Business Consultancy Project: Tesco PLC Internal and External Analysis

This business consultancy project analyzes Tesco PLC, focusing on its Tesco Express format. The report begins with an executive summary, followed by an introduction outlining the project's objectives. A comprehensive situational analysis is conducted, incorporating SWOT, Value Chain Analysis, PESTLE, and Porter's Five Forces models to assess Tesco's internal and external environments. The project includes primary research at a Tesco Express branch. Key problem areas are identified, with a focus on corporate accountability, ethics, and professionalism. Proposed solutions are presented, including a plan of action with a Gantt chart. The project concludes with recommendations for improving vendor and customer relationships to gain a competitive advantage.

BUSINESS
CONSULTANCY
PROJECT
(COURSEWORK 2)

EXECUTIVE SUMMARY
The report concise the business consultancy project. Approach to the management project
and data collection into accounts in corporate accountability defied clearly. Ethics and
professionalism with business conclusion and recommendations emerge the possibilities to
undertake projects perfectly. Case to organizational appropriate logical analysis for secondary
data contains the trends with problem identification. Business analysis with tools like SWOT and
PESTEL analyzed with practical manner. Primary research method is used to collect the data of
Tesco through its small information centers. Stakeholders’ issues and identifications related to
possible approaches determined with appropriate models or theories including Cost Based
Analysis, Business Case or SAF to assess the options. Stakeholder analysis and risk assessment
used as tools justify the approach taken in business. Timeline and action plans are created to
meet the objective of business.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
SITUATIONAL ANALYSIS..........................................................................................................1
Internal Environment..................................................................................................................2
SWOT.........................................................................................................................................2
Value Chain Analysis..................................................................................................................3
External Environment.................................................................................................................4
PESTLE ......................................................................................................................................4
Porter's Five Force Model:..........................................................................................................5
PROBLEM IDENTIFICATION......................................................................................................6
Problems in Internal Environment .............................................................................................6
PROPOSED SOLUTIONS..............................................................................................................9
PLAN OF ACTION.......................................................................................................................10
Improving Relationships with Vendors & Customers to gain Competitive Advantage...........10
Gantt Chart:...............................................................................................................................11
..................................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Tesco PLC is the largest retailer in the world by gross revenues. The company offers a
wide assortment of food and other items. The company aims to create shareholder value through
rigorous innovation activities undertaken on a continual basis. Also, Tesco is committed to
serving its customers by offering them high quality products at highest affordable prices. This
report aims to identify key problem areas of Tesco taking into account corporate accountability,
ethics and professionalism additional to other organisational constraints that are faced by the
organisation in the current scenario. This is achieved with the help of Situational Analysis,
specifically, PESTLE, SWOT, Value Chain Analysis and Porter's Five Forces Models.
Consequently, proposed solutions to the problems identified by the aforementioned analysis are
represented in the form of Gantt Chart, Network Diagram, Resource Sheet, Resource Usage,
Project Costs and Project Statistics Summary. All these graphical representations have been
executed using Microsoft Project Software and interpretations are made thereof to assist
accuracy of conclusions.
SITUATIONAL ANALYSIS
As the name suggests, situational analysis relates to the evaluation of situation either
internal or external to an organisation at given point of time. It is important business planning
tool that helps in assuring the managers about the fact that the activities undertaken by them are
effective and current in relation to their internal as well as external business environment. To
derive problematical areas in Tesco, three situational analytical methodologies have been taken
into account viz. PESTLE, SWOT and Porter's Five Forces Model (Ayodele, Abdallah and
Issaka, 2012). Additionally, primary research has been undertaken for Tesco Express Ealing
Broadway Branch located in Haven Green, London. This has been done with an aim to
understand whether the results of situational analysis are in line with the overall perspectives that
Tesco's customers, management and employees have towards it.
