Competitive Strategy Analysis of Tesco: A Business Report

This report offers a comprehensive analysis of Tesco's competitive strategy. It begins with an introduction to the company, followed by a detailed SWOT analysis, examining Tesco's strengths, weaknesses, opportunities, and threats. The report then delves into a PESTLE analysis, evaluating the political, economic, social, technological, environmental, and legal factors impacting Tesco's business. Finally, the report applies Porter's Five Forces framework to assess the competitive intensity within the industry, considering the threats of new entrants, the power of suppliers and buyers, and the threat of substitutes. The report concludes with a summary of key findings and references used.

Competitive Strategy
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
SWOT Analysis...........................................................................................................................3
Pestle analysis of TESCO............................................................................................................4
Five forces.......................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
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INTRODUCTION
Tesco, is a British multinational groceries and general merchandise retailer with
headquarters in Welwyn Garden City, Hertfordshire, England, United Kingdom. Company has
over 6800 stores in 14 countries and apart from Europe they are also reputed in Asian countries.
This report covers issues such as Swot analysis, Pestle Analysis and porter's five force analysis
of the company.
MAIN BODY
SWOT Analysis
Strength-
Tesco has earned the position of becoming the no. one retailer and supermarket chain in
UK. Revenue and sales of the company is higher as compared to the competitors of the company.
The operating profit of the company has increased from a margin of 28 per cent (David and
David, 2019). Company has 27 per cent share in the market which gives them the power to
dominate others. Apart from UK they have also gained popularity in the market of Ireland.
Company has different forms of stores for different type of people such as Tesco Extra, Tesco
Metro, Tesco Express and Tesco Superstores. Tesco has employed around 7,43,000 people in the
market which has helped them to gain largest opportunity maker in whole Europe.
Weakness-
Company had to close their operations from the markets of Japan and America as the
company was not able to maintain the export of the company. Apart from that they also faced
some issues which affected their image and for which they had to pay some fines as they were
accused of not maintaining their accounts and misrepresenting their profits. The prices of shares
of company reduced from 9 per cent because of the reduction in the operating profits of the
company. After Brexit their performance has been worst in the market. Company has huge
amount of debts and credit pending in the market. The cost strategy which is used by the
company is the reason behind the reduction in their level of profits.
Opportunities-
Company has the opportunity to made their presence in the online sector and start
offering the services of home delivery (Hu, Qiu and Liang, 2018). Tesco has many stores in
developing countries but if they expand their operations into emerging countries such as Turkey,
Indonesia it can be profitable for the company. In some markets the performance of the company
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has not been good and to improve their market in those areas the company has the scope to come
into joint venture. As the companies which are dealing in those areas can help Tesco to improve
their revenues. If company comes into a partnership with other companies who operates on a
large scale then they will be able to gain more power and attract more customers.
Threats-
The impact of Brexit has affected the growth and profitability of the company and has
become a threat for the company. Tesco has faced a case of offering fake brand products and
they marketed those products under wood side farms for which they faced major lawsuit in the
year 2017. The company also faced a threat on social media when they launched their Christmas
ad which came to people as disrespecting their culture which affected their image in the market.
Pestle analysis of TESCO
A pestle analysis is based on the framework or tool that mainly used to monitor or analyse
the micro-environment factors that may have significantly impacts on the business performance
and efficiency of TESCO.
Political factor: Since, TESCO is based on the retailing enterprise that operates in global world.
It is major political factor influence the overall performance of TESCO. It may include stability
of nation, increase tax rats and different acts of legislation. Currently, it is still ongoing financial
instability occurs in global world (Godwin, Kalapana and Valli, 2013). In this way, Governments
always encouraging the retailer to provide new job opportunities for domestic population. On the
other hand, Tesco plays important role for increasing employment opportunities which turn to
increase demand of goods and services.
Economic Factor: It is also important factor in Tesco that they are likely to focus on profit rate,
price and other type of demands. The organization should aware about the policies change such
as taxation which affect on financial accessibility. Currently, there is still dependent in market
share of around 30-40%. For Example- Tesco has used the diversification strategy for success of
businesses. Moreover, it also declined the disposable income levels.
Social factor: there are variety of social changes occurs in Tesco, which is mainly indicating
consumer that have moved towards bulk shopping. The demand of service influenced the people
towards goods. In fact, Tesco also used the better idea for adopting accommodation of organic
items in global marketplace because many consumer concerns about health issues.
