Strategic Analysis of TESCO: Environment, Response and Solutions

This report presents a strategic analysis of TESCO, a multinational retail organization. It begins with an executive summary outlining the importance of strategic analysis for achieving organizational goals. The report delves into the key features of TESCO's external environment, utilizing PESTLE analysis to examine political, economic, social, technological, environmental, and legal factors and their impact on the company. It then explores TESCO's internal responses to these external pressures, considering its strengths and adaptability. The report also assesses various strategic solutions employed by organizations and offers a critical evaluation of TESCO's overall strategy. The analysis covers market conditions, consumer behavior, technological advancements, and environmental regulations, providing a comprehensive understanding of TESCO's operations and strategic decision-making.

Strategic analysis

Executive summary
Strategy is termed as an action with the help of which business organisations can
effectively able to perform their actions and can further accomplish their organisational goals in
best effective manner. Present report has been conducted on, TESCO which is a multinational
organisation offer general merchandises and groceries. In addition with this, report include,
effective evaluation of organisational strategy along with the external factors that impact on
organisation environment.

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Key features of the external environment and their impact on the organisation.....................1
2. The internal organisation’s responses to these factors............................................................5
3. An assessment of the strategic solutions used by various organisation..................................7
4. Critical evaluation of the organisation’s strategy....................................................................9
CONCLUSION................................................................................................................................9
REFEENCES.................................................................................................................................11
Books and Journals...................................................................................................................11

INTRODUCTION
A strategy is mainly a set of actions that is undertaken by managers in order to achieve
organisational goals in best effective manner. Strategic analysis acts as a formative procedure
within which conduction of research is done on an organisation along with it on operating
environment as to effectively frame strategy. In simple terms, in this identifying and evaluation
of those data are done which is relevant for an organisation strategy. Thus, as to effectively
frame business strategy it is essential for an organisation to have well-defined knowledge of,
vision, values and mission statement that are fundamental elements of an organisation. Present
report has been conducted on, TESCO a British multinational organisation dealing in the
segment of general merchandises and groceries (Zhou, 2019). Company headquartered in
England, United Kingdom and was founded in the year 1919. In this report, formative
discussions has been made on, contemporary theory which is related to strategy. Along with this,
particular form of issues of a company in addition with their internal organisational response are
covered in this report. Lastly, project cover critical evaluation in context with organisation along
with strategic solutions in a well defined manner.
1. Key features of the external environment and their impact on the organisation.
TESCO a retail supermarket organisation perform their business operations in
international market. This lead towards facing them unpredictable environmental factors that
may affect their functioning. TESCO in terms of revenue is considered in the list of third largest.
Company not only offer their services in retailing sector but also offer products related to mobile
networks, broadband and insurance services. Thus, it is essential for organisation to effectively
evaluate external environment factors and frame strategies to overcome them as to gain
maximum opportunities and advancements. Mentioned below PESTLE analysis has been done
with the help of which company can analyse all those factors that are affecting their functions:
Political Factors:
There are wide range of factors which is included in political factors that affect
operations of company in direct and indirect manner. There are many factors that are included in
the list of those political factors that are affecting TESCO functioning. EU referendum lead
towards causing numerous impact within which one is linked with, uncertainty of investors .
Along with this, risk related of military invasion, level of corruption and bureaucracy and
interference of government in retail industry are major political factors that affect smooth
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functioning of company. Thus, it is essential for TESCO to effectively consider legal framework
in context with contract enforcement along with trade regulations & tariffs which is related to
customer services as to conduct operations in well effective manner. In addition with this,
TESCO is required to have depth understanding of wage legislation that also include overtime
and wage and adopt measures which is related to mandatory employee benefits and to perform
services within industrial safety regulations. Recently, government of United Kingdom put
mandatory terms on those organisations who are performing their operations in retailing sectors,
to have proper and measured product labelling along with other relating requirements on their
products which is required to be consider by TESCO as to operate activities without facing any
political turbulence.
