Comprehensive Company Appraisal Report: Tesco Limited Analysis

This report provides a detailed company appraisal of Tesco Limited, a major UK-based multinational grocery retailer. The analysis begins with an introduction to Tesco, its history, organizational structure, mission, vision, and objectives. The report then delves into the external environment using PESTLE analysis, examining political, economic, social, technological, legal, and environmental factors impacting Tesco. A SWOT analysis is also performed to assess Tesco's internal strengths and weaknesses, as well as external opportunities and threats. Furthermore, the report utilizes Porter's Five Forces model to analyze the competitive landscape. The report also examines the company's micro and macro economic aspects, VRIO analysis, and stakeholder mapping. The report concludes with an overview of the company's strategic positioning and future outlook, based on the analyses presented.

Company appraisal

Table of Contents
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................6
TASK 1......................................................................................................................................6
TASK 2......................................................................................................................................8
CONCLUSION........................................................................................................................11
REFERENCES.........................................................................................................................12
Books and Journals:.............................................................................................................12

INTRODUCTION
This report will discuss the company appraisal of Tesco Limited which is a UK-based
organisation. Tesco limited is found to be a British multinational grocery organisation that
runs its business not only in the United Kingdom but also in many other countries (Callahan,
Palia, and Talley 2018). It found that Tesco is the third largest retailer in the world in terms of
gross revenues. The founder of Tesco limited is Jack Cohen who founded the organisation in
1919, in London, England. The main headquarter of the company is situated in Welwyn
Garden City, Hertfordshire, England. They are dealing and grocery products and currently
expanding their products and services portfolio. The major competitors of the company are
Sainsbury's, Unilever, Asda, etc. The unique selling point of Tesco is that they are the most
prominent retailer in the world.
It is important to understand the different types of organisations because the legal
structures are variant according to their type. Different types of the organisation include
public companies, voluntary, a private companies, public sector and charity. These are the
important organisation types which are different from the purpose as well as their legal
structures. Public companies are the ones which have the main purpose to earn profits with
the inclusion of society (Karimi, 2019). The control of public companies is always in the
hand of the government. Private companies have a separate legal entity and there is no
interference from the government. Private companies can be formed as sole proprietorships,
partnerships, etc. Voluntary organisations are formed with the will of an individual. That
means the person who is working in the voluntary organisation has a well to work for the
society. No person can be appointed without their consent. Charity organisations are formed
for the particular purpose of social welfare. There are many Organisations in the form of
charity running in the UK.
Tesco is found to be a public limited organisation. They are able to advertise their
shares to the general public through the stock exchange. The structure of the organisation is
hierarchical. Tesco is an example of a decentralized structure in the UK supermarket chain
that has a tall structure which includes multiple layers within the hierarchy. It is also
identified that Tesco's structure is also based on functions. They're focusing on the division of
positions and obligations in order to ensure the work should be effectively performed and
smoothly done.It is important for the organisation they have a mission and vision statement
because it helps to guide the organisation in its future actions. This report will discuss the

operations related to Tesco and that's why it is crucial to know the vision and mission
statement of Tesco.
The vision statement of Tesco is to be the most highly valued business by the
customers we serve, by the community where we operate; by our committed colleagues and
loyal shareholders. The mission statement of Tesco is we make what matters better together.
The aim of Tesco PLC is to become a leading retail supermarket in the world that provided
excellent quality service to customers including the entire product portfolio such as food and
clothes with a low-cost strategy. Characters of the company are to increase profits by
increasing sales and for that purpose, they are focused on providing better service of care to
the customers so that they will stay forever in the company (Ahmad and et.al,. 2018). The
company is also able to new customers from the competitors which will definitely increase
their profits. Their objectives are measurable because they always keep track of the volume
of sales.
Every organisation has a responsibility towards it and that's why it is a similar case
with Tesco. Tesco has a responsibility to reduce carbon dioxide gas in order to overcome the
challenge of global warming. It is the agenda of the United Kingdom that they will get a
carbon-free country by 2050. This is the main reason that government makes pressure on
organisations like Tesco to do something for achieving this goal. In addition to this, earlier
there was an impact of Brexit but currently, it has not had as much impact on the
organisation (Bai and Murphy, 2022). One of the important pressures felt by the organisation
during the last 2 years was COVID-19. It was an external factor which cannot be controlled
by the organisation and provided a negative impact on the organisation's operations. All the
work was stopped for the purpose of stopping the propagation of the virus in the world. That's
why company faces many negative impacts, especially on their sales and profits.
Tesco is related to the retail industry which is found a very big contribution in the
UK. It is identified that the retail industries are an integral part of the economy of the United
Kingdom as it comprises 5.2% of the gross domestic product in 2020. From this figure, we
can say that retail industries play an important role in the UK. It is very important to
understand that post-COVID-19 challenges provide a negative impact on the organisation
because it becomes very difficult for the company to come back again in the market. There
are many economic and environmental challenges found after the pandemic which become
very difficult for organisations to cope with that (Arrebola Ayala, 2019). It is found due to the

