Tesco's IT and Business Strategy: A Competitive Environment Analysis

This report provides a comprehensive analysis of Tesco's IT management and business strategy. It begins with an introduction to Tesco's background, business strategy (cost leadership), and product offerings, including its financial services. A PEST analysis is conducted to evaluate the external environment, considering political, economic, social, and technological factors. The report then analyzes the competitive environment using Porter's Five Forces model, assessing the threats and opportunities. Two primary activities within Porter's value chain (inbound logistics and operations) are discussed, along with support activities such as technology development. The report reflects on how Tesco deploys IT and uses innovative ideas to improve business processes, and concludes with a summary of the findings.

TESCO- MANAGING
INFORMATION AND
TECHNOLOGY

Table of Contents
INTRODUCTION...........................................................................................................................3
Analyse the competitive environment.........................................................................................6
Discussion on two primary and support activities in Porter's value chain..................................7
Understanding gained by use of these activities. Summarise and reflect how firm deploy IT
and use innovative ideas to improve business processes............................................................9
CONCLUSION..............................................................................................................................10
REFERENCES .............................................................................................................................11

INTRODUCTION
COMPANY BACKGROUND
Information technology management is becoming integral part of every organization and
it also inclusive of managerial function as staffing, organizing, budgeting and control (Managing
Information and Technology, 2018.). The main purpose of IT management is to become more
computerize to generate better value with use of technical advancement.
Thus, present report is based on to discuss the role of IT play in Tesco. It is third largest
retail chain in the world. It was founded in 1919 by Jack Cohen. The company is public traded
and listed on London Stock Exchange. Furthermore, Tesco has mainly two main food brands as
its finest and everyday value and each sell over £1 billion per year. As per the report of 2017,
the quoted firm enjoys the tremendous strength of human capital with more than 476,000 and it
has reported the net income of £(54) million (2017). Thus, operating income of the firm till 2017
is £1,280 million and 6.553 shops are located in united kingdom.
BUSINESS STRATEGY OF TESCO-
The business strategy of Tesco can be defined as cost leadership and this entity has motto
as “Every Little Helps”. The business strategy of quoted firm is to satisfy the customers with
help of providing quality food and products. Therefore, the firm is focusing over to adopt those
strategies that revolves around the satisfaction of customer's. This firm put major focus over
having improvement and enhancement in brand equity and loyalty of customer's (Berawi, 2018).
Currently, the firm is taking various initiatives to adopt the technical advancement so that better
innovation can be done and also it aids to operations for ensuring high production with help of
economies of scale.
The entity work as to provide better in store experience to customer with help of highly
attractive interior and by providing good customer services. Thus, firm also takes various
initiative to promoting and marketing the product and services with help of social media tools as
Facebook, Twitter, Instagram etc. Moreover, short term strategy of Tesco is to regain the trust of
stakeholders and customer loyalty after encountered with candled in 29015. In order to regain the
trust the firm has majorly focused over availability, service and selectivity on price. This entity
was only the first retailer that has introduce 24 hour shopping experience and today it has many
click and collected points across the country.
PRODUCTS AND SERVICES OF TESCO-

