Strategic Management and Tesco: An Analysis Using Porter's Model

This report provides a comprehensive strategic management analysis of Tesco, a leading British multinational grocery and general merchandise retail company. The analysis focuses on applying Porter's Five Forces model to assess Tesco's competitive environment, including factors such as competition, the threat of new entrants, supplier power, buyer power, and the threat of substitutes. The report compares theory with practice, expanding on the understanding of the model and evaluating its importance in the context of Tesco's business activities. It also examines the advantages and disadvantages of the model, incorporating criticisms from other authors. The report includes a practical example of the model's application to Tesco, evaluating its successes and failures within the company's operations, and concludes with a summary of the findings and recommendations for strategic improvement. The report also includes an introduction, table of contents, references and main analysis of the problem.

STRATEGIC
MANAGEMENT

ABSTRACT
The present study is based on strategic management that is defined as ongoing, planning,
monitoring and to undertake analysis and assessment of all the activities that is crucial for entity
to meet out the goals of an enterprise. Henceforth, present report will use Porter's five forces
model. Therefore, advantage and disadvantage of this model will be defined. Henceforth,
argument has been undertaken to carry out the study specifically.

Table of Contents
ABSTRACT.....................................................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN ANALYSIS..........................................................................................................................4
Compare theory with practice.....................................................................................................4
Expansion on the understanding of statement.............................................................................5
Evaluation of the importance of theory.......................................................................................5
Analysis and argue of Porter's five force analysis with use other authors criticism...................7
Rational of Porter's five forces model :.......................................................................................7
Use a practical example on your chosen porters model .............................................................9
Success or failure of porter's model in Tesco company ...........................................................10
CONCLUSION:.............................................................................................................................11
REFERENCES .............................................................................................................................12

INTRODUCTION
Strategic management involves setting objectives, analyse the competitive environment,
undertaking evaluation on internal strength of entities and to adopt plan of action to accomplish
goals (Khan, Rahman and Zubair, 2019). This is defined as undertaking investigation and
description of the strategies that managers carried to gain competitive advancement and to
achieve better performance.
The present report is based on business activities of Tesco, it is British multinational
groceries and general merchandise retail sector that deals in product and services as books,
clothings, electronics, petrol, software and furniture etc.
Furthermore, present study will look over the activities as to undertake comparison
within theory and practice with competition model such M.E. Porter's to support the experience
of practitioners. Henceforth, report will lay emphasises on activities as to include practical
example, case or issue to reflect on Porter's model with identify the major purpose of theory.
MAIN ANALYSIS
Compare theory with practice
Chosen theory- The chosen theory to reflect on the experience of the practitioners is as M.E
porter that is Porter's five forces model that aids to analyse the competitive advancement.
Overview on M. E. Porter's model (1985)- It is defined as framework and tool that use to
analyse the competition of business. This model is developed by the Michael E. Porter.
Therefore, this model investigates and analyse the five forces that shape each enterprise to
determine the weakness and strength of the enterprise. Additionally, this defined as simple
framework that aids to assess and evaluate competitive strength and position of the business
enterprise (Mosadeghrad and Amini, 2018). However, this model of gaining competitive
advancement classified into five key forces that are impacting an industry. It is model that
mainly considers to analyse the competition level within an enterprise and also assist in order to
undertake business strategy development. It is inclusive of the those components that close to
firm and affects its ability to serve consumer and make huge amount of profitability. Therefore,
this model is based on that is very close to enterprise and also impacts over its ability to serve its
customers and make a profit. Additionally, Porter strategic frameworks also uses the two other
model as value chain and generic strategic. Thus, its defined as-:

 Bargaining power of buyers-
 Bargaining power of customers
 Threat of new entrants
 Threat of substitute product and services
 competitive rivalries.
Expansion on the understanding of statement
The main purpose of this model is to analyse the competitive environment for the
business. There are number and power of firm competitive rivals, suppliers, alternative
commodities, potential new market and also influence firm profitability. This is one of the
effective that aids to gain the depth insight about the use of competitive advancement within the
enterprise.
Evaluation of the importance of theory.
This is defined as significant tool that aids to enhance the understanding of the forces that
assists to shape competition within industry. Therefore, it is also useful in terms to help out the
strategy to gain competitive advancement. This is effective theory that aids to bring improvement
in the potential profit. It is very effective tool that aids to determine the firm's competitive
environment. Henceforth, bargaining power of the buyers and supplier will hugely impact the
small firm ability to enhance price and to take steps to manage the cost respectively. This is
model that use to explore the competition within the market of the enterprise existing product
and services.
Advantages- This is defined in below contexted manner as are-
Helps in gauging competition- It helps the company in terms to gauging the competition that
presence within industry. If the firm is operating their business activities in the industry in which
competition is low then pricing power that results in firm earning good amount of profitability
(Ulkhaq and Mustikasari, 2018). Additionally, it can be stated that the pricing power of the firm
is reciprocally relative to the competition that exists in the industry higher the competition and
lowering the pricing power of the consumer.
Helpful in planning- This model is useful for the enterprise that undertakes huge investment, if
an entity has made investment than it cannot take back and with the help of conducting Porter
analysis entity can investigate those industry in which the threat of alternative as threat of new
entrant is low. Therefore, it aids to ascertain that if new plays easily take entry into new industry

