Strategic Management Report: Tesco's Competitive Analysis

This report provides a comprehensive strategic management analysis of Tesco, examining its organizational environment, competitive strategies, and risk management approaches. It begins with an introduction to strategic management principles and then delves into Tesco's organizational environment, exploring political, economic, social, technological, environmental, and legal factors through a PESTLE analysis. The report further analyzes Tesco's internal environment using a SWOT model, identifying strengths, weaknesses, opportunities, and threats. A key component is the application of Porter's Five Forces to understand the competitive landscape, including the bargaining power of buyers and suppliers, the threat of new entrants and substitutes, and competitive rivalry. The report also examines Tesco's business strategy and concludes with a discussion of risk attachment strategies. This analysis aims to provide insights into Tesco's strategic decision-making and its position within the retail industry.

Strategic Management

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Organisational environment...................................................................................................3
Competitive plan....................................................................................................................9
Risk attachment strategy.......................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic management is defined as the process that is utilised by the organisation for
accomplish of company goals and objectives. The main purpose of strategic management is to
involve and set objectives, analysing competitive environment, internal organisation and
evaluating operations that aids management to roll out strategy across the organisation. With
strategic management organisations are able to develop with analytic process that helps to obtain
better position in market (Zuo and et. al., 2015). This report is written from perspective of Tesco
and it highlights on the organisational ideas that are related with different aspects of business
policy, strategic management and the philosophical aspect to implement a particular
methodology. Along with this different models such as Porter’s five force, SWOT etc. will also
focused in the report to analyse theory and practices related with organisation. In the last, risk
management strategy for respective organisation to overcome from barriers in also include in the
upcoming report.
MAIN BODY
Organisational environment
The term organisation environment is explicated as an aspect that is composed of different
forces and institutions which is surrounded by an organisation. All of this forces impacts on the
performance of company operations and functions. This includes all elements which exist outside
the organisational boundaries. Government regulatory, competitors, supplier and customers are
some of the external forces which exist as an organisational environment. Further, it directly
impacts on the potential market and portion of Tesco. It also governs that organisation is facing
more number of challenges from competitors as respective organisation operate business in retail
sector and they face challenges from both internal and external company due to wide scope and
demand in retail industry. Therefore, it is essential for Tesco to formulate an effective strategy
that satisfies needs and wants of customers in proper manner. It also determine there are different
challenges are faced by the Tesco to complete their work in an appropriate manner. Along with
this by formulating an effective strategy management is also able to accomplish competitive edge
in market (Bergh and et. al., 2016). The main motive to analyse environment is to identify and

understand current situation because it helps to modify strategy according to the existing market
conditions and environment. Pestle analysis help authorities and management to analyse all
external conditions to manage an accurate strategic administration that support to deal with the
situation of competitive forces in market. With understanding current business objective pestle
tutorial is conducted for the detailed analysis of external environment. Along with this PESTLE
tool also helps to analyse unpredictable environment that helps to discuss different factors related
with Tesco performance and operations.
 Political factor- Tesco perform its operations and functions at global level and it is well-
known for their retail products within Europe and Asia. Along with this Tesco also
exposed its stores in different political areas. So with political analysis management is
able to gain knowledge about tax rate, legislation and the political instability of
government (Bergh and et. al., 2014). So organisation formulates strategy that helps to
operate business with ethical manner in order to complete all task and operations in an
appropriate manner.
 Economic factor- This defines there are different task and operations by management but
all of them are managed with motive of earning profits. Further, economic aspects also
play an important role for organisation and it leads company to earn more amounts of
profits. With economic aspect it is analysed that organisation perform an important role in
strategic management because with the recent change in minimum wage act enhance the
expenses for Tesco. So with right strategy cost for organisation is managed appropriately
that helps to deal with competitors in an effective manner.
 Social factor- With the analysis of consumer shopping the trends related with business is
constantly changing. This refers that the society requirements are dynamic so to manage
strategy and competitive factors it is important to manage business in an appropriate
manner. Individuals who are living in UK follow tight schedule so they require fast
delivery of products. With social aspect it is identified that Tesco rely on UK market area.
So to deal with this strategic management helps to develop flexible policy which helps to
retain customers for longer period (Bettis and et. al., 2014).
 Technology factor- In the previous years, some different issue is faced by the
management that are poor customer experience, scandal related with meat etc. So to deal
with such issue management is focused for utilising technology aspects because it helps

