University Strategy Report: Analyzing TESCO PLC's Business Strategy

This report provides a comprehensive strategic analysis of TESCO PLC, a multinational retail giant. It begins with an executive summary outlining the report's objective: to identify the most suitable strategy for TESCO's growth. The analysis employs several frameworks, including TOWS matrix, PESTLE analysis, SWOT analysis, and Porter's Five Forces, to evaluate both internal and external factors influencing the company's performance. The report identifies two potential business strategies and recommends the most appropriate one for TESCO. Finally, it concludes with a business canvas model to facilitate the implementation of the chosen strategy over a three-year period. The report also provides an overview of TESCO PLC, its history, and its current market position.

Running head: STRATEGY AND ENTREPRENUESHIP
Strategy and Entrepreneurship
Name of the student:
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Executive summary
The aim of the paper is to find the suitable strategy to be implemented in growth of
“TESCO PLC”. The paper discussed on the different analysis to find out the best strategy to
be implemented in the company. The following paragraphs of the paper focused on TOWS
analysis, PESTLE analysis, SWOT analysis and porter’s five forces to analyse the internal
and external factors influencing the growth and expansion of the company. This article found
two potential strategy to be implemented in the organisation and recommended to implement
one most suitable strategy in the organisation. Lastly the paper concludes the appropriate
implementation of strategy using the business canvas model.

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Table of Contents
Introduction................................................................................................................................3
Overview of the company......................................................................................................3
Discussion..................................................................................................................................4
TOWS matrix analysis of “TESCO PLC”.............................................................................4
PESTLE Analysis of “TESCO PLC”.....................................................................................6
SWOT analysis of “TESCO PLC”.........................................................................................7
Porter’s five force model........................................................................................................8
Two potential business strategy...........................................................................................10
Recommendation......................................................................................................................10
Conclusion................................................................................................................................11
References................................................................................................................................12

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Introduction
The aim of the report is to undergo various analysis to determine the current situation
of “TESCO PLC” and implement the best strategy in the organisation. The following
paragraphs of the report will discuss on TOWS analysis, SWOT analysis, PESTLE analysis
and Porter’s five forces model to determine the organisations current situation in relation to
their competitors. This paper will discuss on the two potential strategies to ensure the growth
and market share of the organisation and recommend on the best strategy to implement in
“TESCO PLC”. Additionally it will implement the strategy using CANVAS approach within
a period of 3 years.
Overview of the company
“TESCO PLC” is a multinational retail store deals in groceries and general
merchandise operates worldwide to serve its customers with quality products and reasonable
price with optimum utilisation of resources. It was founded by Jack Cohen in 1919 and serves
around seven countries across Asia and Europe. The organisation has globally expanded
since 1990 and operates in 11 countries all over the world. TESCO involves in the retail
sector of books, clothing, electronics, furniture, toys, petrol, software, financial
services, telecoms and internet services. The organisation “TESCO PLC” has the business
motto of “pile it high and sell it cheap” that states that focus on mass production and selling
in reasonable or affordable price to serve the society. It acquires a large market share in the
countries it is operated in and listed on the London stock exchange. Therefore, have a high
mission and vision for the growth and survival of the organisation.

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Discussion
TOWS matrix analysis of “TESCO PLC”
TOWS matrix is derived from SWOT analysis model in order to find the internal
strength and weakness and external opportunities and threats of the organisation. This
analysis aims at developing the strategic tools for the business field and marketing. TOWS
analysis starts with the external environment analysis therefore the external factors
opportunities and threats are examined initially and then strength and weakness of the
company is determined. This analysis helps in the decision making process of the
organisation and grab the various business opportunities to overcome the threats.
The above quadrant includes the internal strength and weakness and external
opportunities and threats. This TOWS analysis of “TESCO PLC” shows as the organisation
have the strength that it acquires the largest market share in UK grocery. The company gains
the attention from its consumers which helps in increasing the sales and contributes to rise in
the revenues. The organisation acquires 28.4% in the UK grocery market as it considers in
having the leading market positioning in the market scenario (Chapagain and Ahokangas
Strength
Largest market share.
Supplier satisfaction.
Employees satisfaction.
Weakness
Profit declination.
Retail cash flow declination.
Too much dept.
Sales including vat and fuel declined.
Opportunities
Promoting sales of fresh foods with a
growth in sales of fruits and vegetables.
Low corporation tax.
Sale of organic foods
Threats
Growing popularity of discount.
Cutting down the price by supermarkets
price.
Losing consumer confidence and
goodwill.