that it will leads to have huge competition and this things can impact the existing company in
adverse manner. If entity make plan to take enter into any industry than with help of choosing
porter five forces analysis entity will take initiatives to eliminate the industry that have close
alternatives or at where there are fewer obstruction of entry for the new enterprise entering into
industry.
Dealing with buyers and suppliers- If the entity is operating their business activities at a level
in which bargaining power of the supplier is less as compare to bargaining power of the company
that it has dual beneficial aspect because on the one side firm can get raw materials for
undertaking production at the affordable rates (Ulkhaq and Mustikasari, 2018). If the entity has
more supplier then they will start to compete among themselves to sell the commodities to firm
that results into getting good deals from the supplier. On the other hand, when bargaining power
of the buyer is weak than commodities of the firm is inelastic. It is situation in which firm can act
as price makes not s price taker.
Disadvantages
Ignore other components- The one of the foremost disadvantage of the porter five forces model
is that it only give consideration to the above components that may have bearing on the
environment in which activities of the entity is operating. It can be understood with the help of
example as- If the enterprise is operating in industry in which all the five components that are
barrier to entry, firm product are inelastic, bargaining power of supplier is weak and there are no
substitute. If the legal authorities introduces the taxes on commodities of the industry or may
bring some amendments in relation to product of industry than whole five forces analysis will be
of no use.
Not useful for all the industries- The another limitation of this model is that it cannot be
connected to all industries. It is framework to the industries like technology or fashion which
apart from above 5 components like consumer taste, technology and other components plays
major role than this model aids to bring desired results. Therefore, it is not useful for the all kind
of the industry. So, it cannot be universally applicable to all the industry.
Opinion- Henceforth, it can be concluded that porter's five forces model has significant role that
assist in management to undertake evaluation and assess their current market environment. On
the other hand, it offers excellent foundation for the undertaking further research and intelligence
collection of this model needed to formulate future plan of action of enterprise. Apart from it,

this factor also has some limitation as this impacts the choice of undertaking this model to
identify the competitive advancement of the industry.
Analysis and argue of Porter's five force analysis with use other authors criticism.
The porter five forces model is defined as influential tool that aids to undertake the
identification in which power lies in particular situation of business with the use of outside
perspective. As per the view of Škorić, Favro and Šerić, (2018) stated that framework mainly
identifies the five forces within the micro-environment that helps to drive competition and also
threaten the firm ability to make profit. Henceforth, the awareness of this forces can assist firm to
stake out a position in its industry. Thus, it is need to mention that five forces have varied degree
that highly affects within certain industries. According to the view of Sieber and Peters, (2019)
stated that Individual forces and collective effects will bring modification in policies of legal
authorities, macroeconomic and environmental condition change. Thus, it is stated out as
analytical tool that assist to assess the level of intensity exist to find out the competition within
the industry. It is techniques that is very effective in order to undertake the evaluation about the
balance of power in the industry. In contrary to Kokaveshi, (2018) stated that technology is one
of the crucial factor and also a effective driver for change and this is very effective in terms to
outlines the need of change. Technological advancement has adverse impact on new potential
market. As per the view of Meyer and Cohen, (2018) stated that proper understanding of five
force of key in deciding that what industries to enter and accessing how entity can improve its
competitive position. In contrary to Ulkhaq and Mustikasari, (2018) stated that the one of
beneficial aspect of this model is that this provides the wide range of information about the
competitive environment and strategic option that helps in evaluating the profitability of the
enterprise. Henceforth, increase competition led to high demand for information with regard to
competitors, potential entrants etc.
Rational of Porter's five forces model :
It refers to the tool that helps an organization to evaluate the intensity of competition in
the market. Tesco will use five force analysis to identify the structure of industry to develop
corporate strategy. The model involves five forces such as Competition in the industry, Potential
of new entrants, Power of organization that supply raw material to firm, power of customer's for
bargaining from company in respect of price of the products and threat to firm from availabile
substitute products (Lewis, 2017).

Tesco will use porter's five force model because in the organization there is requirement
to innovate new products or services. With the help of this model, management of the company
can easily analyse the intensity of competition in the market. Further, firm have to develop
products under different categories to compete with substitute products. So that, customer's will
not shoft towards the products or services offered by another firms in the industry. Further, the
model also help Tesco to determine how different factors and forces can influence the sales and
profitability of the business (Chenyu and Wen, 2016). If, there is more intense competition in the
market than firm will have to offer differentiated products and services to the clients. Innovative
products should be different from products that are offered by other businesses. If, company will
offer innovative products with better features then firm can easily bargain with customer's and
suppliers.

