Business Strategy Analysis Report: Tesco's Strategic Planning

This report provides a comprehensive analysis of Tesco's business strategy, examining the impact of the macro environment using PESTEL analysis, evaluating internal capabilities through SWOT and VRIO frameworks, and assessing competitive forces with Porter's Five Forces model. The report also explores Tesco's strategic planning, offering insights into its approach to market dynamics and competitive advantage within the retail sector. The analysis covers political, economic, social, technological, environmental, and legal factors, as well as internal strengths, weaknesses, opportunities, and threats. The report highlights key strategies and their implications for Tesco's performance, including its global presence, supply chain efficiency, and responses to market changes, concluding with an overview of recommendations for future strategic directions. The report utilizes academic sources to support the arguments.

Business Strategy

Table of Contents
INRODUCTION...................................................................................................................................3
TASK 1.................................................................................................................................................3
P1 Use appropriate framework to analyse the impact of macro environment....................................3
TASK 2.................................................................................................................................................5
P2 Examine the internal capabilities and environment of given organisation....................................5
TASK 3.................................................................................................................................................7
P3 Apply Porter Five force model and analyse the competitive forces..............................................7
TASK 4.................................................................................................................................................9
P4 Provide strategic planning of organisation by using appropriate framework or concept...............9
CONCLUSION...................................................................................................................................11
REFERENCES....................................................................................................................................12
Books & Journal:.............................................................................................................................12

INRODUCTION
Market is wider and competition rising and corporate level and it is becoming difficult
for or else to survive in the competitive market. So, business strategies are a set of tactics and
strategies which guides the organisation and helps them to achieve competitive advantage in
the industrial sector. It is a broader and wider concept which is to be understood in proper
manner. Tesco, a multinational corporation headquartered in UK. It is the largest supermarket
and retail chain which provides varieties of product suggest groceries apparels cosmetics and
many more it also has many computers like ASDA group Sainsbury Wal-Mart etc. This
report includes pestle analysis porter five force model SWOT analysis different types of
theories concepts as well as models. Business strategy plays a vital role in in enhancing the
productivity of business at wider scale. To implement strategy proper market research and
high level of skills and knowledge is required so that decision making is done in effective
way. Many enterprises use the different methods of business strategies and accordingly they
use their capital as well as resources in most efficient manner so that in future no problems
occur. Also during this process new opportunities are also explored by the organisations.
Resources and capital in strategy to be used appropriately so that they provide benefit to the
corporation.
TASK 1
P1 Use appropriate framework to analyse the impact of macro environment
PESTEL analysis is a Framework which is used to assess external environmental factor
which influences direct impact on success as well as growth of the organization. Macro
environment are those which affect the business and its functions from outside enterprise. It is
important to focus on these external factors so that resources are used efficiently. These
macro environment factors slow down the growth of corporation and distract them from their
core activities (Cao, 2019). In context of Tesco they adopt PESTEL analysis to examine as
well as determine the external for micro environment. This helps them to be aware of risks
associated with market or other aspects. Furthermore, to go through this analysis deep
research and knowledge is required during the process so this Framework is explain below-
Political factor: Political factor involves government policy, tax rate, trade
restrictions etc. In context of Tesco, the government of UK focuses on controlling the obesity
which decreases sales as well as profit level of Tesco in future period of time. On the other
hand due to the political stability of UK the company does not want to change policy
frequently (Xie, 2019). Thus, it increases success as well as growth of the company in future
period of time. Therefore, Due to stability in political condition of UK the company operates