pandemic health and safety become more important in the organisation and in also create
extra expenses in the workplace. The economic situation of organisations becomes bad
because of long and other restrictions made by the government. It is also found that many
environmental challenges are faced by the organisation because it becomes necessary at that
time to make sure about the air pollution as it is one of the best sources to spread of the virus
in the environment. Due to the pandemic situation, Tesco faces a tough challenge in the
supply chain because they are unable to cope with that.
Stakeholders are the important person which have an interest in the organisation.
They're responsible for many tasks and decisions. That's why it is crucial for a company to
analyse the stakeholder and should perform a stakeholder mapping. It found that the external
stakeholders of Tesco include creditors, customers, suppliers, competitors, government and
the local community. On the other hand, the internal stakeholders include employees, board
members, executive committee, managers and shareholders. It is important for the
organisation to perform stakeholder analysis and mapping which helps them to identify the
needs and wants of every stakeholder (MM, and Annisa 2020). With the help of a
stakeholder analysis framework, an organisation is able to prioritise the stakeholders.

High power, highly interested people: In the first grid, it includes all stakeholders
who fully engage and that are why it is important to do efforts for satisfying them.
High power, less interested people: In the second grid, yes it is important for the
organisation to satisfy them but not so many efforts are required.
Low power, highly interested people: In the third grid, it is identified that the
stakeholders have high interest but their control is very less (Alatabani, 2020). So, in this
case, it becomes necessary for the organisation to inform these people.
Low power, less interested people: It is necessary for companies they should do
excessive communication because sometimes it becomes boring for them.
With the help of stakeholder mapping, an organisation is able to influence the
stakeholders which are very important. That's why it is necessary for Tesco to apply
stakeholder mapping for evaluating the needs and influence of stakeholders.
In the digital world, digitization is continuously increasing which is the integration of
technology that focuses on the transformation of organisational operational ways. It found

that business digitisation is able to reduce operating cost and improves efficiency. It is
identified that digitalisation is providing an impact on the business structure. Increased
digitalisation provides an influence on business activities (Arma, 2020). Its influence on the
innovation of the company and also increased responsiveness.
MAIN BODY
TASK 1
Microeconomics: It is a branch of economics that studies the behaviour of an
individual, households, and firms in making decisions regarding the allocation of limited
resources
Macroeconomics: While this branch of economics deals with the performance,
structure, behaviour, and decision-making of an economy as a whole.
Tesco competes with a wide variety of retailers and faces competition from UK
retailers and from the overseas market. Since they are opening new stores, so they have to
increase production and this will lead to a reduction in average cost per unit (TIRUNEH,
2018). This gives TESCO a huge advantage over other small companies.
VRIO analysis: This analysis is used for assessing and evaluating the resources of a
company and determining the strategic advantage and competencies.
 Valuable: Competences that are precious help Tesco in neutralizing the pitfalls from
the internal and external environment. These capabilities allow an organization to
grow, develop, and expand further.
 Rare: International presence is the rare for Tesco. Companies that have a global
presence have a very big consumer base and can earn revenue through multiple
regions. This gives the company not only higher financial strength but also exposure
to various cultures.
 Inimitable: A company whose products cannot be imitated makes an entry barrier for
other firms to enter in the same segment.
 Organization: Financial strength, human resources, employee training, production
capacity, etc. these are some of the resources and strengths of TESCO which cannot
be used by other competing players in the industry.

Pestle analysis for Tesco: PESTLE Analysis helps us in examining the various
external factors like political, economic, social, and technological (PEST) which affects a
company’s business along with legal & environmental factors.
 Political factor: As TESCO functions in different countries, so it is necessary for the
company to keep an eye on changing political environment; in all the countries it
operates in, a crucial point is political stability.
 Economic factor: Tesco has a wide range of products and monetary factors play a
crucial role in the utilization of this wide range of products. As company operates in
many countries, so a company must have an idea of those countries’ economic
changes since it will affect its revenue, sales, distribution, and profit.
 Social factor: Due to social influence people tends to buy products suggested by
influencers, so TESCO has shifted its attitude towards promoting organic products.
 Technological factor: If a company wants to be in the trend so it needs to adapt
changing technology and Tesco has done well in this segment by providing online
shopping options for its consumers.
 Legal factor: Tesco has to face legal action for accounting fraud and misleading the
investors; at last, they agreed to pay GBP 12 million to settle the legal action.
 Environment factor: Companies have to face pressure from govt. on environmental
issues (Ramaekers, and et.al,. 2019). Tesco has decided that they will use renewable
sources to generate 100% of its electricity by 2030.
SWOT analysis:
Strengths Weaknesses
 Biggest grocery retailer in the UK,
Superior technology usage.
 Low-cost strategy, Exploitative
labour, Negative publicity
Opportunities Threats
 One Hour Delivery, Strategic
alliances with other brands, Cashless
stores.
 Brexit Referendum, Competition
with supermarket giants, rising costs
Porter's five forces
 Threat of New Entrants: threat for new entrants is comparatively low for TESCO
because it is already an established giant in its segment.

