Business Strategy: Macro Environment Analysis, SWOT Analysis, Porter's Five Forces Analysis, and Strategic Planning for Tesco

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
LO 1.................................................................................................................................................3
P1 Macro environment analysis...................................................................................................3
LO 2.................................................................................................................................................4
P2 SWOT Analysis......................................................................................................................4
LO3..................................................................................................................................................5
P3 Porter's Five Forces Analysis.................................................................................................5
LO 4.................................................................................................................................................6
P4 Strategic planning for Tesco...................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business strategy is a set of actions or decision that helps an organisation in achievement
of specified objectives. These are implemented in order to gain a competitive position and
profitability in market. In this report Tesco is taken as a company and which it is a multi-national
retailing company of UK. This report analyses the factor which affect the smooth function of an
organisation and also includes macro environment analysis, its SWOT analysis and Porter's five
forces that have an effect company. Present report also provides the strategic direction for the
company in the future to improve its business performance.
MAIN BODY
LO 1
P1 Macro environment analysis
Macro environmental factors are beyond the control of the company and thus it indirectly
affects the strategies of the company. Environment factors include political, economic,
sociological, technological, legal and environmental factors. There are various factors in the
environment which indirectly affect function of the company which are discussed below:
 Political Factor: Every business take political factor in account as these may restrict the
functioning of an organisation (Mose,2016). It means government policies, government
action, restriction imposed that influence the operation of the business. Tesco operate its
business across various countries around the globe and thus its business is greatly
influence by political factors. As it has to take into account various tax policies in order
to set its price and law related to import and export. Currently, Brexit has posed some
serious situations of instability in the economy and this has led to the riskier position for
Tesco’s operation but ultimately, this creates further chances on increasing revenue by
developing proper strategies for branches located all over the world.
 Economical factor: These are the factor which determine the consumer buying
behaviour and pattern the way they spend their money. It includes level of income,
economic resource, trade cycle and distribution of income. So the company should
examine all the factors such as price, cost before exporting goods to other countries (Soto
and Summers). As the company is operating internationally it requires more fund thus it
should focus on the increasing labour cost and borrowing cost. Increase in such cost will
reduce profit margin and affect its brand reputation.

 Social factors: This factor is related to the society's behaviour, preferences and their
values. The company should avoid all such process of production or products that are
harmful for the society. The preference of the customer tend to change constantly so in
order to attract a large number of customers Tesco is accommodating organic product as
the customer in UK are more concerned about their health.
 Technological factor: In order to be competitive the company has to update with the
changes in environment (Arnold, 2015). New opportunity is available to Tesco due to
advancement in technology it leads to introduction of online shopping and self-service
checkout. Thus providing its customer convenience and reducing the cost of labour.
Further, this acts as an opportunity for Tesco because the company can invest into this
sector further improving the customer satisfaction levels and the services that they
provide.
 Legal factor: These factors are related to the legal obligation and restriction across the
world. In it some are internal obligation such as rule related to health and safety, other
related to environment management or consumer protection law. Tesco is following code
of practice such as cannot change its price without notice so it is providing its customer
discount on their purchase of fuel and other items.
 Environmental factor: These are factor related to the environment or natural resource
such as air, water and the government are pressuring many companies to address this
issue. This factor is really important for the company and has a strong impact on its
decision making so Tesco has clearly stated that it will reduce 50% carbon footprint by
2020.
LO 2
P2 SWOT Analysis
SWOT Analysis identifies the strength and weakness of a business and external factor
such as opportunities and threat in order to achieve objective of the company. It is used by the
organisation for strategic planning to outline positive and negative effect of the project. The
strength, weakness, threat and opportunity of the business are explained below:
 Strength: It gains competitive advantage over others by building a strong loyal customer
base, brand or use of unique technology. Tesco provide wide choices to its customers and
quality product that make it one of the leading retailer in the world (Lurati and