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Technological Factor: Modern technology have been increased the opportunities for Tesco
where they provide the better online shopping experience of consumer and give convenience to
check availability item through official website (Nandonde, 2019). In this way, Tesco has
invested a large amount of money on energy conservation project to fulfil long term goal and
objective. The advancement of new technology always encouraged the people where they can
used different platform such as social media, website, Facebook and twitter. These are different
types of tool used by Tesco for promoting their product and services in global marketplace.
Environmental Factor: It has increased the pressure for Tesco due to environmental issues so
that it requires for adopting operations for providing benefits. The organization always
committed towards reducing carbon level 50% in 2020. In this way, it automatically reducing the
wastage of resources and also increasing social conscience in terms of consumers.
Legal factor: There are various type of government regulations and policies directly effects on
the overall performance of Tesco. For Example- Tesco must be used code of practice related
food retailing commission that introduced in global world. It helps for changing the price of
products without demanding payment from different suppliers. It has to be considered the
policies which help for providing the price reduction to customer on item, fuel. Accordingly,
customers are spending a lot of time on the physical grocery shops. Although, it also performed
different type of promotion activities where reduce the prices and give better discounts.
Five forces
Porter's five forces is an evaluation tool that can be used to describe the structure of the
industry as well as competition level within that industry. An industry that have low barriers to
take entry by having few suppliers and buyers but various alternative goods as well as
competitors that can be seen very competitive and due to its low profitability, funds not so
attractive (Mahat, 2019). This kind of tools is considered as vital within the firm's strategy as it
can reveal that it can be more powerful regarding a specified industry.
Threats of the new entrants- As per this factor it is determines that how it can be difficult or easy
to take entry within the new industry. If the industries can be considered as the profitable and
also there are some barriers to take entry. As when more number of the firms like Tesco compete
regarding the same profit, share ,it is very crucial for current firms to create high barriers to take
entry so that it can deter the new entries.
Power of the suppliers.
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As per this power it enables the suppliers to sell the raw materials into the higher prices or low
quality goods to the purchasers. It can directly impact the buying organization's profits, as an
outcome it affects the numbers of the suppliers as per how unique these kinds of the inputs are
or also how much it cost for the Tesco to switch for the another organization. As if there are
fewer suppliers to the Tesco than the firm more rely on their suppliers. (Ge and Li, 2019)
Power of consumers
It can be effected that how many there are consumers or buyers within a firm as well as how
significant they are. It also concerns about that how would cost a firm to find new consumer or
markets regarding its output. A small buyer means that they have the more power to negotiate
regarding lower prices as also for the better deals.
Threats regarding substitutes
It is threatening when the people get easily new alternative goods with much less price and also
with the better quality, also here purchasers able to switch from one goods to the another with
very less cost such as they ca able to switch coffee to tea.
CONCLUSION
From the above report it had been concluded that A pestle analysis tool significantly
impacts efficiency of TESCO. Such as Political factor: Influence the overall performance
Governments provide new job opportunities increasing employment opportunities Economic
Factors as taxation which affects on financial accessibility, Social factor such as demand of
service influenced the people towards goods. Technological Factor such as it provide the better
online shopping experience as well as new technology always encouraged the people for
promoting their product and services online with the help of the Facebook, WhatsApp, you tube
and may more. Furthermore, it also focused on the Porter's five forces reveal Threats of the new
entrants-Power of the suppliers as well as threats regarding substitutes and at last the swot
analysis of the Tesco which determines its weakness and strength as well as challenges and
opportunities of the firm.
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REFERENCES
Book and Journals
David, F.R. and David, F.R., 2019. Strategic management: A competitive advantage approach,
concepts and cases. Pearson.
Ge, L. and Li, C., 2019, April. Analysis of competitive Power of Chinese Sports Apparel Brand
based on Porter's five Force Model. In Proceedings of the 2019 3rd International
Conference on Information System and Data Mining (pp. 54-58). ACM.
Godwin, B.J., Kalapana, D. and Valli, S., 2013. Foreign Direct Investment In Indian Retail
Sector-Pestle & Swot Analyses. International Journal of Management, IT and
Engineering. 3(3). p.265.
Hu, N., Qiu, F. and Liang, P., 2018. Competitive Strategy and Earning Persistence: Evidence
from Large Sample based on Natural Language Processing and Deep Learning. Available
at SSRN 3281448.
Mahat, M., 2019. The competitive forces that shape Australian medical education: An industry
analysis using Porter’s Five Forces Framework. International Journal of Educational
Management, 33(5), pp.1082-1093.
Nandonde, F.A., 2019. A PESTLE analysis of international retailing in the East African
Community. Global Business and Organizational Excellence. 38(4). pp.54-61.
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