In order to identify the critical problems of Tesco Express, a situational analysis of
secondary data has been conducted. This data includes macro as well as micro-economic factors
affecting the business operations. For this purpose, a detailed account of Situational Analysis for
Tesco's internal and external environment is given below:
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Internal Environment
Tesco Express is a part of Tesco PLC that offers food products especially with a high
margin such as sweets, crisps, biscuits, fizzy drinks as well as processed foods. These are located
in central locations of districts and small precincts including villages. For 2017-18, the number
of Express stores comes down to 1,749 in the UK itself. In 2010, the company was accused of
adopting price discrimination strategies that led to charging of higher prices in smaller retail
store than regular branches. However, in order to ascertain the detailed scenario of the business
operations, SWOT as well as Value Chain Analysis have been undertaken (Bose, 2012). These
have been given below. They are as follows:
SWOT
SWOT Analysis
Strengths:
 Part of largest retailer in UK;
 Increased expansion of its Product
Lines by adding 800 new offerings in
the recent years;
 Providing high quality retail shopping
experience;
 Excellent customer service;
 Wide assortment of products to
choose from especially in fresh and
healthy food category;
 Affordable for any income class
customer to buy for;
 Strong Brand Image.
Weaknesses:
 Highly dependent on UK and Europe
Markets for revenue generation;
 Limited range of stores located in small
counties and districts;
 Weak inventory turnover;
 Involvement in scandals which have
affected the Tesco's image;
 Weak Query Response and Resolution
System;
 Low Sales turnover due to remoteness
of such shops;
 Prices are discriminated in comparison
to other branches due to stores' varying
operational costs.
Opportunities:
 Engage in Strategic Alliances with
other brands and develop in the
emerging markets;
 Taking advantage of Euro-Zone's
Threats:
 Increased competition between the
local retailers and the Express stores.
 Higher interest rates prevalent in the
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attractive investment incentives by
introducing retail environments;
 Diversification strategies to enter
liberalized countries on foreign
investment fronts such as India;
 Taking Advantage of Established
Online Market of Tesco to expand
customer base.
UK;
 Increasing Grocery inflation, globally
as well as domestically leading to price
wars as well as reduction in overall
sales;
 Higher Labour Wages as well as
operational costs incurred that are not
able to be recovered from sales made
by convenience shops;
 Rigid Company regulations also pose
threat as it hinders the shops to
compete effectively with their local
counterparts.
Value Chain Analysis
Primary Activities
Inbound logistics Tesco Express, similar to its parent business,
harnesses the advantages of cost leadership.
This is achieved through Tesco's strong
inbound logistics framework that supplies
products to 7,817 stores globally.
Operations management Effective use of IT and delivery systems
facilitate Tesco Express' aim to bring fresh
food at both home and work. The Store
Formats of this subsidiary helps in providing
top-up purchase facilities that are suitable for
customers intending to make short shopping
trips.
Outbound logistics Strategically situated in the busy city-centre
localities, Tesco Express helps in conveying
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fresh food deliveries to home as well as work
located in the nearby districts and villages.
is leader both in online and offline food
retailing. This provides flexibility and enables
cost-effectiveness for the store providing
maximum customer exposure to them.
Marketing and sales Introduction of loyalty programs such as
Tesco Clubcard help Tesco Express business
to retain customers and ascertain their buying
pattern. These stores help in furthering the
customer value through brand association and
low cost-high quality marketing strategy.
Services The Express Store helps in bringing fresh
produce as well as in-store baked goods to
their customer's comfort. For this, the
employees strictly adhere to the code of
conduct that is in accordance with the vision
and mission of the company.
External Environment
PESTLE
POLITICAL
 The company is operating at
international level that make it bound to
follow legal compliances of different
countries. Legal requirements as the
regulatory environment became
restrictive based on changes in political
landscape.
 Brexit creates a disruption in the
business environment and leads to
ECONOMICAL
 Performing business at international
level makes it essential to company to
be aware regarding changes takes place
in taxation and stability of operations in
different countries.
 When more unites are established in
rural areas of the country then it will
leads to overall development at equal
level.
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uncertainty for Tesco express.
SOCIAL
 Competition is high when it comes to
food industry and this needs to kept in
mind while serving to targeted
consumers.
