Tesco's Strategic Management: Competitive Analysis and Strategies

This report provides a comprehensive analysis of Tesco's strategic management, focusing on its competitive landscape and strategic responses to market challenges. The introduction outlines the importance of strategic management in formulating company goals and objectives, emphasizing the analysis of internal and external factors. The main body delves into the issues Tesco faces, such as increased competition, reduced profits, product development pressures, and a declining brand image, along with the emergence of new entrants in the retail sector. The report then highlights Tesco's competitive advantages, including its advanced distribution system, cost leadership, international expansion, well-motivated staff, and attractive advertising. Furthermore, it explores Tesco's competitive strategies to combat risks and threats, such as effective product promotion, loyalty programs, barriers to entry, and technological advancements in production. The report also includes a competitive analysis using Porter's Five Forces model, examining the threats of substitute products and services, new competitors, competitive rivalry, and the bargaining power of buyers and suppliers. The conclusion summarizes the key findings and recommendations for Tesco's continued success in the retail industry.

Strategic
Management

TABLE OF CONTENTS
INTRODUCTION:..........................................................................................................................1
MAIN BODY...................................................................................................................................1
Competitive analysis of Tesco:,.......................................................................................................4
CONCLUSION ...............................................................................................................................6
REFERENCES:...............................................................................................................................9

INTRODUCTION:
The goals and objectives of company is formulated by top management. They are
responsible for implementation of goals and objectives that has to be achieved by company.
They analyse internal and external factors while developing goals and objectives. Besides this,
strategies are formulated by them on how those goals will be achieved (Hill, Jones and
Schilling, 2014) Developing strategy provides a platform through which goals can be achieved.
Moreover, strategic management helps in tackling issues and problems. Also, it is becomes easy
for company to analyse what are the internal and external factors that can affect an organisation
growth and development. According to this, actions and measures are taken. The strategies are
modified with change in factors. It is beneficial for business to implement different strategies so
that there is smooth flow of operations. Organisation always have a back up plan that is used in
critical situations. For this assignment organisation taken is TESCO. It belongs to retail sector
and operates at global level. Thus, they require effective strategic management to develop goals
and objectives.
MAIN BODY
Issues faced by the company in terms of competition
TESCO is facing several issues that is affecting its growth. Due to this its market share
and profits are reduced. Also, it is having a great impact on its operations (Moutinho and
Vargas-Sanchez, 2018) The major issue faced by TESCO is increased of competition in the
market. Due to entrants of new companies in local and global market TESCO performance is
highly affected. There are several issues faced by company as stated below :-
Reduction in profits- TESCO profits are been highly reduced in recent times due to intense
competition. It is because of various other local and global companies that are emerged in the
market. This has lead to decrease in sales as customers are attracted towards new products and
services.
Product development- There is frequent change in taste and preference of customer. It has
forced companies to develop products accordingly to satisfy their needs. TESCO is able to meet
those needs but is facing competition from change in technology.

Decrease in brand image – There has been decline in brand image of company. It is because of
effective promotional and marketing of other companies. This has enabled other firms to target
customers in order to increase customer base (Ginter, 2018) This is done by giving discounts
and schemes on products. Also, sponsoring of famous events and programs have diverted the
mind of people.
Emerging new entrants- Retail sector is very wide. It consists of variety of products that are
available to people. There are various companies which already exist in retail sector. Besides
this, TESCO is facing issue of new entrants. It has highly affected their market share. It is
because they are providing goods of high quality but at cheap rate, so customers get attracted
towards it.
Competitive benefits to TESCO
TESCO has got various competitive advantage. It is mentioned below :-
Distribution system – The supply chain management of TESCO is very advanced. It is very
time and cost effective. It has allowed TESCO to fulfil demand and supply in right time. Also,
the order processing process of TESCO is very fast leading to timely delivery of product to
customers (Lasserre, 2017). The home delivery at low cost method of TESCO provides them a
strong competitive advantage in the market.
Cost leadership- TESCO is able to maintain a stable price of their product. This is because of
their effective pricing policy and strategies. It has allowed them to keep prices at average level so
that every one can afford it.
International expansion- TESCO is having its operations in all over the world. This ensures
their long term growth. Expansion of business has increases its sales and profits leading to gain
more market share in every country. Their products are available in every country making them a
big company rather than others.
Well motivated staff- TESCO staff is very much motivated (Rothaermel, 2015). This is the
reason why customer problems are solved quickly and effectively. Besides this, their outlets are
opened 24 hours making it easy for people to purchase goods. The satisfaction level of
employees is very high in TESCO.