Economic Factors:
In context with Economic factors, elements covered in this are related with foreign
exchange rate, inflation rate, interest rate, economic cycle and more all these factors lead towards
determining aggregate ratio of demand and investment within an economy (Dávila, Azcárate and
Kørnøv, 2019). Thus, it become essential for TESCO plc to effectively determine a country
economic factor where they operate their functions in order to take advantage of economic
growth rate, customer spending and inflation & industry's economic indicators . With the help of
this company can forecast growth trajectory. As TESCO operate their functions in numerous
geographical locations, it becomes essential for company to effectively analyse type of economic
system within a country economy and intervention of government in free market. Along with this
there are numerous form of macroeconomics factors that can lead towards affecting TESCO to
great extent. In this cost of labour acts as an one of the major economic factors that may impact
on revenues of supermarket chain. Thus, it is essential for TESCO to determine latest rise in
national minimum wages rate within UK as major share holding of company 30% is in UK
marketplace. In addition with this, labour cost, economic growth rate, inflation rate and interests
rates are some of the major economic factors which is required to be effectively consider by
TESCO plc in order to strengthen their business cycle prosperity stage.
Social Factor
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In this segment, factors that are included covers the aspect of, society's culture along with
the manner in which things are done as to protect believes, culture, values and norms of society
and individuals. In addition with thus, shared values, beliefs and attitudes plays great role which
is required to be effectively understand by TESCO plc as to provide products and services as per
according to society believes and consumer perceptions. There are some certain factors which is
required to be effectively consider by TESCO that are, skill and demographic level of
population, cultural aspects such as, social conventions, gender role and more. Along with this,
power structure in a society, class structure, education level of society along with education
standard within TESCO plc' industry and leisure interest are some of the measure which is
required to be effectively consider by company as to offer their products and services without
hurting sentimental and believes of society. As major share holding of TESCO is in UK, within
which population is moving towards one-stop shopping and bulk shopping. Thus, there is
requirement for company to make an increase in their estimate number of non-food items that
has been offered to sale. As those goods which are in high demand reflects consumer buying
beliefs along with their attitudes that can effectively help TESCO to determine society
conditioning. As in UK, large base of population is tend towards healthy life prospects and are
becoming more concerned towards health issues, for this TESCO is required to adapt those
changes that are prevailing in society and prefer more organic products as to effectively satisfy
customer demand in best effective way.
Technological Factor
Technology is changing with fast phase that somehow lead towards disrupting numerous
form of industries across the world. Thus, there is a requirement of TESCO to take advantage of
various form of technological advancements as to gain more opportunities. In this context,
company is required to effectively measure introduction of online mode of shopping in order to
facilitate fast home delivery. In addition with this, self service checkout points are required to be
consider in order to effectively provide ease to customers. Along with this, TESCO is required to
invest significant ration of fund in the segment of energy efficiency projects as to effectively
accomplish their long term objective which is related to reduction in carbon footprint. In context
with this, TESCO must consider technological evaluation of industry along with speed that may
disrupt industry. As fast speed will allow company to gain profitability in short span of time. In
addition with this, there are certain technological aspects which is required to be effectively
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considered by TESCO that are, recent technological developments that has been adopted by
TESCO plc competitors, rate of technological diffusion, impact on cost stricture in retail industry
and technology's impact on product offering. Thus, by considering all these technological aspects
organisation can effectively able to perform their operations in well effective way.
Environmental Factor
As TESCO plc operate their functions in different geographical segment, there is a
requirement for company to effectively consider all environmental standards that are prevailing
in a particular region that may impact of organisation profitability. In addition within this, each
and every nation have their separate set of nation and states environmental laws and liability
laws which is required to be consider as to effectively perform operations in best effective
manner. Along with this, most of the European countries provide healthy tax breaks to
organisations those who operate their activities and functions in renewable segment. Thus, it
become essential for TSCO Plc to to effectively evaluate market segment before making an entry
in new market sector as to effectively operate functions as per accordance to environmental
measure. There are numerous factors which are required to be consider by TESCO in terms with
environmental segment that are, laws that are related to regulating environment pollution,
attitude towards and support for renewable energy, waste management in consumer service
sector, climate change, recycling, endangered species, attitude toward' Green” or ecological
products, air and water pollution regulations in retail industry and more. With the effective
consideration of all these environmental measures TESCO can effectively able to perform their
operations within environmental measure and can offer satisfactory products and services to
customers in best effective manner.