 Threat of substitutes: This threat is considerably low for the grocery retail market, in
order to meet the demand & supply of groceries and other food products.
 Intensity of competitive Rivalry: Tesco faces direct competition from its competitors,
including Asda, Sainsbury’s, Morrison’s, and Waitrose, which are competing with
each other.
 Bargaining power of buyers: For daily necessity goods buyers don’t enjoy bargaining
power because prices don’t change easily with different retail stores.
 Bargaining power of suppliers: Suppliers have comparatively less bargaining power
when we talk about the products offered by Tesco.
It is necessary to understand that there are many macro environmental factors which
provide an impact on the businesses (Sereke, 2018). There are many microeconomic factors
which include interest rate, inflation, gross domestic product, national income, employment,
economic growth rate, etc. For example national income is found to be the combined amount
of money with generated by the country in its economy. It provides an impact on the
organisation because the national income shows the capacity of individual pay for a product
and service.
TASK 2
a) It is important to note that leadership is playing a very important role in the organisation's
success and growth. Leadership is defined as the ability of individuals or groups of
individuals that provide influence on the members of the organisation. It is identified that
leadership in Tesco is important because it is one of the key elements of success (Kiradoo,
and et.al., 2021). Tesco is able to modify the working style of employees with the help of
their leadership qualities. Every organisation needs focused and deliberate leadership
development so that the leaders are able to inspire the people of the company towards
productivity. Leadership is not an easy task for the organisation because there are many
challenges posed to leadership which need to be overcome by the company. Some important
challenges are mentioned below:
Honing effectiveness: This is necessary to understand for the organisation that they should
focus on developing the important skills which help to do effective work. But the
development of that necessary skill is not an easy task. It is not necessary that every person is
good at each skill. Some important skills which are necessary to develop by the organisation
include time management, strategic thinking, prioritizing and decision making.

Inspiring others: it is important to know that leadership becomes very difficult for a leader to
inspire others because every person has their different thoughts and opinions which are not
necessary to modify by the guidance of leaders. So that's why it becomes difficult for leaders
to inspire other people.
Developing employees: This is necessary to understand that developing employees is not an
easy task for leaders because it is the responsibility of leaders to develop all the skills and
knowledge in the employees which makes them productive for the organisation.
Leading a team: In today's business environment, the team of an organisation is consists of a
diverse nature (Rachmawati, Kania and Juhana, 2018). That means the member of a team is
belonging to different cultures and backgrounds. This is the main reason that it becomes very
difficult for a leader to lead a team. Due to the differences in cultures and backgrounds of
people sometimes a leader is unable to understand their behaviour.
It is very important to note that global business models should use in the organisation
because Tesco is the large organisation that not only in their business in UK but also run their
business in international market. It is important to understand by an organisation should
understand the function of control (Govender, Thopil and Inglesi-Lotz, 2019). Control is an
important function in the organisation that is necessary for the purpose of effective
organizational performance. With the help of this function, companies are able to understand
the mistakes which they performed in the organisation environment. Every organisation
wants to achieve an effective organisational performance which can be achieved only when
they are controlling each stage. Controlling is not only the function of checking but also
includes the identification of mistakes made by the company. It is not only limited to the
identification and checking of the problem but also includes the identification of solutions in
order to achieve the organisational goals and objectives. It facilitates effective organisational
performance.
It is also important for a company to understand the importance of strategic
management (Alizadeh and et.al., 2022). Strategic management is a process where the
organisation is strategically managing all the business activities in order to achieve the
organisational goals. Strategic management can be better understood with the help of an
example. Strategic management is an ongoing process which includes planning, monitoring
and analysis of the organisational needs. For example, Tesco wants to change its resources.
For that purpose, they need to use strategic management and which they will plan what

resources they will require. In addition to this, they also need to perform all the functions of
strategic management which include monitoring as well as analysis of necessity. So that's
why it is suggested to the organisation to focus on the areas of improvement and make a
strategy to deal with them.
b) Tesco is found to be a large organisation which has a responsibility towards
society. Tesco is a UK-based organisation and that's why it becomes necessary for them to
contribute to the agenda of 2050 where every organisation needs to focus and reducing
carbon in the environment (Alatrsh, 2020). It becomes a responsibility of Tesco and that's
why they are currently focusing on the identification of the important ways which help to
reduce the emission of carbon in the environment. For example, Tesco is focusing on
reducing the use of plastic which helps to make the environment healthy and also able to
fulfil corporate social responsibility.
With the help of such types of activities, the organisation is able to be responsible for
the global citizen, global issues and ethical decision-making (Hayati and Sari, 2019). For that
purpose, the company need to focus on self-awareness, sensitivity to diversity in culture and
openness.
It is found that organisation, environment and management are interrelated (Abdi and
Kembu, 2022). For example, Tesco is run its business in the market which is part of the
business environment and it becomes necessary for them to manage all the functions in order
to run their business in a business environment.
CONCLUSION
It can be concluded from the above discussion that it is necessary for an organisation
to analyse the external and internal environment. It is analysed that environment can be
analysed with the help of important models such as SWOT, Pestel, Porter’s five forces
model, etc. this report included the micro and macro environment analysis. In addition to this,
it also discussed the importance of leadership and the challenges related to the leadership.

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