their activities and function of business in an effective manner which helps them in increasing
sales as well as profitability level in upcoming period of time.
Economic factor: It involves unemployment rate, inflation, deflation, exchange as
well as interest rate and many more which imposes direct impact on performance level of
company. In reference of Tesco, due to increase in level of unemployment the people spend
less amount of money in order to purchase superior quality product from business
organization. They shift their brand from that product which is at low price. Thus it decreases
sales of the company. On the other hand the Tesco focuses on providing superior quality
product and services to its customer as per their needs and wants in order to satisfy them. It
helps them in increasing their trust and loyalty during the period of time (Kong, 2020).
Social factor: It involves taste, preferences, market trends and many more which is
necessary to consider for increasing success as well as growth of Organization in future
period of time. In context of Tesco, they focus on providing those good and services in order
to satisfy the need of customer. They offer innovative and unique goods and services in order
to satisfy the changing need during the period of time. On the other hand due to frequently
change in the taste as well as preferences of customer it is difficult for the company to fulfil
their changing need (Kitsios, 2019).
Therefore it decreases the sales as well as well of profit of company in future period
of time. If company focus on such elements then and it becomes easier to carry out the
activities as well as functions appropriately. To understand the social factors a proper analysis
of customer's demand and needs are to be examine so that goals and objectives are achieved
effectively.
Technological factor: Technology plays an important role for the successful as well
as growth of organization. Therefore it is necessary for company to implement advanced
technology in order to offer innovative product to its customer in order to satisfy them. Due
to implementation of advanced technology that Tesco offer superior quality product to its
customer that help them in satisfying there need. It helps them in increasing brand image and
repetition of the company in front of customer at market place. On the other hand, the
implementation of advanced technology is very costly it adds cost for the company which
decreases sales as well as level of profit in future period of time.

Environmental- Then, the other factor is environmental in which pollution weather
risk management are involved. Many companies keep these at priority level as because which
changing period of time ethics and morals of business has also been changed so to cope up
with the time I'm the environmental factor has become necessity to be considered so, in
relation with chosen corporation, they have been establishing many sustainable development
programs so that quality of life is being provided to the citizen of society. With the help of his
goodwill of enterprise increases in the market and more customers are attracted towards the
organisation (Bentley-Goode, 2019).
Legal factors- At last, legal element in which contracts, agreements, laws etc. is
involved. Such type of factors also have a great impact on management and decision of
corporation as because if any problem occur or the functions of operations of entities are not
conducted according to the government rules and regulations then and a big change is to be
adopted by the enterprise & this leads to use of more resources and capital which will directly
affect the performance and productivity of business (Pan, 2019).
After analysing the specified analysis it is seen that it is crucial to understand the
macro environment so that manpower and resources are used in most efficient way or at
optimum level. Manager of corporation and human resource needs to be more active and take
participate in in various events or workshops in market so that reliable credentials are
acquired or gathered. During this process it is necessary to be aware about the risk and
challenges associated with these elements so that issues are eliminated in future up to some
extent.
TASK 2
P2 Examine the internal capabilities and environment of given organisation
Internal environment are defined as involvement of events factors very sculptures and
many more which affects or influence the decision of the enterprise and management. It is
important to focus on this element which has a deep impact on business because there is a
slow down the growth or enhance the productivity of entity. In marketing there are various
tools which are being used by organisation to determine and examine these internal
environment factors so the distance between is done properly such as Tesco use SWOT
analysis.
SWOT Analysis
SWOT analysis is a tool which is used by many firms to analyse the internal
capability and environment factors in the market as well as entity. Through this tool,

enterprise is able to use strategies and tactics in well organised manner. It is a time
consuming process but it is effectively used as it provides competitive advantage to the
specific organisation. To conduct this analysis, various information as well as research is
required so that problems of errors do not occur in near future or in the process. In context to
Tesco, they also use this SWOT analysis tool which helps them to make decisions
appropriately. This Framework includes various elements which are discussed below-
STRENGTH
 Main strength of Tesco is that they
are located globally and has large
number of market share growth as
well as customer base.
 As it is a diversified company and
have goodwill in the market it helped
them to raise the capital when
required for business.
 It is the largest retail chain and
grocery stores in Britain.
 Tesco has efficient and large number
of suppliers and long network chain.
 Distribution channel of select
enterprise is also wider which helps
them to bargain for their resources
and materials (Otuyama, 2020).
WEAKNESS
 Due to implications of Brexit it is
becoming difficult for Tesco to
enlarge their business in different
countries (Wu, 2020).
 When the company opened its stores
in US and Japan it fails and all the
stores was shut down which created a
negative impact on enterprise.
 There are many financial errors in
management of chosen enterprise
which stops other financial
institutions to help the company in
raising capital.
 Selected entity has been entering into
uncertain market suggest some
mobiles and smart devices due to this
they are unable to invest in or
improve the quality of others stores.
OPPORTUNITY
 Tesco is expanding business by
opening the stores such as Jack stores
and through which the profit is
increasing in proper way and this has
opportunity for the organisation to
invest more in such type of stores
which will increase their profitability.
 The chosen enterprise has also the
opportunity of merging of with other
brands to expand the business at
international level.
 Tesco has expanded its business at
various countries but there are also
many other places which will increase
their productivity such as Turkey
THREAT
 Government rules, regulations, laws
and taxes are some of the economic
factors which are being considered as
a threat to the entity.
 As the competition intensity is
increasing in the retail sector there are
many other brands which are coping
up with each other to cut down the
profit and sales revenue of Tesco.
 Also, as the retail sector is rising and
whitening cost of switching
employees and labour as well as
customer is becoming threat for
corporation.
 Politics in the business is also a big

