Strategic Analysis of Tesco: PESTEL, VRIO, and Porter's Five Forces

This report provides a comprehensive strategic analysis of Tesco, a leading supermarket in the United Kingdom. It begins with an introduction to strategic management and its application to Tesco, highlighting the company's mission, vision, and objectives. The report then delves into a detailed evaluation of the macro-environmental factors impacting Tesco using the PESTEL analysis, examining political, economic, social, technological, environmental, and legal factors. Following this, it assesses Tesco's internal capabilities through VRIO analysis, evaluating the value, rarity, imitability, and organizational aspects of its resources. The report also applies Porter's Five Forces model to analyze the competitive landscape within the supermarket industry, including the threat of new entrants, bargaining power of suppliers, rivalry among competitors, and the threat of substitutes. Finally, the report examines the application of Porter's generic strategies, including cost leadership, differentiation, and focus strategies, within the context of Tesco's business operations. The analysis provides insights into Tesco's strategic positioning, competitive advantages, and the challenges it faces in the market.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 2............................................................................................................................................3
Evaluate the macro environmental factor and internal capabilities within the organisational
context....................................................................................................................................3
TASK 3............................................................................................................................................6
Examine the various theories and models within the organisation context............................6
CONCLUSION...............................................................................................................................7
REFERNCES.................................................................................................................................12

INTRODUCTION
Strategic management is wider and broader scope because it includes various tools and
techniques in order to organisation adapting effectively and formulated the new strategies which
result as achieving organisation goal and objectives of company. The report is about Tesco
which refers to famous supermarket in United Kingdom which provides high quality products
and services and attracting large numbers of customers (Ateba and et. al., 2019). The paper
consist is various tools and techniques in order to analysed the internal capabilities of the
organisation on that basis formulated strategies which helps to gaining competitive advantages
as well as enhancing profitability and productivity of company
TASK 2
Evaluate the macro environmental factor and internal capabilities within the organisational
context.
Mission-: The main mission of Tesco which result as providing high quality products and
service for customers in order to gaining competitive advantages.
Vision-: The main vision of organisation in order to they want to be leader in near future
for sustain and growth for longer period of time.
Objectives-: Tesco main objective to achieving competitive advantages as well as
enhancing their profitability and productivity of company.
PESTEL ANALYSIS-
PESTEL is model or tool which includes various macro environmental factors which are
essential for an organisation in order to including various factors so analysed due to accordingly
formulated the new strategies which helps to gaining competitive advantages as well as
enhancing profitability and productivity of company (Barbosa and et. al., 2020). There are
including various factors such as political, economical, technological, environmental and legal
so it analysed effectively and efficiently which result as organisation determination new
strategies. There are ample numbers of factors which are described below.
Political-: This factors plays important role in order to including government imposed
various rules, regulation, policy and procedures which refers to organisation essential to
followed in order to easily run their business operation and function. In context of Tesco, it
include organisation adhered to such rules and condition because the easily conducting business

as well as Brexit easily highly impact on this factor so according organisation conducting lot of
changes in their policy.
Economical-: It is factor which refers to various factors such as inflation rate, interest
rate, exchange rate and tax rate. In context of organisation, it includes analysed the needs and
demands of customers accordingly managing demand and supply as well as impact on
disposable income of buyers so increasing purchasing habit as well as increasing sales of
company.
Technological-: It includes organisation utilised advanced technology so easily
producing innovative products and services which helps to improving effectiveness of
organisation. In context of organisation, it involves they utilised various tools and techniques of
promotion for products and services such as what's app, Instagram, you tube and many more
(Barney and et. al., 2018). It providing innovative products for customer and developing healthy
relationship with the customers.
Social-: It is element which plays the important role in order to including beliefs, values,
attitude towards the products and services so accordingly serves the customers. In reference of
Tesco, it includes them conducting market research to know about the taste, preference and
market trend accordingly providing the products and services.
Environmental-: This factor important for an organisation because sustainability depends
on these factors such as achieving organisation goal and objectives of company. In context of
organisation, it is process which result as utilising recycling and disposable products and
services and cannot harm for the environment so developing brand image in the market.
Legal-: It is factor which refers to various laws, legality and legislation so accordingly
organisation formulated and conducted business activity. In relevance of organisation, it is
process which organisation adhered to follow in order to smoothly run their business operation
in another country effectively and efficiently (Barney, 2017).
Therefore, it is essential tool for an organisation in order to analysis this model
accordingly mangers formulated strategies effectively in order to gaining competitive
advantages.
VRIO ANALYSIS -: This is tool and techniques which are utilising by organisation because it
helps to achieving organisation goal and objective of company. It is process which includes the
various factors such as value, rarity, inimitable and organisation (Dias and et. al., 2019). This

