Strategic Analysis of Tesco PLC: Business Strategy Report

This report provides a comprehensive analysis of Tesco PLC's business strategy. It begins with an introduction to business strategy, emphasizing its importance in achieving organizational goals. The report then delves into Task 1, assessing how Tesco's mission, vision, objectives, goals, and c...Read More

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
1.1 assess how business missions, visions, objectives,
goals and core competencies inform the strategic planning.......................................................4
1.2 analyse the factors that have to be considered when
formulating strategic plan..........................................................................................................4
1.3 evaluate the effectiveness of techniques used when
developing strategic business plans...........................................................................................5
Task 2...............................................................................................................................................6
2.1 analyse the strategic positioning of a given organisation by carrying out an organisation
audit.............................................................................................................................................6
2.2 carry out an environmental audit for a given
organisation
.....................................................................................................................................................7
2.3 assess the significance of stakeholder analysis when
formulating new strategy
.....................................................................................................................................................7
2.4 present a new strategy for a given organisation....................................................................9
TASK 3............................................................................................................................................9
3.1 analyse the appropriateness of alternative strategies
relating to market entry, substantive growth, limited growth
or retrenchment for a given organisation
.....................................................................................................................................................9
3.2 justify the selection of a strategy.........................................................................................10
TASK 4..........................................................................................................................................11
4.1 assess the roles and responsibilities of personnel who
are charged with strategy implementation...............................................................................11
4.2 analyse the estimated resource requirements for
implementing a new strategy for a given organisation............................................................11

4.3 evaluate the contribution of SMART targets to the
achievement of strategy implementation in a given
organisation..............................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategies played a important role in the success of each and every business unit.
It is pre plan of business which is supported by the tactics and operational plan. It start from that
strategic planning where a business organisation is required to analyses its aims and objectives
which company wants to attain in the near future. It is a continuous process where the manager
of the company try to improve its business performance through using various strategies and
tactics. There are various tools and techniques which can be used by the manager in to analyses
and planning process in a effective manner (Woodcock, Green, and Starkey, 2011). The present
report is based on the Tesco Plc which is one of the leading and well known brand in the United
Kingdom. This company is listed in to the London Stock Exchange. It is a retail chain which
operate their business in to across UK. Apart from that they also having stores in the Asia and
other European countries. Like Ireland, Hungary, France etc.
The market share of Tesco PLC in the UK is approx. 28% which is quite goods as
compare to their competitors. The cited business unit was started their business in 1924 and at
present time they having large number of stores across the world. For example, Tesco
supermarket which is one of the large market segment and well known brand in the UK. Tesco
Extra which is a type of hyper market for the inner city location. The another type of store
operated by the company is called One Stop which is one of a smallest type of store format in the
UK. Apart from that they also having online portal where they can sale their products to its
customers (Chen and et. al., 2012). They provide a wide range of products to its customers such
as books, fashionable clothing, furniture, oil products, hardware and software electronic items,
and so on. They also have a large number of workforce which can help to attain their long term
goals and objectives. The firm is the price leader in the United Kingdom market because they
provide goods and services at the lower price as compare to its competitors. It can also help to
get the competitive advantage in the market. The core competencies of the business unit is that
their operational efficiency and effectiveness. They have an integrated supply chain management
which can help to interlink all distribution and warehouse centre and reducing the time and cost
of the company. They also participate in to the CSR activities like helping to reduces food
wastage at the global level. Provide high quality products to its customers (Pagani, 2013).

