Business Strategy Analysis Report: Macro and Internal Factors of Tesco

This report provides a detailed analysis of Tesco's business strategy. It begins with an introduction to strategic planning and then delves into an analysis of the macro-environment using PESTLE analysis, examining the political, economic, social, technological, environmental, and legal factors influencing Tesco. The report then explores Tesco's internal environment, assessing its strengths, weaknesses, opportunities, and threats through SWOT and VRIO analyses. The competitive environment is examined, including the application of the Ansoff growth matrix. Finally, the report culminates in a strategic marketing plan. The report critically interprets and analyzes information, drawing conclusions about Tesco's strategic position and recommendations for improvement. The report is a comprehensive overview of Tesco's business strategy, incorporating various analytical tools and models to provide a well-rounded understanding of the company's operations and strategic decision-making processes.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
P1: Influence and impact of different macro environment factors of a business organisation4
PESTLE Analysis of Tesco.............................................................................................................4
M1: Critical analysis of of macro factors to determine the management decisions...............6
TASK 2............................................................................................................................................6
P2: Analysis of internal environment and capabilities of the organisation............................6
M2: Critical evaluation of internal environment and the capabilities....................................9
TASK 3............................................................................................................................................9
P3: Analysing of competitive environment of a organization................................................9
M3: Appropriate strategies to improve competitive edge and market position...................11
TASK 4..........................................................................................................................................11
P4: Models, concepts and theories that are helping in organisation planning......................11
M4: Strategic marketing plan...............................................................................................14
Strategic marketing plan:......................................................................................................14
D1: Critical interpretation and analysis of information.......................................................15
CONCLUSION ...................................................................................................................17
REFERNCES.................................................................................................................................18

INTRODUCTION
Strategies are regarded as plan of action are used by all the organisations. It is regarded as
actions which help in achievement of business objectives. It is useful for organisation in
achievement of their desired objectives. Such type of strategies have been formulated in order to
fulfil of business targets. Present report is based on Tesco which is a retail based organisation
and its headquarters are present in UK (Angeloska-Dichovska, and Petkovska-Mirchevska,
2017). There are around 12 stores that are located across different locations. Such analyses of
internal environment and macro environment is understood with help of models such as SWOT,
PESTLE and Porters five force model etc.
TASK 1
P1: Influence and impact of different macro environment factors of a business organisation
Business is working in the fast changing environment and there are some of the factors
that are creating both threats and opportunities for organisation such as Tesco. It is a analysis that
is done for development of understand of the such external factors as mentioned below:
PESTLE Analysis of Tesco
Political : There are many political factors that are posing a impact on Tesco such as
legislations, unemployment rates, tax rates etc.
Positive: There are many political factors that are posing a impact on functions of
company such as if import duty is reduced then it will have a positive impact on functions of
Tesco as there cost will reduce.
Negative: If taxation are are increased then it may posses a increase in prices of raw
material for organisation such as Tesco.
Economic: There are certain economic factors such as GDP growth, inflation rate etc.
that are also impacting a organisation sales.
Positive: Economic factors can have a positive impact in form of low prices ta which
they are offering products,. It will be very helpful in giving a leading position for a retail
organisation.
Negative: There are certain issues in economic environment that are related to stability of
organisation such as it consist of high interest rates that are leading to difficulty in raising finance
for making investment in organisation (Apenko,2017).

Social: Social factor consist of a variety of factors such as shopping trends of consumers .
Positive: changing social trends such as while people are willing to prefer a one stop
shopping destination is making them inclined towards various shopping options of retail markets
such as tesco.
Negative: People are getting more conscious towards their health which is leading to
towards reduction in sales of products that are having high fat content. So, it leads to low sales of
such products having high fat and calorie content (Bentley-Goode, Newton and Thompson,
2017).
Technological factors: Technological factors consist of such factors that are having
relation with technology advancement and opportunity that has to be adopted by certain retail
organisation such as Tesco.
Positive: Tesco has introduced technology of RFID which is helping in saving their
efforts & time that can be used for other productive purposes.
Negative: There are some technologies that can result in disruption for Tesco such as e
grocery stores by other competitors can lead to low sales in Tesco.
Environmental factors: There are some factors that are related with effect on global
issues as a consequence of new technology adoption.
Positive: Tesco is having focused on utilisation of greenhouse effects that are impacting
overall consumption of energy can be reduced.
Negative: There are assured factors that can have a impact in environment in a negative
manner such as there are many changes that have to be adopted by Tesco so that they are not
harming environment in any manner. It includes reduction of plastic usage etc. all such have a
impact on regular functioning of Tesco.
Legal factors: There are certain factors that are consisting of regulation and legal laws of
a country.
Positive: In UK government is having focus towards reduction of subsidies that can
result in increasing prices of raw materials for Tesco as a result they will increase prices of final
products offered by them to their customer and it is going to affect their leadership positions in
market.