for improving customer experience. Along with this strategic management identify that
technology aspect helps the business to accomplish different opportunity that exists in
business. Management also introduced RFID technology and it increases the store
experience for customer. Moreover, to deal with competitive situation organisation also
introduced online platform for increasing the number of customers.
 Environmental- There are various organisations exists in market and also different
business sector are performing their operations to satisfy needs and wants of customers
(Engert, Rauter and Baumgartner, 2016). But from the past few year environmental
authorities, NGO and government are focused towards the safety of environment.
Therefore, to deal with this Tesco encourages its consumers to purchase products from
tesco.Com. Tesco Van Drivers will also formulate daily schedule for reducing unessential
round. This helps to reduce pollution and also help to gain competitive edge by improving
efficiency of product delivery. They also use gasoline-saving routes and additionally
collect undesirable plastic bags from customers and recycle them. Also, Tesco is devoted
to apply renewable resources and generate one hundred% of its power through 2030. The
organisation promises to minimize as much as 50% carbon footprint through 2020.
 Legal factor- If a commercial enterprise follow illegal environment than it generates
impacts on the commercial enterprise performance at time of achieving company
objectives. In the year 2016, Tesco workers took legal action towards the enterprise
because they face discrimination while working. Workers were extremely frustrated after
observed low pay quotes for night time, weekend and bank vacations shifts. Tesco
additionally faced prison movement for accounting fraud and deceptive the traders,
finally, agreed to pay GBP 12 million to settle the prison action. Thus, it works as a
positive for rival organisation so to deal with this management is focused to work in a
legal manner.
In short with the analysis of external environment it is identified by management that
organisations need to manage strategic management in order to deal with competitive factors of
environment (Guo and et. al., 2019). The practical example of PESTLE analysis relates with the
approach that is related with the market of Japan. It refers there are different task performed by
management and most of them are considered towards analysis of market for attaining better
position in market. Japan stores are conducted by management because recently Tesco

management announce close of their Japan store due to low market sales. So it is essential for
TESCO to analyse market conditions before entering into a new market. One of the major
challenge, which is faced by organisation relates with competitive situation that is generating
challenges for Tesco to perform all work in an organised manner. Along with this it also relates
with outcome of practices related with business strategy of company that helps to match external
environment conditions with current business operations and functions.
Figure 1Source(https://www.ibisworld.com/industry-insider/how-to-use-industry-research/how-
to-use-ibisworld-research-in-a-pestle-analysis/)
Internal environment of Tesco
With analysing internal environmental conditions it is identified that some challenges are
also faced by organisation in existing environment to complete their work in an accurate manner.
Therefore, SWOT model is used to analyse the internal operations and functions of Tesco which
is mention as follow:
Strength
 Tesco is one of the largest leading
stores in UK (Hendren and et. al.,
Weakness
 Tesco management face failure in the
global environment. This refers US and