TASK 1
1.1 assess how business missions, visions, objectives,
goals and core competencies inform the strategic planning
Business strategy means strategies made for the business to achieve the desired goals of
the organisation. Business strategies plays an important role to accomplish the mission, vision,
goals and core competencies of the company. If strategies are made perfectly then it helps to
reduce the cost of the product and increase sales, maximize profit (Iacob, Quartel and Jonkers,
2012). There are mission, vision, goals, objectives and core competencies of the Tesco company
are mentioned as below -
Mission  They want to create competitive advantage in the marketplace.
 They want to create customer loyalty.
Vision  Tesco wants to provide its goods in all over the world.
 Tesco wants to build customer loyalty and customer satisfaction.
Goals and
Objectives
 They want to develop and create opportunities to take advantage
of this.
 They want to maximize their market share.
 Tesco wants to minimize their cost and achieve maximum profit
Core competencies  They want to collect more information from their customers to
compete the competitors (Slater, Olson and Finnegan, 2011).
 They want to maintain the quality of their product, it helps to
build more customers.
1.2 analyse the factors that have to be considered when
formulating strategic plan
Strategic plan is made by top level management and it should be clear and understandable
by all the employees. Strategies are made to achieve the desired goals and objectives of the
organisation (Schrader, Freimann and Seuring, 2012). There are many factors that have to be
considered when making strategic plan which are described as below -

Communication: For better and successful strategic planning it is necessary that there is
proper communication between all the departments. Managers share the strategic plan with their
employees so that all the employees can help their manager or employees to achieve the goals
and objectives. Employees also can give feedback with the help of surveys, group meetings etc.
(Acquaah, 2011).
Innovation: It is very important for any organisation to be more innovative and creative.
It is not necessary that planning is done only for existing products and services, it can also be
done to introduce new product in the marketplace. Innovation and creativity is very essential
while Tesco company develop the new product because a new product with attractive feature can
attract the more customers.
Culture: Every one's culture is different from other people similar to that organisation
culture is also different (Li and Tan, 2013). Employees of the organisation has their own beliefs,
attitude, values, behaviours etc. Some employees believe that changes are necessary but some
will get fear about that.
1.3 evaluate the effectiveness of techniques used when
developing strategic business plans
Tesco company develop the strategic plan for their business. They want their business to
be more effective and efficient for this they use BCG matrix. In this matrix there are four cells
which denote the growth of the market. Every cell of BCG matrix present a different type of
business (Elliot, 2011).

BCG matrix is described as below -
Stars: It means organisation is growing fastly and have huge share in the market. This
type of organisation can generate more cash because this type organisation needs more
investments.
Cash cows: It represents that the organisation growth is very low but the market share is
high. They can generate more revenue by taking the advantage of high market share (Azar,
2011).
Dog: It represents that growth of the company is very low and they also have less market
share. If company wants to develop then they need to cut the unwanted costs. If their existing
products do not provide them profits then they can stop producing those products and they can
develop the new product.
Question mark: It shows that company or organisation growth is very high in the market
but there market share is very less. It shows that company mostly produce new products for the
people and take risk (Ghezzi, 2013).
Task 2
2.1 analyse the strategic positioning of a given organisation by carrying out an organisation audit
An organisation audit is very necessary for the Tesco company. With the help of
organisational audit it is easy to find out the errors and mistakes easily. Tesco conducted SWOT
Illustration 1: BCG matrix

analysis with the help of this company can find out the internal strength and weakness and also
they can find the external opportunities and threats.
SWOT analysis for Tesco company is mentioned as below -
Strength: There are various strength of the Tesco is given below -
 They have a good and successful strategy for their business (Barberá and et. al, 2012).
 They have their stores in all over the world and also has very effective policies.
Weakness: There are various weakness of the Tesco is given below -
 Prices are very high in the Tesco company.
 There are transportation cost is also high.
Opportunities: There are various opportunities for Tesco in the marketplace, which are
mentioned as below -
 They sale their products online and also provide service of free home delivery.
 They also give customers best quality of products (Ferreira and et. al., 2011).
Threats: There are various threats for the Tesco are mentioned as below -
 They have very huge competition in all over the market.
 Income of the individual can also affect the sales of Tesco's products and services.
2.2 carry out an environmental audit for a given
organisation
It is also necessary for the company to know their external environment. External
environment is uncertain and it is uncontrollable by the Tesco company. So it is necessary to
analysis the external environment with the help of PESTLE (Ibrahim, 2015).
PESTLE analysis for Tesco company are described as below -
Political factors: Tesco has their store in all over the world so that political factor can
affect the the daily activity of the company. In this factor it includes taxes, policies etc. Some of
the countries allow them because they provide job to the people of their country.
Economic factors: These factors can affect the price, sales and demand of the product. If
the product's demand of Tesco go down then it can affect the goodwill.