Legal Factor
There are numerous form of government policies and legislations that can lead towards
impacting upon TESCO overall performance. Some of the certain measures include the Food
Retailing Commission ( FRC) which a Code of Practice within which government restrain
organisation to change prices without offering prior notice. Thus, in order to take numerous
opportunities from these legal factors TESCO offer different types of promotional offers within
which they offer low prices products. As TESCO operate their functions in many countries thus,
they are require to analyse framework of each and every region institutional segments as all
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countries are not having robust legal structure. Thus, in order to protect intellectual property
rights it is essential for TESCO to carefully evaluate legal factors. Some of that are,
discrimination law, data protection, anti-trust laws in retail industry and in within overall
country, employment law, copyright, intellectual property law and patent and customer
protection and e-commerce. By considering all these factors TESCO can effectively able to
perform their functions with legal abiding and can gain more developmental opportunities.
Thus, by considering all these factors in best effective manner TESCO can effectively
able to perform their operations in best effective measures. In addition with this, with the critical
evaluation of all these factors company can effectively able to perform their operations in best
effective manner can can further find opportunities to gain long term advancements from them.
2. The internal organisation’s responses to these factors
Survival of a business is mainly depend on their strengths along with on their adaptability
in an environment. In context with internal strengths it lead towards representing internal
environment. In mainly include physical , technological, financial and human resources, in this
financial resources depicts an organisation finanacial strengths along with their fund allocation
activities. Within this it is essential for an organisation to evalaute number of fund resources as
to increase organisation financial holding capabilities. Along with this, physical resources
include building, machinery, plant and more that can be converted into outputs. Further with
human resources there is a representation of manpower that hold specialisation of knowledge
that have best effective capabilities to perform business activities. In context with technical
resources it include the manner in which innovate tools and techniques can be use as to conduct
the process of manufacturing in best effective manner Internal environment consists of
controllable factors that can be modified according to needs of the external environment. Thus,
there is a requirement to effectively consider both internal and external environmental factors as
with the help of this effective opportunities can be ascertained with the help of which
organisation can effectively able to conduct their business operations in best effective manner.
Internal and external factors have a huge effect on the success or failure of a business.
Business owners can’t control external factors, but they must be able to anticipate and adjust to
these factors to keep their organizations on track. However, business owners and leaders do have
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significant influence over internal factors that affect a business, and how they handle these
internal factors will have a major impact on the future of their companies.
Strength:
 Political factor is a strength which affect the internal business. some government policies
that create a good environment if the organization, which directly impact the business.
 As TESCO is using the latest technology, its a strength of the company, as using the
latest automated processor, online payment technology, online shopping etc.
 Change in law can also be a good thing to the organization, as company adopts the
changes and it gives the positive effect on the organisation as well as on the employees.
Like change employment law, Labour law, consumer law etc. which is beneficial for both
Weakness:
 Political factor also affect the internal business. some government rules and regulations,
which directly impact the business (Sousa and Rocha, 2019). For example, increase &
decrease in tax rates, political stability.
 Technology can also affect the internal environment, as if the company is working with
its old backward technology.
 Social factor is a majorly which effect internal environment, which includes believes,
systems, costume, practices, traditions, such as the culture does not allowed the women
to work as girls are so creative and have ability to work, conflicts within the organization
Threat:
 Political factor creates the threat in the company as it is risky to judge the what the
government give the decision as it is in favour or in against.
 Technology can create the risk for the organization,if the company will not adopt the
latest technology.