Negative: Tesco is a organisation that has to face many different types of threats as they
are part of retail industry (Chen, Eshleman and Soileau, 2017). So, when they are following all
the regulation in an appropriate manner it leads to achievement of a competitive positions and
enhancement of brand image as compared to their other competitors.
Ans off growth matrix:
Ansoff growth matrix is used for understanding the different types of marketing strategy
that can be in relation to existing customers or some new customer. The Matrix helps in
understanding the four options that are available as strategies for a particular organisation:
1) Market penetration:
It is a strategy that is focusing on existing products and existing market. In Tesco, the
strategy can be used for the purpose of using the existing expansion in the existing markets.
There is no new category of product will be added in this strategy. Various new offers and
loyalty campaigns can be started by Tesco in order to attract more customers by use of their
existing products.
2) Market development:
Market development is related with use of existing product category for entering in New
Market segments. This is a strategy that can be used for the purpose of selling the products in
some new market that is completely different from the existing market. In case of Tesco the
strategy can be used for approaching a completely new market segment such as new distribution
channel can be used like e commerce strategy where only those customers who just want to buy
products online medium and not by visiting the stores can be approached.
3) Product development:
Product development is related with enhancement of profitability of organisation by
introduction of new product for the existing customer base. It consists of new product creation
for the existing base of customers, such as there can be approach by Tesco for financial services
that is completely different existing retail products and will be used for the purpose of attracting
more new customers.

4) Diversification:
There is Development of new products in new markets in business market and products. In
case of Tesco there will be high level of risk involved by using of diversification strategy as it
will lead to a complete change in the market segment and also the product categories. This
strategy involves high amount of risk as there is high investment that is required for approaching
a new market.
M1: Critical analysis of certain macro factors for determination of the management decisions
Macro environment consist of various factor that are impacting a organisation. Such
different factors are divided in different categories such as social, political, legal, environmental
etc. all such factors are having their presence in a country and according to these organisation are
planning their future operations (Galpin, 2019). In Tecso it is helping in adoption of various
technologies such as AI technology is being sued for sending and communicating with large
number of customers at a particular point of time. Various other factors includes changing
customer preferences can leads to reduction in sales for Tesco.
TASK 2
P2: Analysis of internal environment and capabilities of the organisation
Strengths Weaknesses
 Tesco is the No.1 supermarket, in the
UK. It has high sales & more revenue
as comparison to other superstore
chains.
 Company grow number of stores, now
they operate 6966 grocery stores
worldwide. Which will increase their
revenue every year.
 Their diversified stores such as Tesco
Tesco Metro, Homeplus, Tesco Extra,
Tesco Express, One Stop,
 Tesco fail in American and Japanese
markets in 2012.
 The company has closed their stores in
Japan after nine years and in US after
five years because they fail in export
operations.
 In 2017, Fines was charged to Tesco
due to misrepresentation of profit of the
company.
 Tesco share prices fell in Oct, 2018 due
to decline in operating profit. It was

 Due to Tesco successful commercial
performance, they awarded by several
international awards.
 Tesco uses some updated technology in
their best way to enhance the customer
experience of shopping (Habib and
Hasan, 2017).
recorded as a worst performance for the
company.
 Company low costing strategy lead to
reduced profit margins.
 Tesco, has some of the grocery outlets
are not having high performance well in
some countries. Due to their bad market
research.
Opportunities Threat
 Tesco recently introduce new
discounted stores which show
significant growth in the market.
 Company has an opportunity to grow
their business so that they can compete
with rivals.
 Strategic partnership with other reputed
companies can offer an excellent
opportunity for Tesco. It helps Tesco in
attracting new customers and retaining
old one.
 Tesco’s online shopping business as
well as home delivery services also
avail the opportunities.
 Tesco's Christmas advertisement in
2017 faced social media backlash when
it launched. People boycotted the all of
their stores claiming to be a
disrespectful act from them.
 Company misleads customers from
some of the fake brand names and
marketing its food products under fake
such a brand name. Due to this they
faced several legal threats.
 Their market position can be threatened
because of rising growth and
performance of their competitors in the
market (WalMart, Carrefour, Aldi,
Tesco's biggest competitors)

TOWS Analysis of Tesco based on above SWOT analysis:
Strength opportunities Weakness opportunity
Tesco can make use of their advanced
technology for the purpose of using it as a
strategic alliances with other reputed brands
Low cost strategy of Tesco can be used for
purpose of using it as a online strategy of
enhancing the shopping experience of their
customers.
Strength Threat Weakness Threat
The high performance and continuous
innovation by their competitors can be used for
purpose of growing their stores to other
diversified market structure.
Tesco can use some of their stores which are
not performing well to close down so that
further this investment can be made towards
other stores that are resulting in higher profits.