Social factors: Every people or employees of the organisation has their own social rules
and culture that can affect the Tesco. Also customer has their own values and attitudes towards
any product that also can affect the Company (Smith, 2013).
Technological factors: It is also necessary to introduce new techniques in the business to
achieve the desired goals. If there is no innovation and creativity then it can also reduce the sales
of the product. It is very necessary to provide satisfaction to their customers with the help of their
products and services.
Legal factors: Every country has their own law and regulations that can affect the sales
of the Tesco company.
Environmental factors: Environment can affect the business either internally or
externally. But it gives large impact to the Tesco when it is externally because they are uncertain
and uncontrollable. It is necessary to prevent the environment by reduce the waste (Rahbar and
Abdul Wahid, 2011).
2.3 assess the significance of stakeholder analysis when
formulating new strategy
Stakeholders are very important for any businesses and they can be an individual,
organisation or group. They are totally involved in the Tesco company and have interest in all
activities which is related to the business. Stakeholder also includes employees, creditors,
government, unions etc. they all are support all the activities which is related to the Tesco
(García‐Rodríguez and et. al., 2013). There are many importance of the shareholder analysis
while making or formulating the new strategy, which is described as below -
 They need to find out the people or groups that can affect the business either internally or
externally.
 They need to motivate all the employees in the organisation.
 They need to understand the nature of the people and of there is any issue then eliminate
it with the help of communication.
 They also need proper support of all the people to achieve the desired goals and
objectives.
 They can also take support from the powerful stakeholders when they begin the business.

 It is also need to find out that what factors can affect the business strategy (Zott, Amit
and Massa, 2011).
If Tesco company wants to achieve more success in the marketplace then they need to
analyse the stakeholder very carefully.
2.4 present a new strategy for a given organisation
Tesco plan a new strategy to provide their customers or buyers more satisfaction. Tesco
create the strategy for to develop value for their products and services among their customers.
Whenever a new product is developed there is a need of new strategy to the success of the
product. Every consumer has their own needs and wants, Tesco can fulfil all their need and
wants by offering them a new product. When Tesco make strategy then it should help them to
create or generate revenue (Woodcock, Green, and Starkey, 2011). Strategy also provide some
opportunities to the Tesco for an expansion of their products and services.
Tesco make strategy for the Cost leadership and wants to lead in the market by taking
advantage of the cost. Tesco wants to reduce the cost of their products and services and increase
their sales to achieve the maximum profit. They can offer their products to the customers ate
Illustration 2: Stakeholder's grid

lower prices it can help them to increase their sales. It also helps to take advantage from their
competitors and with the help of cost advantage they also can target the new segment of the
market. If there is low of the product of the Tesco then it also helps them to create their goodwill
and market share (Chen and et. al, 2012).
TASK 3
3.1 analyse the appropriateness of alternative strategies
relating to market entry, substantive growth, limited growth
or retrenchment for a given organisation
In the market for survival we have to be in compete with competitor . So tesco competitor
are ASDA, Sainsbury's, Morrison's, Aldi in the market. So tesco have to analysis them and
analysis our self also and as per the situation tesco have to make strategy. As per the situation the
best strategies are as follows:
Market entry: First strategy can be getting the organic growth in the organization or two
organisation merge together. The second strategy or third strategy can be doing the Acquisition
of another company (Pagani, 2013).
Substantive growth: Getting the product line diversification in the organisation will help
in this situation or we can do the horizontal integration or we can do the vertical integration
limited growth: We can do penetrating the current market by increasing market share
for the new product or Offering the different services and product in different areas or we can
Make a new product according to customer need and developing design and brand.
Retrenchment: For this situation company can turnaround from underperformance into
the profitable company. If it will not work as expected then we can Sale the liquidity of the
company for recovering the company from the last stage of life cycle or at last if any ting will
not work sale business to another company (Iacob, Quartel and Jonkers, 2012).
3.2 justify the selection of a strategy
Market entry:-

