BSc (Hons) Business Management: Strategic Analysis of Tesco (BMP6002)

This report provides a strategic analysis of Tesco, examining its purpose, vision, mission, and objectives. It critically evaluates the value of a clear strategic direction. The analysis includes an assessment of Tesco's competitive advantage using the VRIO framework, a PESTLE analysis to evaluate the external environment, and an application of Porter's Five Forces model. Furthermore, the report reviews Tesco's overall strategy, providing a comprehensive overview of the company's strategic management practices. The analysis highlights Tesco's strengths, weaknesses, opportunities, and threats, offering insights into its market position and future prospects. The report is a comprehensive analysis, and it concludes with a summary of the key findings and recommendations for Tesco's strategic direction.

BSc (Hons) Business Management Top up
BMP6002
Strategic Management
Strategy Evaluation
1

Table of Contents
Introduction................................................................................................................................3
MAIN BODY ................................................................................................................................3
A critical evaluation of the value of clear purpose, vision, mission and objectives in setting
the strategic direction of organizations using examples from selected organization..........3
Assess the competitive advantage of the selected company, using the VRIO framework ..3
Using PESTLE framework analyzing the external environment of the selected business.....5
Application of the Porter’s Five Forces Model for the selected organization ......................6
A review of the selected organization's strategy ................................................................7
Conclusion..................................................................................................................................7
References..................................................................................................................................9
2

Introduction
Strategic management is considered as one ongoing process regarding monitoring,
planning, analysing of all necessities in order to meet the tasks of the firm. It is used to
denote a kind of the branch regarding management that can be focused alongside the
development regarding strategic vision. Changes within the business environment also needs
firm to regularly approach their strategies regarding success. The process of the strategic
management aids firms to take stock of their present situation. It has five basic strategies as
well as differ within implementation that relied on the surrounding environment. This
management applies both on mobile platforms as well as on premise platforms. Present
Report focuses on Tesco which is known as the third largest retailer and also measured
through gross Revenue (Tesco,2020). Report focuses on analysis of value, aims as well as
objectives of Tesco, VRIO framework, Pestle analysis for evaluates the external environment
(Del Marmo and Feys, 2015). Porter’s Five Forces and Modern organization’s strategy.
MAIN BODY
A critical evaluation of the value of clear purpose, vision, mission and objectives in setting
the strategic direction of organizations using examples from selected organization
The purpose of the TESCO is being built with a easy mission, which is to be the
challenger for the target retail customers, which helps them to enjoy with better quality of
life and and easier way of living. Customer want large goods at the high value, which they
can easily buy from the company and it is the job of the company to give this in the right
manner . Its core purpose it serving customers and shoppers a little better every day, which
enhances the value for the company. Its main purpose is to understand the customers better.
Be the first to meet the needs and wants of the customers, and act responsible for the
communities and to adopt to means of production and manufacturing of goods and services
which are in regards with the protection of environment.
The vision of the company is to be highly valued business, by the potential customer
that the company is serving. Its vision is to stay constant while the strategies of business
continuously adapt the changing world.
The mission of the company is to make what matters better, together. It mission is to
let the customers enjoy better attribute of life and the easier way of living standards . Its
mission is to serve the customers with goods and services which makes it easier to have
more healthily by sourcing the great of quality, sustainable and affordable goods (Core
purpose and values, 2020).
The objective of the company is to make the positive contribution by its goods and
services to the communities where the company operate. The main objective of the company
is to reduce the wastage of food and making surplus of food available to those who are need
of the same.
Assess the competitive advantage of the selected company, using the VRIO framework
Competitive advantage refers to factors which implies Tesco to make goods and
services better and more cheaply than that of the rivalry. It allows productive entity to
generate higher sale revenue and superior margins which is being as compared with that of
competitors of Tesco .
This could be understood with VRIO framework to gain competitive advantage of
company. It is the analytical technique which is being excellent for resources of Tesco and
3