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2015). It established the largest supply networks with 58% that sets up the supplier
satisfaction. This shows a positive relation between suppliers and the consumers.
Additionally, it establishes a high employee’s satisfaction as it sets a good workplace for the
employees. 70% employees recommends it as a good working place to work smoothly and
77% recommends the organisation as a good place to shop for (Mollah 2014).
The weakness of TESCO PLC is that its sales in VAT and fuel declined by 1.3% in
the year of 2014/15 and faced a loss in declining the sales. The profit earned by the company
declined by 1.4 billion due to declination in sales services there is fall in earning the group
profit. The retail organisation’s cash flow declined by 1.9 billion which shows instability in
inflows and outflows of cash in the organisation (Agarwal 2014). Due to declination in sales,
profit revenues and instability in cash flows the organisation had too much debt which shows
as 22 billion debt in the company.
The opportunities that the organisation can grab to overcome the weakness and threats
and survive in the competitive market can be shown as the organisation can promote the sale
of fresh foods and can increase the sales of fruits and vegetables by growing 5% in their total
sales. The organisation can reduce its corporation tax in order to cut down the price to gain
the price advantages. Additionally, TESCO can introduce the organic products as the sales of
organic food are rising by 4% therefore TESCO can take the advantage to introduce their
product line in organic items (Xie and Allen 2013).
The threats faced by the TESCO is from other convenience stores that offers
discounts, free gifts, coupons and vouchers for growing popularity. The other companies in
compare to TESCO provides various remittances which creates threats for TESCO. The
supermarkets forces to lower down the prices by 2% this creates a threats for the organisation

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(Clarke and Liesch 2017). In addition to this threats the organisation can have a fear to lose
its goodwill in the market and lose consumer confidence due to the accounting scandals.
The TOWS matrix analysis show its implications in TESCO as positive as well as
negative. As implications of strength and opportunities in the organisation reflects a positive
effective and implications of weakness and threats brings out a negative effect in the
organisation. The organisation faces an issues in declining the sales, impact from its
convenience stores, pricing wars and lower profit revenues.
PESTLE Analysis of “TESCO PLC”
Political factors has a major influence in the performance of TESCO. The political
factors involves the acts of legislation, tax rates and the stability in operating countries. Due
to the instability in cash flows government inspires the retailers to offer job opportunities to
the domestic population. TESCO takes part in creating employment opportunities that
increases the demand of the products and diversify their workforce (Ayodele, Abdallah and
Issaka).
Economic factors influences the TESCO in demands, profits, leverage costs and
prices of the product. The organisation should adapt the changes in policies such as taxation
which effects the financial accessibility. This also brings out the company to grow
internationally. So, diversification and internationalization can be two main strategies to be
pursued by the organisation.
Social factors impacts the social changes in the people that indicates the choice,
demands, beliefs and attitudes of an individual in buying a product. This influences the social
condition of an individual in the society. TESCO have analysed the market demand of the
customers and accordingly planning to supply the products in order to gain the customer
satisfaction. As customers are showing their concerns in health care and this brings changes

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in their food approach. TESCO is trying to meet the changes by introducing organic products
in the market (Haleem and Jehangir 2017).
Technological factors shows the concern in technological advancement in TESCO for
further new opportunities. The technology development shows as introducing the online
shopping facilities with home delivery and introducing self-service checkouts made
convenience and easy for the customers (Grundy 2017). This new technological adaption
helps the organisation to cut down the labour cost and make efforts in long-term objectives
for reducing carbon footprint.
Legal factors influences the legislations and government policies which impacts the
performance of TESCO. As the food retail commissioner proposed a code that introduced the
ban in price changing without notice and suppliers demand payments. In order to adapt this
policies TESCO cuts down its price in fuel, in accordance to the amount invested in grocery
stores (Janeš, Faganel and Biloslavo).
Environmental factors shows the benefits towards the society the organisation noticed
the issues in the society and operate accordingly that would benefit the society. TESCO plans
to reduce the wastage produced in the stores by spreading awareness in social message to the
customers and reducing the carbon footprints by 50% by 2020 (Mayer and Bakhshandeh
2014).
SWOT analysis of “TESCO PLC”
Strengths of TESCO shows the number of awards won by the organisation, its service
provided to the customers and experience by the customers. It shows as the largest super
market and most profitable retail industry in the world. A strong financial position by the
company and cash reserves shows the stability of the company and it stands as the strength of

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the company. Its technology, brand equity, long-term survival, operations and cultural needs
shows the strength of the organisation (Jenkins and Williamson 2015).
Weakness of TESCO shows as the pricing wars by other supermarkets, decrease in
profit levels, and lack in research which helps in approaching the market information
decreases the decision making in the organisation. Bearing high cost in inventories and
having less disposable income. With feasible finance and strategic intent the organisation
undergoes various weaknesses.
Opportunities provided in TESCO is having strategic alliance with the other brands in
order to offer more products and to attract the consumers (Fernie and Sparks 2018).
Opportunities for the joint ventures helps the company to overcome the weakness as joint
ventures helps in market research and improving performance. Introducing online shopping
with home delivery encourages the customers to participate in trading activities (Agarwal).
Accessing to adapt changes in product according to the customer demand brings out changes
in gaining the opportunities (Murray and Scuotto 2016).
Threats for TESCO shows as economic recessions that threaten the market share and
profitability of the company. Government regulations and political changes brings out the
threats in the organisation. Stakeholders pressure for lowering the prices which leads to
decrease the disposable income of the company. Increase in the cost of raw materials and
imposing increased wages to employees’ declines in the profitability of the organisation and
acts as a threat to the company.
Porter’s five force model
Threat of new entrants’ states that the market gets dominated by some competitors of
supermarkets. This force impacts the small shops such as bakers and butchers. New entrance
in the grocery market creates a barriers for the entrants as they need to raise high capital to

