devise strategic planning for Tesco...................9
Business level strategies.........................................................................................................9
Business management plan ..................................................................................................10
Porter's generic strategies.....................................................................................................10
Bowman's strategic clock.....................................................................................................11
Hybrid strategy.....................................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Every business organisation gets affected by various internal and external factors.
Companies identify and determine these factors to face competition in market and build good
image in market. The factors are identified so that its impact can be minimised (Auliandri and
et.al., 2019). This enables them to enter in new markets. Furthermore, structure and goals are
defined by evaluating change in factor. The strategy is formed on basis of analysing of factors
from market, business, etc.
The report will emphasis about different organisation, its purpose, number of employees,
etc. Also, the relationship between different organisation functions will be discussed. Moreover,
in internal environment SWOT is explained and in external Pestle will be described along with
positive and negative impact. At last it will be discussed about macro environment with strength
and weakness.
P1: Analyse the impact of macro environment
Environmental analysis: PESTLE
Political factors- Tesco is known as the British retailer which operates within several
nations as the home market of company is within UK so there are several political environment
that can be stable but due to some changes the company has to face lot of problems. Thus, it is
said that Tesco is operating within the political environment which is considered as conductive
regarding business.
Economic factor- Due to Covid 19, global economies impacted severely as it is etimated
that various people's income will go down. Tesco company should be aware of changes in
taxation, demand of the products, profits and prices. Although, the business is growing and the
company is depending on UK market as its 30 % share is in the market of UK (Agustia.,
Muhammad and Permatasari., 2020).
Social factor- Social changes refers to the change in need and requirements of the
customer according to the latest trend and fashion. As there is change in trends and tastes and
preferences of the customers, UK customers have started buying in bulk. Tesco has increased
non food items and offer at sale to customers . These non food products were demanded by the
customers and this change was done as people in UK are becoming aware of health issues. Due
to this awareness the demand of consumers is changing and Tesco is adopting these changes by
bringing organic products in the UK market.

Technological factors- These factors affect the organisation as daily new technology is
coming in the market. The advancement in the technology nowadays has bring new opportunities
for Tesco. The first change in technology in this digital world is online shopping. Today
customers want home delivery facility with no charges and online shopping. Further, it has
reduced labour cost. Tesco has invested in project of energy efficiency so that the company can
achieve its long term objective.
Legal factor- Government rules and regulations impact the organisation directly. There
are many restrictions from the government side which affect sales of products of Tesco. To
compete with legal factors company provide price reductions to its customers on fuel which they
purchase and also offer products at discounted rates. Tesco uses all these discount policies and
offers to attract customers and increase its sales (Baraibar‐Diez., Odriozola and Fernández
Sánchez., 2017).
Environmental factor- Organisations should focus on environment also while producing their
products. Tesco has promised to reduce use of carbon by 50%. Company is also working on
how to reduce or eliminate the waste that is produced within the stores. Organisationis giving
some part of its profit for Corporate Social Responsibility.
SWOT analysis
Strengths : Tesco has good financial turnaround as operating profit of year 2020 is £1.9
billion. The company has 26.9% market share in the Great Britain. So, Tesco has its dominance
in the market and it is unchallenged. During the Covid-19 organisation register 10.5% growth,
the company was selling its products online. The company makes creative and innovative
products which differentiate it from others. Company adopts every situation easily and find the
solution to increase its sales (Cubas‐Díaz and Martinez Sedano., 2018).
Weakness : There are some competitors of Tesco like, Sainsbury's, Asda and Morrisons.
The leadership of companyis not so good as compare to its competitors, the quality control of the
company needs improvement to maintain good reputation in the market. To avoid shortage of
products company keep some products in stores and when customer demand for the product they
sell the product. Inventory management of the company is not good as compare to its
competitors.
Opportunities : As in this digital world where Tesco is using advanced technology, there
are lot of opportunities available for the company to explore or expand its business. In today's