Tesco is one of the largest British multinational groceries and to attract the range of
social services the quoted firm is taking initiatives to provide low cost goods at premium quality.
Thus, this firm has diversified into the number of areas such as retailing of books, clothing, toys,
furniture, software, telecoms and financial services (Darnton and Giacoletto, 2018.). Currently,
the firm has launches healthy food ranges as “Tesco light choices” and “Tesco eat live enjoy”. In
this, the products will be inclusive of bakery, ready meals and yoghurt. These products are
mainly for the people who are trying to loose weight and for customers who wants to make the
healthier choices with balanced diet.
Thus, Tesco also offers the financial services to their customers with having 50:50 joint
venture with the Royal bank of Scotland. The quoted firm is world largest multi-nation grocery
and also a general merchandise retailer and that has headquartered in England. This is firm that
provides its customers the transparent, cost effective and simple services ( Ifrishammar and et.al.,
2018). In addition to it, the Tesco band offers the range of insurance, credit card, savings, loan
and travel products. Therefore, this entity has more than 7 million accounts of customers and
also having more than 12% of credit card spending. Thus, the main aim of Tesco is to provide
the full-fledged retain bank with the aim of providing its customers the transparent, cost effective
and simple banking services and also provides the chance to earn loyalty incentives. Therefore,
the firm is taking various initiatives to introduce the technological advantage that aids to full fill
the vision of Tesco Bank. By the use of better technical tools firm can able grow continuously.
PEST analysis-
This is one of strategic tool that aids to make evaluation in external environment for the
business. Thus, PEST is inclusive of factors as political, economical, social and technological
and this all affects the retail chain in huge aspect. These as are-
Political- Tesco is retailing industry that operates its business worldwide, number of global
political factors greatly influence the performance of entity. These is inclusive of tax rates, acts
of legislation and stability of country that operates their business functions. In addition to it,
Tesco plays an essential role order to creates the employment opportunities. Therefore, it also
enhance the demand for its product and services. The changes in political condition also affects
the performance of enterprise. This all leads to affects the working enterprise in huge context.
Changes in political condition mujst be understand so that firm can operate their working
smoothly.

Economical- The factors as demand, profits, prices and leverage cost all are the most important
concern for Tesco. In addition of it, the firm must be aware changes in policies, taxation and all
other factors could affect the accessibility of finance. Thus, economical factors are totally outside
the control of the company. Due to it, Tesco can be badly affected by the slowdown in UK food
market and these are also exposed to market concentration risk. Therefore, decline in disposable
level of incomes and household incomes the firm has to shift their focus over advertising its
value brand other than more luxurious item.
Social factors- The shopping trends of consumers are also constantly changing over time. Thus,
customers in British move towards the one time shopping and bulk shopping and this is all
happening due to variety of social changes (Veszelszki, 2018). Furthermore, quoted firm need to
put major consideration over changing behaviour and demand for organic food. Currently, the
customers are becoming more aware about the changes in food and this all also accommodating
the demand of food products. In order to cope up with it, it is essential to understyand the need
and wants of customer's. This aids to firm in order to deal with the changes that has been occured
in enterprise.
Technological factors- The technical advancement has brought number of opportunities for
Tesco. with the use of modern advancement tools the customer and company both will be
beneficial and it also aids in raising satisfaction of customers. In 2015, the horse-meat scandal
and all other issues has affected the reputation of firm. With the advent of technical advancement
Tesco can able to regain the trust of customers. By the use of technical tool the entity is able to
deal with innovative procedure and this factors also aids to improve the brand image.
Analyse the competitive environment
To analyses the competitive environment the model of porter five forces can be used. It is
tools that aids to identify the number of factors that can affect profitability and productivity of
Tesco. Thus, these as are-
 Threat of new entrants- The threat of substitute in retail market is very low for food
items and medium to high for non food items (Simpson and Foltz, 2018). Thus, the firm
who takes entry in retail market brings innovations and new technical advancement puts
the pressure on Tesco plc. Due to it, the firm has to face various issues as lower pricing
strategy, reduction in cost and provides new value proposition to customers. The quoted
firm can able to face all these challenges with help of innovating new product and