help in gaining the competitive advantage of the company. It defines with the value, rarity,
imitability and organisation of resources.
Value-
It implies with the first question of the frame work, which asks with how the
resources of Tesco adds value by having company to exploit the opportunities and
fight against with threats. If it is so then the assets are valuable for the company . Resources
are valuable for the company of it help in creating with the perceive value to the customers.
The company can do this by the means of differentiating the goods and services offered or
can be by the means of decreasing the prices of goods and services. It will leads to increase
in the customer satisfaction and will result in getting the competitive edge over the customer
as they will develop the sense of understanding that resource of the company are valuable for
its customers. However the resources which cannot leads with the value for the company
leads with competitive disadvantages. It is being important for the company to constantly
monitor and review the value of resources because constantly changing environment can
make them useless and less valuable (Ariyani and Daryanto, 2018).
Rarity -
Its states that resources which can be acquired by the TESCO and very few company
are considered to be rare. By having the rarity of resources, it will help Tesco to gain
competitive advantage. It will helps in fulfilling the needs and wants of target customer more
effectively. It is being ascertained that when the company leads to have the same resource
that are being not rare in nature will leads to situation of competitive parity . It is because
company can use resources which are being identical to implement the same strategies and
company can not achieve superior performance with the same. It will leads company with
loss of competitive advantage for Tesco (Miethlich, and Oldenburg, 2019). Even though
competitive parity is not what the company wants, company should not ignore the resources
which are valuable and common. It states that losing resources which are valuable and
capable would hurt the company as this are being required in the competitive market and gain
the competitive edge of winning.
Imitability
It states that resources of Tesco, should be costly to imitate if other companies does
not have it can not copy and imitate and can buy at substitute at a reasonable price. This can
occur in two of the way. One could be the direct imitating that is being referred to as
duplication. The another is providing and giving comparable services and products of Tesco
which can also be named as Substitution. Tesco when have the resources which are being
hard to copy , rare and valuable implies with gaining competitive advantage in the
marketplace.
The resources of the company can be hard to imitate if it is being based upon the
condition which are being historical. It states the resource of the company are developed over
the long period and events which are being historical and costly to imitate. It could also be by
the means of casual ambiguity, where competitors cannot identify resources which serve to
the means of getting competitive advantage (HoLEE,2020).
Organised-
It states resources for Tesco will not leads to confer to any kind of advantages of its
resources are not being organised in proper way to capture value out of the same (Geraldes,
da Costa and Geraldes, 2019). To gain the competitive advantage its is required that its
management process, system, policy, culture and others to be able to amply utilise the
capacity of rare, valuable and costly to imitate resource.
4

Using PESTLE framework analyzing the external environment of the selected business
The detailed investigation of Tesco is to explore several political,social,economic, lawful and
environmental factors that impact the Tesco. This organisation is also known as the market
leader within the supermarket industry of UK. It is also known as one of the bigest as well as
renowned retailers within the world.
Political factor
As retailing firm operates all over the world as these political factors impacts the Tesco's
performance. These includes the stability of nation,tax rates, acts of legislation. Tesco is the
one that plays vital role within creating the employment opportunistic as it enhances the
demands regarding products as well as diversifies its staff members.
Economic factors- As per these factors they grasp costs, profits, demands, profits and many
more. Therefore, firm has aware of such changes within policies such changes within taxation
that impacts the accessibility regarding finance. Due to reduce within disposable incomes
levels as well as unit incomes, Tesco has also translated most of its advertisement its value
brands instead of luxurious items. As the global economies that have been severely impacted
through pandemic , it can be expected that earning of several group are likely down and many
of them lost their jobs. All of this sudden change within the life style of the people leads them
to switch at cheaper brands as this can impact the profits
Social factors- As due to the variety of trends, social changes indicates that consumer within
the United Kingdom to the one stop shopping as well as bulk shopping. Thus Tesco has also
enhanced the non-food items (Del Marmo and Feys, 2015). Such type of food as well as
services demanded through consumers that can mostly impacted by their attitudes as well as
beliefs that can be impacted through social conditioning as consumers are becoming more
aware regarding health issues as food approach of food is constantly changing. Due to the
growing demands of the organic foods the Tesco adapt regularly such changes. In addition to
this Tesco has also takes several numbers of initiatory within going years in response within
the social changes as well as economic process such as Tesco sells the halal meat to the
Muslim due to the high demands or also they have the independent meat counters within the
some stores of United Kingdom. Thus, it sells both own label meat and branded meats within
Thailand and Malaysia. Tesco also sells some branded Kosher product within the United
Kingdom especially for Jewish consumers. Within the European markets there is rise in
demand for meat or chicken, vegan foods as well as drinks are there that offers Tesco good
opportunities for the future growth.
Environmental Factors- In order to address the environmental issues as well as adopt
several ways regarding operations that can benefit society. To decrease the carbon footprints
up to50 % by 2022. In addition to this Firm is also minimizes the waste produced within their
stores through enhancing social conscience with consumers. Several nations all over the
world are facing large pressure from the government in order to address the issues regarding
environment especially the firms like EU and UK. It is also noticed that this pressure is not
only from government only but also the public who are conscious regarding environment.
Tesco has also takes several initiatives as it commit to remove more than 1 Billion pieces of
plastic consumption by the end of 2021.
Technological factors- Firms like Tesco greatly benefited from the technological
advancements over the time as within the year 1995 it introduced Club-card as this card has
been considered as the loyalty card of the firm. Several people uses within UK as several
other nations where Tesco operates. Also, the self-service checkout points gives consumers
with convenience as well as aids the firm decreases the cost.
Legislative factors- Government legislation as well as policies are directly impact Tesco's
performance. As per the reports from EU and UK competition law prohibition anti
competitive activities thus Tesco unable to simply merge or purchase several other
5