resource plays the important role in order to increasing effectiveness of organisation. In context
of organisation, it utilising this factors which are discussed below.
Valuable-: Most of the organisation using this factor in order which refers to valuable
resources so implemented effectively and efficiently in order to improving performance of
employees (Baumgartner and et. al., 2017). In context of Tesco, it includes top management of
company which utilising cost strategy as well as differentiation strategy in order to having
strength comparing to its competitor and accordingly formulated the strategy.
Rare-: It is leading organisation so products and services easily reached for customers so
used this factors in order gaining competitive advantages. In relevance of organisation, it
utilising various strategy which such as differentiation strategy mean it used different from the
competitors as well as competent workforce which perform the business activity effectively and
efficiently (Ketchen and et. al., 2020).
Imitable-: It is element which adapting by organisation in order to skill and trained
workforce effectively performed so achieving organisation goal and objectives. In context of
organisation, it utilised this factors in order to which cannot be imitated from other competitors.
Organization-: This element play important role because organisation using in order to
smoothly running business operations and activity. In context of organisation, it is process which

refers to organised the business activity in that manner in order to smoothly running business
operations.
Hence, it is important tool and techniques which are essential to analysis this model in
order to achieving organisation goal and objectives of company as well as analysed the resources
which are necessary for organisation.
Porter’s five forces model
Porter’s five forces model it is tool and technical which help to analysis the internal
capabilities of organisation on that basis organisation developing the strategies which result as
achieving organisation goal and objective of company. It includes various factors which help to
analysed the industry so according developed the products and services and targeting large
numbers of customers (McMillan and et. al., 2016). In context of organisation, it utilised this
tools and techniques in very effective manner so there are various element which are discussed
below.
Threat of new entrants-: Organisation used this factor because new entrants developing
new innovation regarding products and services so Tesco provided products and service at low
price in order to targeting large numbers of customer as well their competitor having lower price
charged from the customers. There are maple numbers of competitors as well as required huge
amount of capital in order to operating business functions and activity.
Bargaining power of suppliers-: There are ample numbers of suppliers are available at
market place which are affecting the sales of Tesco in order to impact on profitability and
productivity of company. In relevance of organisation, it involves bargaining power of suppliers
is high because it leads to decreasing profit margin of the company. It includes ample numbers
of suppliers so easily negotiation for the customers and impact on profitability as well as impact
on supply chain in order to reducing the channels.
Rivalry in the industry-: There are rivalry among the existing products and service
within the supermarket industry (Napshin and et. al., 2017). It involves organisation effectively
analysed this element and adapting the differentiation strategy in order survive and sustain in the
market for longer period of time. In context of organisation, it involves they are collaboration
with other firms because they are capturing huge market share so high the rivalry so negative
impact in the company.

Threat of substitute-: It includes various products and services are offered to customer in
order to achieving satisfaction level as well as developing brand image in the mind of customers.
In context of Tesco, it involves there are ample numbers of competitors are present at
marketplace so they are easily switch from other brands and it directly impact on sales of
company (Phillips and et al., 2018). Tesco is leading organisation which providing quality
products and services for customers in order satisfy the needs and wants accordingly analysis
their taste and preference accordingly serves the best services to customers.
TASK 3
Examine the various theories and models within the organisation context.
Generic model of porter:
This is tool and technique which utilising by organisation in order to know about the
internal strength, weaknesses and threats in order developing new strategies which result as
gaining competitive advantages. In relevance of organisation, it is process which utilising by
organisation in order to attracting large numbers of customer as well as developing brand image
in the mind of customers. There are various strategies which are mentioned below.

Cost leadership-: It is strategy which refers to developed by Porter in order to
organisation get benefit of cost advantages by providing the products and services of customers.
Organisation used the cost strategy in order to increasing effectiveness of operation and business
functions. Tesco effectively adapting utilised this tools in order to providing low price products
and services for customers as well as accordingly comparison from other competitors and
determined the various strategy which result as developing brand image at market place.
Differentiation-: This is element which utilising by most of organisation in order to
providing different products and services for customers. Tesco used this strategy in order to
enhancing the profitability and productivity of company as well as attracting large numbers of
customers. In addition to this, it majorly focuses providing best services for customer which
result as capturing large market segment as well as gaining market share. It involves them
providing high quality products and services offered to customer so utilising differentiation
approach so it is different from its competitors (Tonelli and et. al., 2018). It includes adapting
effective technology so producing innovative products and services which developing different
brand image in the mind of customers.
Focus-: This is strategy which refers to organisation adapting effectively in order to gaining
competitive advantage as well as focusing on niche marketing strategy. In relevance of
organisation, it is focusing towards the goal and objective of company along with majorly
focusing small market segment which refers to organisation developing new strategies targeting
small group of customers. It involves the two types of focus strategy which refers to cost focus
and differentiation strategy (Weiss, 2017). Cost focus strategy refers to Tesco provide products
and service at cheap price so each and every customer buying them. Other hand differentiation
focus strategies which known as organisation adapting different approach in order to utilising
various innovation regarding products and services which are different from its competitors.
CONCLUSION
From the above report it has been concluded that, it includes various process which refers to
organisation analysed the various tools and techniques in order to gaining competitive
advantages as well as achieving organisation goal and objectives. It includes organisation using
various tools which helps to formulating new strategies which result as attracting large numbers
of customers. It includes organisation to know about the internal capabilities in order to used

VRIO and porter’s model on that basis targeting customer segment and increasing effectiveness
of organisation as well as developing brand image in the mind of customers.
REFERNCES
The Books and Journals

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