Indonesia etc. Investing in these
countries or by opening stores in
countries will have positive impact.
threat as because there are many other
rivals of the chosen corporation who
prepare fake scandals or rumours.
VRIO Framework
This framework is being used by organisation to evaluate their resource and
competitive advantage. It comprises of several factors which are mentioned below-
Valuable- In this, resources which is most valuable for the organisation is used by entity in
most efficient manner. Tesco valuable resource is their employees.
Rare- This stage specifies that how rare is the resource of a particular enterprise. It is
important as it help company in gaining competitive advantage.
Intimacy- This states the intensity of copying the resource or using that for benefit. It is easy
to intimate the resources of Tesco as there are many rivals amongst the business sector.
Organisational- It shows that structure of entity and management how well is organised. The
chosen entity has well organised staff and management which assist them in achieving
objectives properly.
After brief analysis of above matter, it has been analysed internal environment has a
different effect on business and its performance. Thus, it is essential for every organisation to
conduct a SWOT analysis so that effective decision making is being done. So, with the help
of this tool it will be possible for them to run their functions and operations smoothly.
Internal environment are important to be considered in the business so that factor affecting
functions and operations of management are analysed effectively. High level of expertise and
skills required to implement the tool properly.
TASK 3
P3 Apply Porter Five force model and analyse the competitive forces
Competition is necessary in in business sector because it gives his contribution and
profit to the economy. With the help of competition new ideas and thoughts are generated
which helps entity to increase the channels and sources so that demands and requirements are
fulfilled in proper manner. Rise in competition leads to implementation of strategies as well
as tactics in the business (prasasti, 2020). There are many competitive forces which have
deeper impact on organisation performance and growth as well as overall development. In
relation with Tesco, to determine the forces they use porter five force model. It is important to
use marketing tools and frameworks so that market situation and related information are

analysed by enterprise for growth and success. All the forces in the model are to be
considered properly so that conflicts or error do not occur in near future. Tesco management
team is always active towards the market situations as well as friends and this assists them in
in making effective decisions which provide profitability to the company. This also helps
company to improve the profitability by ingesting the strategy adopted by entity in their
business (Kamran, 2020).
Porter Five Force Model-
It is a Framework which is used by and rupees to determined or examine the intensity
of competition in the market the help of this tool it is easier for selected entity to implement
business strategy which are beneficial for the business. Main advantage of this model is that it
helps the business in implementing city was strategies for business. Also, when using this
model profit and sales margin of company and furniture position is examine as well as
identified wider scale. Superior authority of enterprise make sure that appropriate forces are
being focused which affects the growth and overall development of entity. This model
involves various forces which are explained below-
Threat of substitutes- Substitutes are the commodity which are being used by
consumer when they didn't find total satisfaction in the purchased product. Degree of
substitute affects the business in negative way. So it is important to focus on customer
demand as well as requirements so that reason for cost of switching behaviour or shifting to
substitute are being analysed effectively. In context to Tesco, manager of the corporation and
please make ensure that consumers get satisfaction when the purchase products. Customer
behaviour and their demands are dynamic which rises importance of substitute. It depends on
the products services up to which level they are able to satisfy the demands of customers and
accordingly consumer reacts and choose the best option. Threat off substitute is high when
products of cheap quality customer demands changes frequently or other product of different
brands provide more satisfaction (Anastasiu, 2020).
Threat of new entry- In market, it is dynamic in nature because there are many new
businesses which enter and their activities as well as operations. In relevance with retailing
sector, it is not easy to open a new store and acquire the customer but there are many local
retailers which sell the product at cheaper rate. In relation with chosen enterprise, there are
many small businesses and local retailers in UK which affects the existing brand at depth.
Degree of new entries is higher when there are no rules and regulations or no government is
involved in the market, few sellers, unsatisfied products etc. The local retailers affect the
business of Tesco because they provide same product at cheaper rate and acquire customers.