VRIO analysis is also a tool that can be used for purpose of making of the internal assessment of
a organisation based on four major factors that are value, rareness, organisation and imitability. It
is a framework that can be applied for Tesco as discussed below:
Value It is a factor that is a result of organisation
capabilities that are very valuable for a
organisation (Habib and Hasan, 2017). It is
helping in increasing functioning if an
organisation and for their survival for a longer
duration of time. In case of Tesco there are
certain resource's it includes cost leadership
position, brand image, local food products,
distribution network etc.
Rareness It is an attribute that is connected with those
resources that are rare or not. In case of Tesco,
it includes there major resources that are cost
leadership position, distribution network and
their food products.
Imitability There are providing Tesco a certain assets or
resources that cannot be copied or easily adopt
by other similar competitors and that are
competitive advantage. Such resources include
their leadership position and food products that
are providing this brand a competitive and
differentiation advantage in the market.
Organisation It is very important for every organisation to
make optimum utilisation of all available
resources. It is helping them in having long
terms survival and at same time is also very
necessary for attainment of cost benefits and
cost advantage.

After, making a analysis of internal environment of organisation like Tesco. It is resulting into
bets strategies that can be formulated by Tecso in achieving their overall goals.
M2: Critical evaluation of internal environment and the capabilities
Internal environment of a organisation consist of various factors that posses impact on
operations of a organisation. Such factors have to be controlled by management of a organisation
(Johnson, 2016). Tesco is a large organisational and they are having sufficient amount of
resources that can help them in achievement of their lad objectives. From above made internal
analysis it is said that because of some of internal capabilities, structure and skills that are
helping in proper functioning of an organisation:
Internal capabilities
 It consist of resources like competent staff
 It is also helping in trading along with various business situations in terms if increased
business legislations and regulations
Internal structure:
 There is adequate communication channels that are present in Tecso
 There is compensation that is paid to employees an dis helping them in dealing with
reduction in employee turnover.
Skills Set:
 There is a skilled workforce in Tesco which is helping them in dealing with various
business situation
 There can be some amount of conflicts that are being handled by management to ensure
smooth working of their organisation.
TASK 3
P3: Analysing of competitive environment of a organization
Porters Five force model:- Michel porters five force model were introduced in 1979,
for the competitive position examination of the company. Porters five force model analyse or
evaluate the strength & position of this company. Porters competitive theory helps in identify the
strength and weaknesses of the company. This model helps in identifying those factors which

have direct or indirect effect on the business. This is also help in identifying what is the impacts
of other rival or competitive companies on the business. Tesco five force are discussed below:-
 Competition in the industry:- Now a day’s every type of industry weather it is small,
large facing high level of competition in the market. In macro environment number of
competitors are increased which affects or influence the growth of the companies. There
is high competition for Tesco in the industry but they have good market strategies, unique
ideas to deal with competitors (Leischnig, Woelfl, and Ivens, 2016). Tesco can attract
their customers through marketing. The company offer better deals at low price to reduce
the competition.
 Threat of the Substitutes products:- Substitute products and services used by the
customers for the place of products of the company were consider as a threat for
company. If company produce different or unique item then chance of substitute product
threat is low. But if companies product substitute is available in the market it increase
competition. There is some similar brand in the market offer substitute to Tesco but the
standard of product offered by the Tesco is unique and different from other substitutes
(Madhushree, Kuma and Aithal, 2018).
 Power of the supplier:- There is huge impact of supplier on the company’s product. The
suppliers have power for the driving overall cost of inputs and advantage to push the
trade services. TESCO has large number of suppliers in the market. That's why suppliers
have less power over TESCO input cost (Lyneis, 2020). Because of low number of
substitutes company have advantages, they offer less cost to the suppliers.
 Power of the customer:- The companies growth is depend on the purchasing power of
customer. Customers have power to driving the overall cost from high to low.
Company’s growth and cost affected by the number of customers or buyer have
(Yuliansyah, Gurd and Mohamed, 2017). When company have few customer they have
power to increase product prices, if company have many customer they already have high
power. TESCO provide good cost benefits which prevent their customer from switching
to other brand. TESCO'S targeted customer is of low income group which help company
in getting high profitability.