Use a practical example on your chosen porters model
Tesco is one of the leading company in U.K and develop their business at large scale.
Tesco has a long retail chain of supermarket all over the U.K. Due to increasing competition in
retail sector in U.K. Tesco prepare porter five force model to analyse the market. Tesco uses the
model to analyse the competitors product and services. With help of porters model Tesco analyse
the new entrants in the market and try to develop their products and services by building
innovation in their products to compete with new entrants. The Tesco needs to do a research to
develop their product in the market. Tesco analyse the bargaining power of their suppliers to
prepare a plan to tackle and build a chain of supplier so if any one of them increases their price
then they can shift to another supplier. Bargaining by buyers the Tesco needs to analyse the
bargaining tactics of their customers and increase the engagement of customers with their
business to increase their business in the market. The threats of substitute will effect the business
of the Tesco needs to bring innovation in their product know the need of the customer. The
Tesco needs to improve their services. Rivalry among the existing competitors help Tesco to
differentiate their product with the competitor. The rivalry from existing competitors helps them
to analyse the market situation. The porters five forces helps Tesco to bring innovation in their
product to build effective competition in the market
There are lots of advantages using the porters five forces while launching the new
products in the TESCO because it is the important aspects of analysing and understanding the
factors related to the profits and success of the business. Launching of new products in the
TESCO with the porters five forces strategies decreases chance when the customer divert to
other company. Porters five forces helps to reduce the threats of the business because launching
of the products increase the number of new customer of the TESCO and increase the satisfaction
of the existing customers as well. It also increases the supply chain of the business increase the
numbers of new customers and supplier of the company. The wants and demands of the buyers
are unlimited so the launched products fulfils the demands of the customer by using the five
forces of the porters. The new products reduce the level of the competition in the business. Five
forces of the porter are helpful in the planning of launching the products in the business. For
example when TESCO made the planning to launch the new products in the markets other
competitors loses their substitutes in the business. These five forces helps to increase the sale of
the new products with the effective planning is taken at the time of launching. (Porters)
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modelshelps the TESCO by reducing the competition in the market for example when the price
of the products should have inverse relation with the competition in the market like greater
competition will lower the price and lower competition higher the price4s of the products.
Success or failure of porter's model in Tesco company
Porter's five force model is given by Michael porter in 1979 that help in identifying
competition in the market for the purpose of shaping industry. This include five forces that
provide competitive advantage in the market to Tesco (Wicker and et. al., 2015). It consists of
threat of new entrant, bargaining power of suppliers, bargaining power of buyer, threat of
substitute product and rivalry among existing firms.
By using this model into Tesco that help in providing competitive advantage in the
marketplace. Through this supplier can drive price input into business by providing product on
less price that help in attracting more consumer towards the company. This help in evaluating
strategies for industry that help in developing industry strength and depth study of market for
survival. This also help in providing proper planning related investment that will be done in
company for achieving organizational objective. Dealing with buyers and suppliers in the market
Tesco gain knowledge about market trend that help in bringing success for the future. By
implementing this model into Tesco help in carrying out various aspect of marketing and
evolving various strategies in developing operations of company (Kraja and Osmani, 2015).
This also help in identifying competition in market that emphasize development of market and
implementing pricing power in business. This model help in eliminating substitute product and
also provide few new entry into the market. Therefore, this lead to success of this model into
Tesco company.
On the other hand, it also has some disadvantages of porter five force in Tesco as it
ignore other factors that are related to environmental aspect as implementation of taxes on
countries for buying and selling product or services. As Tesco have to expand it business at
global context there affect due to changing policies and rules in other country that may influence
business operations. Another aspect is that there is no industry that will get positive impact after
implementing this model into Tesco. This do not provide clear understanding of market as
gaining profit in the future. By applying this model into Tesco company may not get success and
different changes may be occurred for evaluating various aspects for the future (Pisano, 2017).
This will not help in gaining various perspective for bringing changes in business. By applying
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this model into Tesco get failure in providing better services to customers. This model is not
useful for all industries as it only help in identify competition in the market. Therefore, it
provides effective use of technology but in contrary it provides challenging aspects that influence
business operations in the future (Roos and Von Krogh, 2016). By using this model Tesco not
properly emphasized its operational activity and evaluating various changes for bringing aspect
in gaining strategy that provide effective of resources in business.
CONCLUSION:
From the above study it can be concluded that the porters five forces helps to minimize
the threat of entering of new competitors, reduces the threats of the substitutes of services and
products in the business, decrease the bargaining power of the customer and suppliers. These
forces help to increase the success and expand the business at the higher level. It includes the
theories and practices of the porters five forces used in the business operations. There are various
advantages and disadvantages of the porters five forces in the business of the company. This
study explains the five forces of the porters with different example which helps in the success
and growth of the company in the future and present. There are different method to analyse the
success and failure of the porters five forces uses in the business operations of the company. And
with the various examples it explains the profitability of the business in the company. These five
forces of the porters helps to increase the productivity of the company reduces the risk which
affects the success of the business. These helps in better development and improvement of the
products in the competitive environments. Porters five forces give the chance to stand in the
increasing competition in the business environments. By proper and effective uses of the these
forces in the organization the business will increases at the higher level.
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REFERENCES
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