2015). So it works as strength for
organisation that leads to earn more
revenue by selling different products.
 With the analyse of four different
supermarket markets it is identified that
Tesco dominates retail market of UK
with 30% that also enhance strength of
organisation.
Japan face complexity because of low
customer’s evolvement and interaction.
 Accounting department of the
organisation is not organised. This
refers that false declaration of profits
generate misrepresentation to perform
company operations in proper manner.
Opportunities
 Jack and Tesco recently make an
agreement by which both businesses
perform their operations in an
appropriate manner to compete low cost
market. It provides opportunity to
develop competitive-edge against rival
organisations.
 With developing strategic partnership
by reputed organisation it is easy to
gain different opportunity that attracts
more number of customers.
Threats
 At the time of promotion about
company Tesco take the base of
Christmas due to which people boycott
their stores by claiming a disrespectful
faith in Christians.
 One of the major threat identify by
strategic department relate with the
Brexit as in financial year 2017-18 the
profits of Tesco are declined (Hill,
Jones and Schilling, 2014). It generates
a large threat for organisation to
perform business operations properly.
The above internal environment analysis defines that there are various task performed by
management and most of them are focused towards implement of organisational goals and
objectives. This also undertakes management is facing for defining different farms as it is used in
managing aspects as it include the aspects that improve strength for developing competitive edge
in market (Hitt and Duane Ireland, 2017). With analysis of SWOT there are various task
performed by management and with support of company strength it is easy for organisation to
complete all work in an accurate manner. Moreover, the existing opportunities such as use to
company goodwill for managing and completing work into new market. In the last, by

overcoming from different threats management is also able to improve their market position
which increases market area for business to manage work in an appropriate manner.
Business strategy- The term business strategy understands as the course of action that is used for
understanding action and decisions. This also assist entrepreneur management is managing to
implement better competitive position in market. Moreover, this helps in managing operations
that is leading customers to achieve desired results from business and it leads management to
complete business in an effective manner. From perspective of Tesco it also define that corporate
action and intent also leads to plan business strategy which leads to overcome from company
operations and challenges.
Porter’s five force of Tesco- This is defined as a detailed module that helps to examine the
impact of five forces on organisation. Competitive business, supplier power, buyer bargaining
power, threat of substitutes and bargaining power of customer are understand by analysing Porter
five force model.
 Bargaining power of buyers- Tesco is offering their products to a large customer base
that satisfies needs and wants of customers properly. With analysis of retail sector it is
identified that bargaining power UK buyer is low because they are not organised. In
context of competitive situation ASDA and Sainsbury’s are not able to provide similar
quality products and services (Li and et. al., 2016). It generates attractive industry aspects
for Tesco but strategic management define now-a-days there are different retailers exists
such as Aldi etc. that attract customers by comprising with profits margin of the
organisation.
 Bargaining power of supplier- In the present scenario, Tesco work with more than
2,500 suppliers within the UK. This also defines there are different task performed by
management and it define that many persons are out. Along with this Tesco negotiates
hard with the suppliers for enhancing their profit margin. It also define that Tesco accused
it suppliers by managing with the price cuts. Further, it helps to deal with competitive
situation because it leads organisation to manage and control supplier power.
 Threat of new entrants- The threat to enter new organisation in the market is low
because of the capital requirements as high amount of capital is required by the
organisation for performing business in UK retail sector. Therefore, Tesco focus less on
the new companies but to manage economy of scale organisation develop new core