services and to give customers to buy product and services of Tesco plc. By spending
money on the research and development the firm can able to gain the dynamic position in
market.
 Bargaining power of suppliers- Raw material in retail sector buys from numerous
suppliers. Thus, it can be said that the bargaining power of supplier is very low. Thus,
suppliers inclined towards the firm that deals with the major food and grocery retailers.
They also works as to dreads loosing their business contracts with large supermarkets. In
addition to it, positions of retailers like Tesco, Sainsburry and Asda got strengthened and
negotiation are positive in relation to get the lowest possible price form suppliers. Thus,
Tesco can able to deal with bargaining power of suppliers by building better supply chain
with the number of suppliers in market.
 Bargaining power of buyers- It is relatively very high. Thus, buyer in market want to
purchase the commodities that avail at minimum possible prices. In addition to it, the
customers are always attracted towards the firm that provide lower prices goods with
qualified services (Schuhmacher and et.al., 2018). By the availability of online retail
shopping the prices of commodities can be easily compared. Thus, Tesco can overcome
from it by building large base of customers as it will reduce the bargaining power of
buyers and also provide an opportunity to firm to streamline the process of production
and sales.
 Threat of substitute product- It is fairly low in the retail industry. This requires the
huge capital investments with regards to be competitive and to establish a brand name.
There are number of brands that has captured the food retail market are as Tesco, Asda
and sainsbury's. In addition to it, the Tesco should put their focus over being service
oriented rather than just product oriented. With help of understanding the core need of
customers they can able to enhance the profitability and productivity.
 Rivalries among the existing competitors- Walmart, sainsbury. Asda and waitrose are
the biggest competitors of Tesco. The rivalries among the existing players in industry is
high and it can also affect the overall productivity and profitability of the industry (eng,
2018). Thus, Tesco plc is one of the competitive retail industry. The entity can able to
deal with intense rivalries with help of building the sustainable differentiation. By
collaborating with competitors, it can possible to enhance the market size rather than

competing with small market. It could also be done with help of adding innovative
features to product and services.
The external environment also highlights the opportunities and threats that could affect the
performance of Tesco-
Opportunities- The commercial network portfolio of Tesco is high on demand. Thus,
Geographic diversification will aids to firm in order to bring improvement in economy of scale at
the time of minimising its systemic risk exposure (Onyango, 2018). Furthermore, there is
presence of strategic alliance with other brands and also admired company to offer more
commodities and this aids to attract the customers in target market. This entity also have
opportunity to grow online shopping for Tesco and to enhance home delivery services to more
areas. This entity has wide number of opportunities in private label market. With teh help of
online website the netity can able to reach wide range of customers and profitablity of the firm
can be enchanced.
Threats- The economic recession and credit crunches can also works as to continue to threaten
the market share and profitability in all over the world. In addition to it, the greater stakeholder
pressure in relation to government and social responsibility adversely impacts the Tesco cost
basis (P Tesco SWOT Analysis / Matrix. 2019). Thus, fluctuations in currency rates is also a
barricade in terms to growth and sustainability of business.
Discussion on two primary and support activities in Porter's value chain.
The two primary activities in Porter value chain as are-
 Inbound logistic- These are placed at the first stage of value chain and also aids to create
the earliest opportunities to create the value. In addition to it, activities of Tesco at this
stage is associated with receiving, storing and disseminating the inputs of commodities.
Thus, it is inclusive of warehousing of physical products and material handling and
transportation of goods services (Marvin and et,al., 2018). The Quoted firm is taking
various initiative in order to maintain the level of customer choice in store by having
improvement in efficiency in its distribution system.
 Marketing and sales- These both are the downstream elements in value chain. Thus, one
technical advancement as club-card gives the further discounts and loyalty to the
customers. However, this is entity that is taking initiatives in order to attract the