This is the reason why Tesco use psychographic market segment and one of the most suitable
strategies to deal with new entries of a specific market sector (Man, 2016)
Competition rivalries- In business, competition as well as rivalry are the two main
factors which increase the performance and growth of organisation. It is crucial to focus on
degree of competition so that strategy and tactics are used in in effective way. In the UK,
maximum profit and growth ratio is increased through the tourism as well as hospitality
industry. The selected enterprise also has many computers in the market such as Wal-Mart,
Amazon, ASDA Group and many more. To deal with their competitors, Tesco use dynamic
business strategies so that it is not used by any other third party. Impact of competition as
well as rivalry is both negative as well as positive and it is responsibility of the manager to
make ensure that company have appropriate knowledge and information regarding the market
situations so that strategies and suitable tactics are adopted.
Bargaining power of supplier- In enterprise, suppliers are important part of business
because they are the part through which customers are able to purchase the product. Without
the vendors, it is not impossible for corporations to carry out their functions as well as
operations in appropriate way. Mostly suppliers Barbie game and keep their power high so
that they are able to earn profit and provide cheap quality of products to the buyers. In context
to Tesco, it is globally established there is ample numbers of resources and materials for
which they need suppliers full show manager of the company ensure that suitable vendors are
selected for the process. Bargaining power of suppliers of Tesco is moderate because there
are many other vendors which are available in the market and company can switch to them
(Filippov, 2017).
Bargaining power of buyers- In market buyers also have a bargaining power which
day use for their business so that they are able to acquire the product or raw materials at
affordable or cheaper rate. Power of buyers is high when there are few buyers; purchasing
party is serious to the cost of product, etc. In relevance with Tesco, bargaining power is low
because there many other competitors and rivals which can purchase the product from those
suppliers so to maintain the relation in the market & with suppliers they keep their bargaining
power low and moderate depending upon the situation.
After examining above paragraph, it has been stated that it is essential to focus on
competitive forces so that resources as a resources are used efficiently. Also with the help of
this model it becomes easier for cooperation to run their activities smoothly without facing
any problems or issues. To implement this properly deep market research is retired so that
decisions are made accordingly. Moreover through this tool, company is able to generate new
ideas and thoughts which are beneficial for the management Ghotge, 2020).

TASK 4
P4 Provide strategic planning of organisation by using appropriate framework or concept
In every organisation, strategies used to achieve competitive advantage or goals as
well as objective of the business it is not easy to adopt the strategies and any wrong decision
can affect the infrastructure of the management so strategic planning is used by the entity to
implement tactics in proper manner with the help of written documents. Strategic planning is
a systematic process and which is to be considered at priority level. In relevance with selected
corporation, they prepare strategic planning with the help of HR manager and other superior
authorities so that decisions of all the departments and individuals are examined. There are
also many other tools which are used for strategic planning and Tesco uses Ansoff matrix.
Through this decision making and error identifications for problem recognition is also done
in effective manner.
Strategic planning-
Vision- Tesco vision is to be the global leader in retailing sector
Mission- Company mission is to provide quality of products to the consumer across
the globe
Objectives- To enhance market area and increase sales as well as profitability of
business
With the help of strategic planning how work is going to be done water resources and
level of manpower which will be used is also analysed at brother level. This is beneficial for
the entity as it give clear picture of business operations as well as objectives that they want to
achieve. Furthermore, effective decisions are made when this planning is implemented in the
project which has been taken. Risks, problems are also analysed during the process is also
examined at deeper scale (Meurice, 2020)
ANSOFF Matrix
This is also called growth matrix which is used by marketers to identify or analyse the
strategies and risk associated with them so that growth as well as development is being done
properly. This Ansoff matrix is divided into four dimensional which has been discussed
below-
Market development- This strategy states that existing product is used are
introduced in the new market. When going with this, proper market research is to be
conducted so that situations and trends as well as customers preferences are analysed. In this
risk associated with this strategy is relatively high because uncertainty of market might lead
to two negative impacts on business. In relevance with Tesco, there are entering into new
market as they have purchased various retail food chains in different countries and also so