supermarket regarding its size within UK. Tesco cannot play workers less than their
minimum wages that can be set through government. Within the same way Tesco cannot sell
alcohol to the underage consumers (Dissanayaka, 2018). It must mentioned that Tesco fined
and Sued within the past for misleading consumers.
Application of the Porter’s Five Forces Model for the selected organization
It is considered as a framework for evaluates a TESCO competitor environment as the
powerfulness as well as number of the firm's rivals, suppliers, consumers, substitute products
impacts the profitability of the firm. It can recognize as well as evaluates mentioned
competitive forces that can easily shape every industry and aids in describing the strength and
weakness of the Tesco. The five forces evaluates is frequently utilized to recognizes the
structure of the industry so that determine the corporate strategy. This model can implied any
type of the segment of the system to imply the competitive level in the commercial
enterprises as well as increases the profitability of the firm within long term
Competition rivalry- It refers to 1st t of the five forces that refers to the numbers of rivqalries
for Tesco and there ability to undercut the organization operations. The higher the number
of competition, with goods and services offered, lessor will be the power of company.
Provider seek out to the rivalries., if they are being able to provide with best of the
deals(Mehjabeen,2018) . It states that when competition is less, Tesco has high power to
charge prices which are relatively higher and set the deals in manner to achieve for higher
profits and sales.
Potential of new entrant – The power of Tesco is being affected by the new entrant in the
marketplace. It will take less money and time for rivalry to enter in marketplace and be the
effective competitors. It will in turn result in weakening the position of Tesco. The industry
with strong hurdle to entry is being ideal for the companies which is existing as the company
will be able to charge prices which are being higher and will be able to negotiate on better
terms. It will leads with having the competitive advantage (Wee, 2017).
Power of supplier- The next factor relates with how easily the suppliers of the company can
drive the value of inputs. It is being taken by number of suppliers of key inputs of goods and
services of, how unique these are and how much it will cost Tesco to transfer to another
supplier. The less the number of supplier, more it will be depended on the supplier. This will
result in supplier having huge power and drive up the cost of inputs and force for other
advantages in commerce and commerce and the vice versa.
Customers powers – It states with the power of the consumers to drive prices less and it is
one of the major force of Porter. It is being impressed by how many buyers Tesco has, and
how important each buyer is and how much it will cost company to switch to find new
markets and customers for its output. A littler and more strong customer base means that
customer client has high power to negotiation for better deals and prices. It will help with
easier time for charging prices higher which increase the profitability (Isabelle,2020).
Substitue threats - It is last of the 5 forces. Substitute products and services that can be used
in place of Tesco goods and services posses threat. Company if produces goods and services
for which there are no close substitute will be at more ability to charge higher prices and lock
in positive manner . It states that when substitues to company products and services are
available, customers will forgo buying its products and services and which can serve as the
means where company power and competitive position can be threatened which is not
favourable.
6