TECHNOLOGICAL
 As high amount of services are
provided in the rural areas of the
country this will make hard to
implement various latest technology
due to non availability of resources.
 Providing services to consumers of
rural areas directly will help in
generating new consumer base for
expansion by introducing more
technologies.
LEGAL
 Businesses that are operated in rural
areas needs to follow some specific
rules applicable to rural development
and data security and privacy is high
concern of the business to survive in
long run.
ENVIRONMENTAL
 While providing services usage of
renewable material is used to reduce
environmental pollution.
 Tesco express has recognised various
environmental issues and adopted ways
of operations which will help society to
get pollution free environment.
Porter's Five Force Model:
It is a tool for analysing competition of a business. This competitive position analysis
were developed in 1979 by Michael E porter of Harvard business school (Clarke, Friese and
Washburn, 2016). This is useful in understanding the strength of an organisation's current
competitive position and the strength of a position that an organisation may look to move into.
Porters five force model is as follows-
Supplier's power: When number of suppliers of any goods and services are less in
comparison to its demand the suppliers can easily drive up the price of goods and services. As
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Tesco express is providing services in unique manner by focusing on rural areas that helps in
creating suppliers power and high amount of profits are derived from the business activities.
Buyer's power: Consumers have the power to demand lower price or higher product
quality from industry producers when their bargaining power is strong. As there is high demand
for the product which is supplied and in some areas Tesco express is the only suppliers that leads
to reduction in buyers power to reduce price and company is benefited by more revenues.
Competitive rivalry: Availability of number of consumers in the industry determines
which strategy needs to be followed so that survival of business can be maintained. As Tesco
express is providing facility of serving food in the rural areas make it a unique seller and gives it
a competitive advantage. Due to minimum number of competitors high amount of profits and
good market growth will be attained.
Threat of substitute: This threat is available to businesses when consumers can easily
find any substitute of the product served by Tesco express. When attractive pricing and better
pricing is provided to consumers the it will lead to switch consumers from one product to
another. Tesco express do not have such threat as no availability of substitute is less (Coe and
Lee, 2013).
Threat of new entry: When business is profitable in long run then it leads to attract more
suppliers to provide similar services and earn profits. As Tesco express is providing food
services in rural which leads to high amount of profits and there is always a threat of entering
new supplier which will leads in reduction of profits.
PROBLEM IDENTIFICATION
Tesco operates in various formats that cater to the different needs and preferences of their
customer base. One of such format is that of Tesco Express. These are convenience shops
located in small neighbourhoods all around UK as well as other countries. This format provides
the maximum revenues to the Tesco PLC with its widespread placement on a global scale.
However, in the recent years as the technological advancements have paved new paths to value
creation and wealth maximization. This has led to increase in cut-throat competition and rise in
grocery inflation in the retail sector (Fatricia).
Problems in Internal Environment
SWOT Analysis:
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Taking into account the results of SWOT analysis for Tesco Express, the following
problems have surfaced:
 Pricing Strategies: As different stores require different operational frameworks, the
company has adopted customized pricing strategies. In recent years, Tesco's Express
format stores have been accused of adoption of price discrimination strategies such as
Express Pricing (Gereffi and Lee, 2012). This has resulted in the reversal of economies of
scale in all the stores as the Express stores tend to have higher operational costs in
comparison to company's other store formats such as Metro, One Stop Shop, Extra and
Superstore.
 Profitability Reliance on Limited Market: The stores have been highly successful in
UK and European Markets in comparison to their other international counterparts. The
management has been unable to taste this success in others neither has it taken necessary
steps to improve operations and profitability of stores in other countries. This has resulted
in the higher reliance of the business on two markets which is not a good sign as a slight
unsupportive change in these markets could collapse the entire operational frameworks of
Tesco Express and Tesco PLC as a whole.
 Weaker Management Control: As these stores are located in small districts and
villages, the lack of management control has resulted in weak customer follow-up as well
as dispute resolution systems. This has resulted in increased lack of trust in the services
of the stores which is one of the main objectives of Tesco.