they have purchased the C two network for their Tesco mobiles and devices. Main benefit of
market development is that company expand business and access at both national as well as
international level. It is important for an organisation to focus development of market so that
new opportunities are explore at wider level full song this will help them to make decision
accordingly (Cao, 2019).
Product development- Furthermore, arises the product development strategy in
which new product is introduced in the existing market. This is mostly used by the
organisation to increase the product line of company. Risk associated with this strategy is
moderate as because customer comments and taste your preferences decide the actual result.
In context to chosen enterprise they also used it strategy for example they have introduced
credit cards insurance products and smartphones in their business. Through this strategy they
are able to acquire more customer growth and increase the profit ratio. This is to be adopted
after analysing the need or requirement of customers in effective way so that appropriate
products are developed in market. The HR manager of company needs to be more active at
the time of adopting tactics or strategies for business.
Market penetration- This strategy specifies that existing products are used in the
existing market it is the safest strategy from the above discussed one. This is mostly used
when corporation wants to produce such new change in business or a product so that
customer stays in in touch. Resources and capital news in this hour also at minimum level
which results in saving of time and other raw materials. In relation with Tesco, they use
market penetration by introducing club cards or reward programs which attracts more and
more customers towards the brand. Moreover, risk associated with this strategy is also low
and which is beneficial for entity because they contain their functions and operations
smoothly. Existing customer and morning customer will be acquired this strategy which will
increase the progress as well as performance of entity (Kong, 2020).
Diversification- Furthermore comes diversification strategy in which new product is
introduced in the new market it is to be considered as most risky strategy because degree of
uncertainty is high it is mostly used when organisation is financially stabilized and need a
new change in the business. Relevance with selected enterprise they have introduced
electronic goods DVD rental and sales in their business at new locations which is a dangerous
decision. There are many financial errors which show that company not to be go with this
strategy instead of that they should focus on their existing stores to increase sales as well as
profit (Xie, 2019).

BCG Framework
It is mostly used by organisation so to implement strategic planning for longer period
of time. This is further divided into several factors which are discussed below-
Dogs- This stage specifies the low and slow growth as well as development in the market.
Question marks- Then, this strategy involves low market share with high growth market of
products.
Stars- This is the most beneficial strategy which is used by entities in which products have
high growth market with maximum market share and are able to run their business smoothly.
Cash cows- This strategy is adapted by enterprise when they need support for the
business and the main aim is not profit. In this it includes, products with low markets growth
but with high share of market.
After examining me above matter it is specified that strategy planning and strategies
are essential for the business so that all the resources are used appropriately. When going
with strategic planning proper consideration is to be done so that conflicts error does not
occur. Therefore, it is crucial for entity to use suitable frameworks when implementing
strategic planning. Also the above stated concepts are to be understood properly so that
Ansoff matrix is used effectively. This will help them to use capital in optimum manner for
future perspective.

CONCLUSION
After a brief analysis of above report it has been concluded that business strategies a
wider and broader concept which is to be understood in most suitable manner. In this present
report discussions have been made about PESTEL and SWOT Analysis, Ansoff and Porter
five force model and other concepts. This gives a brief knowledge about different types of
strategies and techniques which are being used by organisation for higher growth and
development.

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