customers with help of advertising tool via radio, pricing, sales force management,
channel selection, local newspaper and national TV program.
The support activities in Tesco value chain-
Human resource management- This is the department and also a ultimate key in order to get
success in enterprise. Thus, support activities of HRM will be inclusive of Recruiting, selecting,
hiring and training and development at the both business and corporate level (frishammar and
et.al., 2018 ). The quoted firm is taking various initiative in order to enhance the training
program so that firm can able to get introduce with well recruited and well trained staff. With
help of it, staff of the enterprise can able to feel motivated and encouraged to produce the better
and effective services.
Technology development- In modern era, technological advancement plays essential role in
order to bring competitive advantage. With the advent of technical tools the firm is able to have
long term innovation in products and services. By adding new features to commodities the entity
will able to attract the customers and productivity in market can be expanded (Kiziltas and
Çalıyurt, 2018).
Thus, evaluation of strength and weakness of firm as Tesco-
Strength-
 Tesco is the biggest retailer in the UK with a grocery market share of 27.9%.
 This is the firm that derives substantial benefits with help of its club-card at the multiple
levels. It is one of the effective consumer information tool. It is a tool that effectively
used in terms to enhance consumer retention and loyalty (Hamilton and Webster, 2018).
 The quoted firm has strong property portfolio and this enhance its overall value. In
addition to it, Tesco has an option of gaining financial resources to deal with
emergencies. Thus, this entity has strong portfolio ratio.
 Tesco conducts the online operations effectively and with help of it they are attracting the
wide range of customer's.
Weakness-
 The financial profits levels of Tesco has been adversely impacted during the recent credit
crisis and this is need to rebound with global event.
 There are some retail formats in certain countries have not performed in well manner.
The Tesco has not done the market research in proper manner.

 This firm is also fined by the serious fraud office in the United Kingdom. Thus, Tesco
had to reach the deal to avoid the prosecution. This entity has avoided it and therefore it
has negatively impacted the brand image of the enterprise (frishammar and et.al., 2018 ).
 The pressure of rivaries has created the price wars and in order to get rid of it, the Tesco
should have focus over market research in depth manner.
 The new technical advancment by teh competitor and market disruptor could also become
the biggest threat to the certain existing categories of product and services.
 The innovative technologies developed by competitors and market disruptor can also be a
serious threat to the performance of enterprise.
Understanding gained by use of these activities. Summarise and reflect how firm deploy IT and
use innovative ideas to improve business processes.
By the use of primary and support activities it has been analyzed that without the use of it
firm cannot able to perform its business function in appropriate mode. The human resource
department aids to conduct the performance of enterprise in sooth manner by providing proper
assistance to customers (Darnton and Giacoletto, 2018). Thus, marketing and sales activities aid
to improvise the selling growth of firm. This is also helpful in order to promoting activities of
form with help of social media tools so that customer can aware about the activities and services.
By the use of technological advancement the entity is able to bring better modification in
products and by adding some attractive features they are able to have long term retention of
customers. Thus, fraud practices can also be mitigated with use of modern equipment tools.
How firm deploy IT and use innovative ideas to improve business functions
 The better technical advancement aids to improvise the performance of business with
help of implementing the better communication process between the employers and
employees (Managing Information and Technology, 2018.).
 Thus, technological changes helps to have reduction in risk, opportunities and threats to
businesses.
 The Tesco can have the use of technical advancement and also work as to improvise the
products and processes in order to create new product and process and this all also aids to
expands markets and profitability (Berawi, 2018).

 Technical implementation has both kind of benefits as tangible and intangible. It is also
useful in order to make money and produce the results as per the demand of customers. It
is also helpful in order to improvise the efficiency and relationship of a business.
 The technical advancement aids to business operations by keeping them connected to
suppliers, customers and their sale force.
 Technological advancement can massively improvise the customer support function and
this also works as to empowers the business activities in well and proper manner.
CONCLUSION
Based on the above report it can be concluded that managing information and technology
is crucial component and very helpful in order to deal with day to day operations. The present
report was based on the business activities of the Tesco, it is one of the largest retailer chain in
United Kingdom. Furthermore, the report has covered the number of activities as are product and
services of chosen firm, pest analysis in order to analyse the external performance of industry,
the porter's five forces also has defined to evaluate competitive environment, the two activities of
primary and support activities has defined in terms to identify the performance of enterprise.
Lastly, innovative ideas has been given in order to improvise the business processes and also aids
to enhance its competitive positioning.

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