 The complex threat is economic factor, as the organization TESCO, faces some problems
& risks such as, fluctuation of cost of goods and services sold by the business, deflation,
recession, change in fiscal policies, banking policies, decrease in demand.
 Threat of changing laws Such as, employment law, Labour law, consumer law, copyright
law, health & safety law, import and export law.
Opportunity:
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 As change in technology, the company TESCO can take the advantage of new technology
by adopting it. By considering the online market. Such as, internet, automated process,
FRID technology, online payment apps.
 Economical factor creates the opportunities for the organization . In context of TESCO
the opportunities are :increase in the demand and the utility, money circulation,
economic growth , economic development, income and employment, inflation, increase
in demand.
By considering the above all factor, it proves that the external factor also affect the
internal environment of the organisation (Gaviria-Marin, Merigó and Baier-Fuentes, 2019). As
TESCO company creates the strength, weakness, opportunity, threat of external factor affecting
the business directly or indirectly. As all factor has both effect, positive as well as negative
effect in organisation. Its on the company how, they deals with all factors by creating their
strength or by their weakness. By analysing all these factors in best effective manner
organisation can perform their activities and functions in best effective manner. It will
simultaneously lead company towards gaining more productivity and profitability. Further with
the help of analysing all these factors company can effectively conduct their daily basis
operations that further help them to effectively ensure their long term sustainability.
3. An assessment of the strategic solutions used by various organisation
Strategic business unit in a single business or interrelated business unit. It is a business
organisation is a well managed division which operates itself. It is a departmental unit with their
own mission, objectives and vision, which is planned and organised separately from different
business unit of the organisation. It is a unit specially created to target specific market, customers
which need expert in production as well as in management. There are three levels where at the
top of the pyramid Corporate headquarter is located, on the middle level division clustered is
situated and at the bottom strategic business unit (SBU) is located. In context of TESCO; vision
and mission statement of the company is stated below:
Missions of TESCO: Mission statement of the company is to make what matters the
most and is better together.
Visions of TESCO: To become the most valued business organisation in the world and
the consumers we serve are loyal and committed towards them.
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Each and every business organisation must adopt an effective strategy which is required
by large number of organisation in order to gain competitive advantages. Strategies adopted by
the company largely depends upon the strengths and weakness of the product's offered by
organisation. Best strategies used by companies helps in developing market share and to gain
more profit at the marketplace. By attracting large number of customers, company offer
attractive pricing strategies which as a result aid them to gain competitive advantages at the
marketplace. For this company adopts porter's generic strategies which are as follows:
Cost leadership strategy: In this strategy, company manufacture products and services at
very low cost. It is the strategy commonly used by organisations which produce goods similar to
each other, or substitute products. These are the goods continuously purchased by large number
of customers across the whole wide world. With the help of lowest pricing strategy company
wants to attract large number of customers, which as a result helps in increasing profitability at
the marketplace. In the present context of TESCO, managers of the company provide goods and
services at very low cost so that they can retain their customers, as well as to attract large number
of customer.
Cost focus: Companies who adopt this strategy takes huge risk at the marketplace. Along
with this, it requires to focus on a limited market segment and examine the needs of specific
customers. Some of the features add to the existing products which only attracts niche market
people and not broader market (Sousa and Rocha, 2019). In the context of TESCO, managers
develop some of the products which is only developed by for a specific segment. For this,
management team of the company need to target their potential customers as they produce goods
only for those who fix in this segmented part. Thus, it become essential for TESCO to offer their
products and services in a cost effective manner. This will aid company to effectively satisfy
needs and demands of customers in best effective manner and can further ensure long term
sustainability of organisation. By considering this company can further facilitate effective
amount of profitability and productivity.
Differentiation focus: It is the strategy which is used by companies with the aim of
approaching narrow niche market. In this case, company largely depends upon the spending
habit of customers who belongs to small group with the motive of earning profits. For a
successful differentiation strategy, company need to develop strong brand loyalty and attract
customers by for enhancing large number of customers. In context of TESCO, company
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