Merger strategy is the best strategy because in this we will be sharing losses and also
sharing the profit it is better to get fully loss . Two weak can make one stronger. Getting the
organic growth is good but it need the financial help. So the merger better strategy where we will
get the financial help also.
Substantive growth:-
Related diversification is the best strategy in this situation. Because if we diversify the
product line which is closely related. It will help in targeting the more customer in the market. it
means that we can earn more profit (Slater, Olson and Finnegan, 2011).
Limited growth:-
Product development is the best strategy for this situation. In this we have to develop the
brand in the market and we the to develop the design, packaging, etc. In other two strategy
(Market penetration, and market development ) needs the financial help in a strong manner.
Retrenchment:-
Selling the liquidity is the best strategy in the retrenchment. Because as per the need we
have to sell the liquidity in the company and then from this we will get the financial help. It will
help in overcome from the last stage of the company or then we can be in the market. It well help
the company to repay the loans and repay all the credit and dues (Schrader, Freimann and
Seuring, 2012).
TASK 4
4.1 assess the roles and responsibilities of personnel who
are charged with strategy implementation
When strategy is made successfully then it required to be implemented in the
organisation. For implementation of strategy there is always need of a person, this person can
called leader or manager. In Tesco the person who implement the strategy has some roles and
responsibilities for the successful implementation, which are mentioned as below -
 It is the duty of manager or leader to divide work among all the employees very clearly
and plan must be easily understandable by the employees also.
 It is also necessary that there must be proper communication between every people
(Acquaah, 2011).
 Manager or leader can also maintain the record which is related to their plan.

 It is necessary to follow all the rules and regulations.
 Work which is done by them must be ethically.
 Evaluate, control and monitor all the work which is done by employees.
 It is also necessary to encourage or motivate employees for there better performance.
 If there is need of any correction, then corrective steps must be taken by the leader or
manager.
 It is also necessary to determine that work is doing properly or not and budget is also
necessary to be under control (Li and Tan, 2013).
4.2 analyse the estimated resource requirements for
implementing a new strategy for a given organisation
Analysis of the estimated resource requirement for the better implementation of the
strategy is required to maintain Tesco's competitive advantage mainly depends on the resources
which are either limited or substituted. When all resources are shared, they develop new abilities
and competencies. A strategy is deployed when we expect better result with its deployment And
for better results we use resources in a very tactful manner.
To implement a new strategy, Tesco needs these resources which are mentioned as
below-
Human resource: Human resource is a very important asset of Tesco. Its the human
resource which is responsible for the successful implementation of any strategy (Elliot, 2011).
Financial resources: Financial resources are very crucial element of Tesco strategic
implementation. For getting maximum out of strategy implemented, we need to deploy our
financial resources in a very precise manner.
Physical and Information resources: Physical resources refers to be present physically
for the customer service and to do so Tesco have many superstores and convenience stores
throughout UK region (Azar, 2011). While Information resources are very essential as it
provides the assistance through research and data available (customer feedback etc.)
Time and Material: Every good strategy strategy has a specific time limit and Tesco
requires material for the implementation of strategy. They need qualified workforce and
technology to fulfil the goals.

4.3 evaluate the contribution of SMART targets to the
achievement of strategy implementation in a given
organisation.
SMART targets are set by company. These targets comprise specific nature with
established measurable criteria, these targets are needed to be attained in a realistic time limit.
Essentially, targets with a proper timescales are necessary for the accomplishment of objectives.
Being one of the Most prominent retail chain, company needs to follow 6 SMART principles-
Customer: Targeting the population who are up-to the standard decided by the company.
Shareholders: Bring more clarity among our income and expenses.
Partners: Sharing all the required information for the growth of company (Ghezzi,
2013).
Stores/Physical Evidence: placing stores at right place for widest outreach.
Network: Creating a network for faster transaction of information and resources.
Neighbourhood: Understanding the place, its culture and social algorithms.
When SMART targets are reasoned, short term goals gets impacted by long term goals.
To interpret the contribution of SMART targets to the strategy implementation, Specific points
are there-
 Targets set are attainable in nature and not vice-versa.
 There is a timescale for everything. Crossing a time limit will result in loss.
 Targets should be measurable and in accordance with the ultimate objective.
 Set targets are specific when SMART targets are chosen. This avoid any haphazard
situation (Barberá and et. al., 2012).
CONCLUSION
As per the above mentioned report it is concluded that to success of Tesco, there is a
good strategies which is made by them. It helps Tesco to achieve the desired goals and objectives
and also helps to increase sales with profit maximisation. In this report there is also defined
about the mission, vision, objective and goals of the Tesco. Factors are also defined which is
necessary to take into under consideration while making strategic plan of the Tesco.
Environmental factors i.e. internal and external, that can affect the plan is also discussed. Tesco