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develop their supply chains. In order to invest large amount of capital to set a supply chain
and maintain stock control and advanced technologies the new entrants faces a lot of problem
and this become barriers for them from the existing one. Economies of scale and product
differentiation acts as an obstacle for the new entrants (Wood, Wrigley and Coe 2016).
Bargaining power of suppliers is a force that presents the suppliers power which
influences the grocery chains and increase the fear of losing business in large supermarkets.
This brings out the leading positions of stores to negotiate promotional prices from the
suppliers that unable to match the small individual chains. The relationship with suppliers
effects in strategic freedom of the company that influences its profit margins. This force
relatively reduce the profit margins of suppliers and supermarkets (Špička 2016).
Bargaining power of customers states that standardized products reduces the
switching of cost this builds up power for the buyers. The organisation imposed various
clubcard, loyalty card which impacts as having successful strategy in customer retention
which leads to increase the profitability of the business. Ensuring customer services, low
prices, better choices, and constant flow in store promotions helps to retain and control
customer base (Zokaei et al. 2016).
Threats of substitutes states that substitution of a product reduces the market demand
of that product as it creates the threat of switching the customers in choosing the alternative
product. In grocery stores there are chances of having substitutes in small chain producers
and this substitution weakened the new trends in the market as many small chins are
emerging in the market which increases the substitution of product.
Bargaining power of competitors states that power of retail industry is concentrated in
the small retailers. As the grocery stores have significant growth in the market which
dominate the large players and increase the store size, retailer concentration, utilisation of

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range and prominent characteristics. This high competition in the market foster the
development which have to be innovative to build up the market share and develop the
trading format in accordance to changes in consumer behaviour (Yamoah and Yawson 2014).
Two potential business strategy
Diversification and internationalization are the two potential business strategy that can
be implemented by the “TESCO PLC”. The company needs to diversify in its customer needs
to emphasise on the sales promotion (Gen 2013). The organisation needs to qualify its staffs
in order to produce quality goods and serve the customers in a better way to maintain
customer relationships. This leads in having diversification of the organisation.
Internationalisation can be done by analysing the international market capabilities and
changes required to meet the customer satisfaction and provide long-term growth to the
organisation.
Diversification should be implemented in order to qualify the employees to produce
the quality goods including low cost which is the main objective of any organisation. As this
leads to have overall growth in the organisation. Using canvas model this strategy can be
clarified as canvas business model is a template for strategic management for developing
existing business models. As this business model provides value and visuality, infrastructure,
finance and customers as the potential strategy diversification fulfils all these demands of
business model and results in long-term growth and survival of the organisation.
Recommendation
TESCO PLC being the largest retailer in Britain should maintain its position n the
market with acquiring largest market share. The organisation can open a 24/7 TESCO express
in high streets providing with self-service facilities which can increase the market share of the
company. Promotional strategies should be boosted to increase the sales service, reputation

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and profit margin of the company. In order to gain customers attention TESCO can conduct
various free services like free medical check-up, various camps and bringing clubcards to
gain the customers attention. By introducing new products, having product differentiation and
managing international markets by improving the quality of product and proper service to
customer can improve the growth and survival of “TESCO PLC”. The organisation can focus
in developing the quality of product and maintain the product according to the need of the
customers, by providing various offers, discounts and vouchers they can acquire a large
consumer attention which leads to improve the sales revenue and profit margin of the
organisation. Adapting various changes, technological upgradation, new and effective
business strategy and optimum utilisation of resources including low cost results in
maintaining the long-term survival and growth of the organisation.
Conclusion
The above report concludes that the strategies implemented in the organisation brings
out a positive effect in the organisation and thus results in effective growth of the
organisation. The above paragraphs of the report discussed on the internal and external
analysis of the TESCO PLC. The report includes the TOWS matrix analysis, SWOT analysis,
PESTLE analysis and porter’s five forces model. This analysis of various theory proposed by
different authors helped in examining the strength, weakness, opportunities and threats of the
organisation. Additionally, it examined the political, economical, social, technological, legal
and environmental factors that influences the market strategy of the organisation and make
changes according to their effects. In addition, the paper discussed on porter’s five forces
which shows as threats of new entrants, bargaining power of suppliers, bargaining power of
customers, threats of substitutes and bargaining power of competitors. Lastly, the paper
focused on two potential business strategies and the best one to implement in the organisation
using the canvas model.

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References
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