A review of the selected organization's strategy
Ansoff matrix –It is being also best-known as Product and marketplace expansion grid
which includes four stage
Market penetration- This is focusing increase in sales of the existing product in existing
marketplace. This can be executed by the company by increasing distribution and
promotional efforts. By the means of decreasing prices to attract the customer and can be by
the means of acquiring the competitors in same marketplace (Martins, 2020). It is simply
when firm uses goods and services in existing market.
Product development- It is when company uses new goods in existing market. The firm
move towards typically extensive R&D and expansion of company range of wide
products and services. It is being employed by the company when it has strong knowing of
its current marketplace and provides with the innovative solution to meet up with the same.
Market development –It is when the company enters into new market with the helps of
existing goods and services. This is by expanding into new geographic regions, segments of
customers and others. It is most successful when organization owns technology which can be
used in new market. It can be when potential customers in new market place are highly
profitable to the company (Cleberg, 2019).
Diversification- This is riskiest of all the strategies as it relates with gettimng into new
marketplace with new products and services. Diversification which is related when there is
potential synergies which need to be realised between existing business and new market and
products. Unrelated diversification where there is no potential synergies realised between
existing business and new goods and services.
BCG matrix – This is the growth matrix which states with four segments such as
Dogs- These are the products with lowgrowth. and low market share The company focus
very low as it is being believed that they generate less sales to the company. They frequently
break even, neither consuming nor earning up with large deal of cash extracted out of it for
business (Madsen, 2017).
Question mark – These are the goods in high markets of growth with low market share.
These consumes huge of cash, but bring less in return. It result in loss of market share. They
have the capability to turn into stars having high growth rate. It is being advised to invest in
this if they have ability to for potential growth.
Cash cow- This states the products in low market growth with high market share. It is the
marketplace leader that provides more cash than it takes. It provides with the cash which is
required to turn a question mark into the market leader, covering with administrative cost of
the company (Mohajan,2017).
Stars- These are the products of the company with high market share and high growth rate. It
states that monopolies and first to market products are being constantly termed as stars .
These consumes large amount of cash. It is generally with what is sum of money coming in
which is what going out.
Conclusion
From the above analysis it is being concluded that there are various understanding
which is being reasoned by Tesco in successful implementation and evaluation of its
strategy. It has clearly evaluated with the purpose, mission and vision of the company. It has
evaluated the competitive advantage of the company by means of VRIO framework. It has
briefed with the external environment of company by doing the PESTEL analysis. It has
briefed up with the implementation of porter five force analysis and lastly have briefed with
reviewing of the organisational strategy such as Ans- off growth matrix and with BCG
matrix
7

References
Books and Journals
Ariyani, W. and Daryanto, A., 2018. Operationalization of Internal Analysis Using the VRIO
Framework: Development of Scale for Resource and Capabilities Organization
(Case Study: XYZ Company Animal Feed Business Unit). Asian Business Research
Journal. 3. pp.9-14.
Cleberg, C., 2019. Strategic Success: The Ansoff Matrix vs. The Balanced Scorecard.
Del Marmol, T. and Feys, B., 2015. PESTLE analysis.
Dissanayaka, S.D.P.P., Supply chain of TESCO.
Geraldes, R., da Costa, R.L. and Geraldes, J.,2019 VRIO FRAMEWORK-STATIC OR
DYNAMIC?.
HoLEE, J., 2020. Smart Study’s Strategy in the Kids Content Industry: VRIO
Framework. Journal of Economics, Marketing and Management. 8. pp.1-8.
Isabelle, D., and et.al., 2020. Is Porter's Five Forces Framework Still Relevant? A study of
the capital/labour intensity continuum via mining and IT industries. Technology
Innovation Management Review.10(6).
Madsen, D.O., 2017. Not dead yet: the rise, fall and persistence of the BCG
Matrix. Problems and Perspectives in Management. 15(1). pp.19-34.
Martins, A.M.A.R.D.L., 2020. Scenarios and Ansoff Matrix(Doctoral dissertation).
Mehjabeen, L., 2018. Assessing Attractiveness of Banking Industry of Bangladesh by
Applying Porter’s 5 Forces Model. International Journal of Business and
Management Future.2(1). pp.55-62.
Miethlich, B. and Oldenburg, A.G., 2019. The Employment of Persons with Disabilities as a
Strategic Asset: A Resource-Based-View using the Value-Rarity-Imitability-
Organization (VRIO) Framework.
Mohajan, H., 2017. An analysis on BCG Growth sharing matrix.
Wee, C.H., 2017. Think tank—beyond the five forces model and blue ocean strategy: an
integrative perspective from Sun Zi Bingfa. Global Business and Organizational
Excellence. 36(2). pp.34-45.
Online
Core purpose and values. 2020[Online]. Available
through<https://www.tescoplc.com/about/how-we-do-business/core-purpose-and-
values/>
Tesco .2020[Online]. Available through<https://www.tescoplc.com/>
8