 Rigid Policy Structures: Unlike other local retailers operating in the same category as
Tesco Express, the company has a definite code of conduct that it needs to follow. This
results in situations where a customer may get annoyed or leave without making a
purchase which is not the case for other retailers working independently. Even though
policies are meant to be followed, rigid structures may hamper the operations of a store
altogether, leading to loss of customers to the business(Gereffi, 2013).
Value Chain Analysis:
As far as Value Chain Analysis is concerned, Tesco has a highly integrated process of
supplying products to its stores all around the world (Gürel and Tat, 2017). This has proven to be
a competitive advantage for the store as well as the company for years. However, the main
problems that has been identified in addition to those mentioned above is that:
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 Degraded Quality of Service: Tesco Stores are experiencing a decline in the quality of
service rendered to their customers. This is due fact that the the company wants to
provide low cost products to their clients at higher level of service. However, this is not
possible until certain amount of additional costs are incurred on their part. This poses a
threat of losing brand value as well as stunting growth.
 Price Fluctuations: As the main business model of the company's express stores
includes deliverance of fresh produce, unpredictability in prices of raw material which
could result in incremental cost of delivery as well as carrying and ordering costs that
could cause deviations in the budgeted costs for such stores (Ha Xuan, 2014).
PESTLE:
Looking at the external analysis, the following problems have been analysed through PESTLE:
 Non-Compliance to International Procedures: Operating at international level its
important for the stores to follow rules and policies as specified in legal system of each
country which are not completely adhered to as the company tends to follow policies.
 Tax Systems: Taxation system keeps on getting modified on a continuous basis so as to
improve financial reporting (Hammad, 2015). This has made it hard to follow each rule
and regulation specified in taxation policy of the country.
 Remoteness of Business: Introducing business in rural areas make it difficult to apply
latest technology due to non-availability of some resources.
 Changing Customer Needs: Continuous change in the taste and preference of
consumers make it difficult to get satisfied consumers.
Porter's Five Forces Model:
Some problems noticed as per Porters model are as follows-
 Business is operating in the industry which do not possess more competitors which leads
to high amount of profits. High amount of profits make this industry attractive to large
number of producers and Tesco express faces problem of threat of new entry in the
market.
In addition to these problems, Primary Data collected by conducting surveys in the form
of questionnaires and interviews have evidenced that aforementioned problems have, in fact,
resulted in decline of overall stakeholder value in the stores all across the world. Additionally,
degradation of quality and irresponsive grievance resolution systems have also contributed to the
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magnification of problems identified above (Hashim and et.al., 2015). The main problems
identified are:
 Decreased customer and vendor relationships.
 Changing Customer Needs.
 Pricing Strategies and
 Rigid Policies.
PROPOSED SOLUTIONS
Solutions to problems are as follows-
 Decreased customer and vendor relationships:
Tesco perform its operations globally, so they should maintain good supplier relationship. Even
if the bargaining power of supplier is high then also the company should maintain good
relationship with them. This helps in eliminating the gap between demand and supply of goods
(Haslam and et.al., 2014).
 Changing Customer Needs:
Tesco is known worldwide for serving quality services at reasonable rates. It is essential for the
company to maintain their positioning in the mind of their customer(Tama, 2017). Along with
that they must make sure customer do not find shortage of inventory for this company can
maintain strong relation with its customer.
 Pricing Strategies:
Solution to this issue is to becoming competitive in the market. For this goods and services needs
to be provided at affordable price and quality needs to be maintained (Slavik and Bednár, 2014).
Managers of the business needs to take all the relevant steps so that a good image of the business
can be created in the eyes of targeted consumers. This will help in attracting more consumers and
retaining them in long run so that effect of competition can be minimised and growth of the
company can be maintained (Housden, 2012).
 Rigid Policies:
During the growth phase of Tesco, company has been the part of various scandal which had
deteriorated its image and directly impacted the profitability of the firm. Though respective
company took various measure to rebuilt its image but still it should take precaution for future.
As already company has made various amendments in its policy Like, fair laws for all its internal
staff (Kalantari Shahijan and et.al., 2014). Thus, company should maintain as well as update the
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