competency of business with right strategic management that helps to explore areas
which is used for attracting more number of customers (Meyer, Neck and Meeks, 2017).
So with large market area and more number of customers it is easy to obtain competitive
edge in market.
 Threat of substitute products- Tesco offer and store a large and wide variety of the
products range that satisfies needs of customers. This also sells the substitutes of products
and majority of them also fulfil requirements of customers. Along with this products such
as butter and margarine are also sold in the Tesco stores so as per strategic management
and the current situation analysis of competitors defines that threat of substitute products
is relevant for the Tesco.
 Rival organisation analysis- In the context of Tesco, the first situation which is
identified relates with high competition that exists in the market. Along with this it is also
analysed by business that competitors spend huge amount on advertising and promotion
techniques for promoting their products. Tesco is recognised as a market leader but as per
current market scenario it is complex to manage and all functions in proper manner
because competitors are impacting on business with the price factor (Qu and et. al.,
2019). Example- Price war was started by the Aldi and Lidl due to which profit margins
of organisation are impacted.
While going through with the model of Porter five forces on Tesco there are different aspects
recognised by management and it is impacting on store management of Tesco. To deal with this
there are different aspects are recognised by organisation such as Stakeholder analysis of Tesco
that helps to understand role of each stakeholder within the company. This also refers that
individuals are also able to manage and complete it work in an organised manner. One of the
most appropriate solutions for overcoming from the challenge of competition is to enter into
discount chain. Jack’s is recognise as a discount chain and it was establish for competing with
Aldi and Lidl stores which start a trade war between company.
Competitive plan
The main motive of this study is to explore strategic management aspect that leads the
organisation to obtain top position in market. Different competitors of Tesco recognise and
analysed the areas which makes areas for organisation to work as a British multinational retail
organisation. It’s headquarter is situated in Hertfordshire, England. The main competitors of

Tesco in the UK are Sainsbury’s, Asda, Morrisons, Aldi, Waitrose and many more. With the
analysis of competitive market it is identified that nearest competitors of Tesco are ASDA and
Sainsbury both organisation grab overall 30% of UK market (Sullivan, Thomas and Rosano,
2018).
The existing competitive plan of Tesco only focus on the major retail organisations such as
ASDA but with the analysis of environment it is identified that company need to modify the
plans. Therefore, it is analysed by business that to ensure better position in market this is
important for company to take right action for making right alliance that satisfies needs and
wants of customers in an organised manner. Example- With purchase of local business it is easy
to complete work with the discount because most of the production is completed at local level.
The motive to alternate the plans is to gain better position in market that helps for making aspect
which is used to see strategic results and it also helps business in making analysis of strategic and
long-term plans that mention and undertakes better results for organisation. Tesco is the leader of
retail market but due to constant competition it is complex for organisation to sustain at top
position for longer period. Discount store of Aldi and Lidl are also major challenger of Tesco and
it is impacting on business because of weak strategic plans and it minimise the market area for
Tesco. So it is mandatory for Tesco to generate right strategies because it helps to ensure better
position in market. Similarly, with the analyses of market this is also identified that Tesco is
facing challenges from small and regional competitors that reduce sale of products. With
formulating right and effective strategy it is easy for management to ensure right position in local
as well international market. Along with this by right plan it is easy for management of Tesco to
develop policy which reduces the challenges of UK market competition.
Risk attachment strategy
Diversification strategy is defined as a corporate strategy that is used for entering into new
products, new services and in new market. With the above analysis it is identified that
organisation present its work with motive of managing and completing their work into new
market. Along with this diversification strategy leads to complete their work by presenting the
idea into a simplified manner that aids employees to manage and complete work as per existing
market situation. Tesco utilise the risk strategy to determine and review assessment which is
developed to take right and effective actions (Zhao and et. al., 2017). From the perspective of
Tesco it is also analysed that competition from international market also generates challenges for

management. So some risk also faced by Tesco from international market that undertakes diverse
workforce management. Competition from well-recognised organisation such as Amazon entry
into retail business etc. so to deal with this risk management strategy of trading decisions is
included by management and according to the strategy of risk it is easy for business to gain better
position in market. It refers that all decisions which are developed by respective organisation are
more effective and it leads to ensure better position in market by obtaining competitive edge
against rival business.
CONCLUSION
With the analysis of above report it is concluded that strategic management plays an
important role for organisation and this also leads business to ensure that all work is completed in
an efficient and effective manner. By managing all work with the strategy specific and desired
results is gained by management and this also helps business to deal with real and practical
situation which is making company emotions and to obtain bigger gains. With analysing of
competitive factor in the business this is analysed by organisation that PESTLE, SWOT and
Porter’s five force models helps in managing trade that is used to manage operations according to
existing conditions of business environment and customer’s requirements.

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