take cost leadership advantage while making the new strategic plan. In this report it is also
discussed about the implementation and evaluation of the strategic plan. There is also a
description of rules and responsibilities of personnel who are charged with the implementation of
strategy.

REFERENCES
Books and Journals:
Acquaah, M., 2011. Business strategy and competitive advantage in family businesses in Ghana:
The role of social networking relationships. Journal of Developmental
Entrepreneurship. 16(01). pp.103-126.
Azar, O.H., 2011. Business strategy and the social norm of tipping. Journal of Economic
psychology. 32(3). pp.515-525.
Barberá, L., and et. al., 2012. Advanced model for maintenance management in a continuous
improvement cycle: integration into the business strategy. International Journal of
System Assurance Engineering and Management. 3(1). pp.47-63.
Chen, C.C., and et. al, 2012. A business strategy selection of green supply chain management via
an analytic network process. Computers & Mathematics with Applications. 64(8).
pp.2544-2557.
Elliot, S., 2011. Transdisciplinary perspectives on environmental sustainability: a resource base
and framework for IT-enabled business transformation. Mis quarterly. 35(1). pp.197-
236
Ferreira, M.P., and et. al., 2011. John Dunning’s influence in international business/strategy
research: a bibliometric study in the strategic management journal. Journal of Strategic
Management Education. 7(2). pp.1-24.
García‐Rodríguez, and et. al, 2013. Corporate social responsibility of oil companies in
developing countries: from altruism to business strategy. Corporate Social
Responsibility and Environmental Management. 20(6). pp.371-384.
Ghezzi, A., 2013. Revisiting business strategy under discontinuity. Management Decision. 51(7).
pp.1326-1358.
Iacob, M.E., Quartel, D. and Jonkers, H., 2012, September. Capturing business strategy and
value in enterprise architecture to support portfolio valuation. In Enterprise Distributed
Object Computing Conference (EDOC), 2012 IEEE 16th International. pp. 11-20.
IEEE.
Ibrahim, A.B., 2015. Strategy Types and Small Firms' Performance An Empirical Investigation.
Journal of Small Business Strategy. 4(1). pp.13-22.
Li, Y. and Tan, C.H., 2013. Matching business strategy and CIO characteristics: The impact on
organizational performance. Journal of Business Research. 66(2). pp.248-259.
Pagani, M., 2013. Digital business strategy and value creation: Framing the dynamic cycle of
control points. Mis Quarterly. 37(2). pp.617-632.
Rahbar, E. and Abdul Wahid, N., 2011. Investigation of green marketing tools' effect on
consumers' purchase behavior. Business strategy series. 12(2). pp.73-83.
Schrader, C., Freimann, J. and Seuring, S., 2012. Business strategy at the base of the pyramid.
Business Strategy and the environment. 21(5). pp.281-298.
Slater, S.F., Olson, E.M. and Finnegan, C., 2011. Business strategy, marketing organization
culture, and performance. Marketing letters. 22(3). pp.227-242.
Smith, D.J., 2013. Power-by-the-hour: the role of technology in reshaping business strategy at
Rolls-Royce. Technology analysis & strategic management. 25(8). pp.987-1007.
Woodcock, N., Green, A. and Starkey, M., 2011. Social CRM as a business strategy. Journal of
Database Marketing & Customer Strategy Management. 18(1). pp.50-64.

Zott, C., Amit, R. and Massa, L., 2011. The business model: recent developments and future
research. Journal of management. 37(4). pp.1019-1042.