Attractive advertisement- TESCO advertisements are very attractive. It automatically attracts
people and forces them to buy their products. It creates a distinct brand image in the minds of
people.
Competitive strategies of TESCO to combat any Risks or Threats from the contenders
It is very important for TESCO to overcome risk that can affect their growth and
development. By overcoming risk TESCO will be able to compete in the market and can identify
new areas for growth. Also, they can develop products by identifying customer needs. The
strategies followed by TESCO will help them to remain survive for long time (Slack, 2015). It
will also be beneficial in increasing sales and profits. Organisation will be able to gain strong
competitive advantage over its rivals. This will help in ensuring long term growth of TESCO.
TESCO can promote and advertise its products in more effective way. This will help in
attracting more people to purchase their goods. Besides this, it will help in creating brand
awareness among people. Moreover, TESCO can develop loyalty programs that will help in
retaining customers. This can be done by providing offers and schemes to them. Also, it will
increase sales resulting in more profits. Furthermore, TESCO can create strong barriers to restrict
the entry of new entrants. This can be done by developing products and increasing customer
base. Barrier will not allow new entrants to enter in the market. Apart from this, it will also
ensure that if any new company emerges it is not able to survive for long run. TESCO can use
technology in their production process to develop products (Wheelen and Bamford, 2017). It
will help them to reduce cost as well as increasing efficiency of business. Furthermore, it will
allow TESCO to make continuous change in product features and specifications to retain and
attract customers.
Tesco is among the largest food retailer in the world with revenue in expenses in a billion of on
its business functions, it has been seen that, the organisation is providing large numbrs of retail
foods services in various countries around the world. In the UK country,Tesco has such a huge
business with over 2,200 stores with various formats (Asiedu, 2015). Tesco express, Teso Metro,
Tesco superstores, Tesco Extra and Tesco Home plus. From the mid 90, tesco is operating its
various business functions in the several countries around the world. Tesco mission statements

and vales defines about Tesco is about creating value for customers to earn their lifetime loyalty
by understanding the customers and become more repsonsible to their customers in the industry
in order to getting proper positioning in the industry in proper manner. The company has been
listened on London stock exchange in proper way. In addition to this, the company in UK alone,
from year 2006-2010, the revenue increased for 28.9%, whereas in the rest of Europe, the
increment achievement an amazing rate of 70.8%. Beside from it, Tesco market share in UK has
grown steadily since the easy 90s and it has recorded a 30.4% of market share in the year
2010(Grundy, 2017). It could be said that, the company is generating effective revenue and
profitability across the world by their various retail outlets.
Competitive analysis of Tesco:,
In case of Tesco organisationm Five forces models are very necessary part for the firm in
order to proper analysis of business positioning in the market and it can also help to examined its
competitive advantage from the market in possible manner.
Threats of substitute products and services:
In order to identification of Tesco company's substitute products and services can assist the
business professionals to better understand its competitors strategies in terms of introducing
various new products and services in the retail industry of the UK. In addition to this, it has also
examined that, Tesco business is offering high quality of products and services at very low prices
in the industry (Giulia and Walters, 2017). Moreover, the business entity needs to open up new
attractive retail stores at local towns and city centres creating a hurdle of these substitutes to
enter in the market. It has been seen that, there are numbers of issues has been facing by the firm
concerning about its various substitue products and services provided by its competitors and
various small size of retailers in the market. However, the threats of introducing new products
and services refacing its several types of clothing, foods and others products in the market. So it
need to maket analysis of the company in order to determining the positioning of retail products
in the market.
Threat of entry of new competitors:

In case of retail industry, there are always threats of entering of new competitors in the
market with introducing innovative and valuable products and services in the UK retail market.
From the analysis, it has been stated that, Tesco organisation has large numbers of small
competitors in the marketplace which is furnishing high range of competition in the market. The
major competitors of the firm is, Asda, Sainsbuy's and Morrisons and all they have account for
80% if all shopping in the UK (ArAs, 2016). So the business have major threats of entering new
competitors and small retailers in the market by launching valuable and quality of the products in
the market at very low prises, so it could be said that, there are large numbers of competitors are
presented in the market, which generates several barriers to its competitors in the market in
relevant form.
Threats of competitive rivalry:
Tesco organisation is facing its large number of competition from its UK market segmentation. It
could be said that, competition of its rivalry is also necessary factors in order to examining its
competitors strategy and its positioning in the retail market of the nation. Its one of the largest
competitors in retail industry which is Asda is increasing its large number of its market share
form 16.6% to 16.8% during the fiscal year (Hengky, 2016.). It's another competitor in the
market which is Snainsbury's has shown an increase to 16.1% from its previous values. So it
could be said that, frequent increment in its competitors rivalry and market share of Tesco's
competitors comes in the market rivalry of the business, which is the threatening for Tesco
business leadership positioning in the industry.
Bargaining power of buyers:
IN case of Tesco organisation, bargaining power of its buyer also high in the market. In these
cases where products have a slight differentiation and area more standardize and its switching
cost is very low and its buyer can easily switch from its products to competitors products at very
lower rate. So this is also a crucial term for Tesco corporation in order to maintaining proper
positioning in the market (Kew and Stredwick, 2017). In addition to this, online websites alsohas
been increased retail market sales high and its buyer have bargaining power to go for other
products and services.
Bargaining power of its suppliers:

This is also one of the crucial factor for Tesco organisation, they have large number of suppliers
in the market and it must be noted that supplies are major part of grocery and retail business in
the UK. So several times, they have threatened of losing of bog contract with their existing
suppliers in the market (Hammad, 2015). Varied of short suppliers are available in the market
and they have string bargaining power to making contract with several company retail products
and services. So Tesco organisation's professionals require identifying the positioning of its
competitors in the market such as Asda and Salisbury's in the market. Hence, it can be said that,
its competitors need to identify its loyal supplies in the market and make positive and healthy
relationships with them in order to getting proper orders from them in the industry.
CONCLUSION
Based on above report it can be concluded that strategy is helpful in relation to derive the
plan of action, in this firm need to perform it business activities effectively. goals and objectives
of company is formulated by top management. They are responsible for implementation of goals
and objectives that has to be achieved by company. They analyse internal and external factors
while developing goals and objectives. The strategies are modified with change in factors. It is
beneficial for business to implement different strategies so that there is smooth flow of
operations. In this manner here it can be considered that TESCO is facing several issues that is
affecting its growth. Due to this its market share and profits are reduced. Moreover, this report
has covered the various aspects as are Issues faced by the company in terms of competition,
Competitive benefits to TESCO, Competitive strategies of TESCO to combat any Risks or
Threats from the contenders Competitive analysis of Tesco, this all are need to be done in the
effective manner. The stratgey of the firm is helpful in relation to determine the overall plan and
policies so that operation of firm can be conducted in the effective manner. This will all kind of
strategy will be helpful in order to deliver the best result to the firm. The firm need to have the
effective supply chain management so that they can have the firms resources ion the timely
manner. In this it is very essential to have effective strategic management plan so that there can
be development in the goals and objectives. In addition to this it can be said that it is very
essential to have reduction in the business activities of TESCO to overcome risk that can affect
their growth and development. By overcoming risk TESCO will be able to compete in the market

and can identify new areas for growth. Furthermore, the major issues faced by the Tesco is in
relation to increasing in the number of rivalries in the business enterprise. it can be said that, its
competitors need to identify its loyal supplies in the market and make positive and healthy
relationships with them in order to getting proper orders from them in the industry. In order to
cope up with firm need to run it business activities in the effectively mode so that expertise
operation of firm can be conducted. With the help of proper strategic plan and proper polices the
entity is able to conduct the operation in the expertise manner. This all kind of strategies will be
helpful to achieve the one particular aim of the business enterprise. The present assignment has
also stated that Tesco oppression has highly affected their growth in terms to market share. It is
happened because they are providing goods of high quality but at cheap rate, so customers get
attracted towards it. In this manner it can be true to said the main aim of the business enterprise
is to make proper strategic management plan so that business activities can be conducted
effective. This will be helpful in relation to enhance the growth of enterprise in large manner.
RECOMMENDATION
11 The Tesco need to hire the skilled employees who can able to conduct the proper
business activities, this will be helpful in order to enrich the growth of the firm in the
systematic manner.11 Apart from this, they are together required to arrange regular sessions of training and
development for their existing employees in order to increase their current capabilities.
For this purpose, they are required to hire trained instructors who will be giving a
thorough knowledge to the employees regarding the adopted organisational process.11 Also, on considering the enhancement of digitalised environment in the market, it is
important for Tesco to adapt some inventive measures to combat the state of competition
in the market and beat the contenders.11 This will require special training sessions for the employees to understand any newly
introduced measures in the organisation and work upon it to effectively serve the
customers.11 They need to take the feedback from the customers so that they are able to bring the
modification and alteration in the business activities.

REFERENCES
Books and Journals :
Ginter, P.M., 2018. The strategic management of health care organizations. John Wiley & Sons.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Lasserre, P., 2017. Global strategic management. Palgrave.
Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI
Tourism Texts. Cabi.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.
Wheelen and Bamford, C.E., 2017. Strategic management and business policy. pearson
Asiedu, E., 2015. A critical Assessment of the Strategic Position of Melcom within the Retail
Industry in Ghana. Journal of Entrepreneurship & Organization Management, 4, p.137.
Grundy, T. D., 2017. Dynamic Competitive Strategy: Turning Strategy Upside Down.
Routledge.
Hengky, S. H., 2016. Competition Gaps of Tomatoes’ Industries in Cameron Highland,
Malaysia. Business and Economic Research. 6. 2. pp. 368-378.
Hammad, A., 2015. Strategic Change and Its Management to Expand Business Through
Implementation of Models: A Case Study of Boots UK.
Kew, J. and Stredwick, J., 2017. Business environment: managing in a strategic context.
Kogan Page Publishers.
ArAs, G., 2016. A handbook of corporate governance and social responsibility. CRC Press.
Giulia, T. and Walters, A., 2017. Recognizing readiness in manufacturing firms.