Tesco: Contemporary Business Environment and Strategic Analysis Report

This report provides a comprehensive analysis of Tesco's business environment. It begins with an introduction to the factors influencing organizational activities, both internally and externally, emphasizing the importance of strategic measures for competitive advantage. The main body of the report focuses on Tesco, a British multinational grocery and general merchandise retailer, established in 1919. The report applies Porter's Five Forces model to assess the competitive landscape of the retail industry, evaluating the threats of new entrants, the bargaining power of suppliers and buyers, the threat of substitutes, and the rivalry among existing firms. Additionally, a PESTEL analysis is conducted, examining the political, economic, social, technological, environmental, and legal factors impacting Tesco's operations. The report concludes by summarizing the key findings and strategic implications for Tesco, highlighting the importance of adapting to a dynamic business environment. The report highlights the importance of understanding consumer trends, technological advancements, and the competitive landscape for Tesco's continued success.

Contemporary Business
Environment
1

INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................4
CONCLUSION................................................................................................................................9
REFERENCES .............................................................................................................................11
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INTRODUCTION
There are different types of factors that are prevailing in business environment and have
impact upon organisational activities and functioning in both negative and positive manner. In
order to ensure high competitive positioning and keep up with the change in today’s respective
industrial segment organisations are required to effectively understands all the factors and further
developed strategies in order to overcome impact upon organisational functioning. There are
mainly two aspects of business environment that are internal and external. In this there are
different types of factors that are prevailing and affect functioning of organisation in number of
ways (Amankwah-Amoah and Wang, 2019). In order to ensure strategic positioning in
competitive market place organisations operating their functions are required to take advantage
of strategical measures and frameworks in order to gain more competitive edge. Present report
has been conducted on Tesco. Company operate their functions in retailing industrial segment
and was established in the year 1919. Entity is a British multinational groceries and general
Merchandise stores with having headquartered in England, United Kingdom. In this report
formative discussion has been made pestle and SWOT analysis. This allows entity to identify the
strength and weakness and further take advantage of opportunities that are prevailing in business
market. In addition to this report include cultural and natural environment that shape behaviour
of Tesco. For this Porter five force analyses is being done, as it is a strategic framework that
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allow entity to effectively tackle threats that are prevailing in cultural and natural environment of
retailing industrial segment.
It has been analysed that in retailing industrial segment there are different types of leading
organisation those who provide services to customers with high quality and affordable price
range. Tesco operate their functioning as a leading multinational grocery and general
Merchandise store and have headquarter in England, United Kingdom. Main product of company
is sold via supermarket, superstore, hyper store and convenient shop. There are different types of
products and services that are provided by Tesco to their customers with high quality. Company
is having diversified area in which they offer products like furniture, clothing, financial services,
toys etc to their customers. Tesco was founded by Jack Cohen
in 1919 and currently having more than 6800 shops. Organisation offer their services worldwide
with an aim to provide high quality products and services to customers. Company mainly aim
towards satisfy their customers with high quality products and services with minimum price
range. In addition with this main motive of company is to expand their business area in order to
serve high base of customers. Company always engage in the process of research in order to
effectively identify needs and demands of their customers, through this company offer unique
product and services to the consumers in order to ensure their loyalty. In addition to this
different types of offers is been provided by Tesco to their customers in order to serve them with
the best. Further it has been identified that company always emphasize upon high quality in their
product and services and innovation in order to increase loyalty of their customers towards
organisational offering.
MAIN BODY
Porter’s Five Force
TESCO operates their functioning in retailing industrial segment and as a leading British
multinational grocery and general merchandise retailer. Company offer different types of
products and services to their customers thus, it is essential for entity to safeguard their
competitive edge in marketplace and ensure more profitable outcomes. In order to fulfil their
goals and objectives and serve customers in a best effective manner company is required to
tackle threats that are prevailing in business environment with the help of innovation, lower
pricing strategy, less production cost and further provide value to customers. With the help of
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these measures company can effectively able to manage the challenge in a best effective manner.
In this company by taking advantage of Porter’s five forces model can effectively able to ensure
strategic positioning. This further allow entity ensure more competitive edge in marketplace.
Porter’s five force model was coined by Michael. E. Porterin the year 1979. It is a
strategic management tool with the help of which an organisation can effectively able to evaluate
with their competitive landscape in a respective industrial sector. Every force in this model helps
an organisation to understand their strength. With the help of this model Tesco can analyse the
industry in which they operate their function in terms of attractiveness with the help of which
they can undertake profit potential. This further allow strategic planner of entity to undertake
best strategic decisions. Mention below Porter’s five force analysis in context with Tesco is
being defined:
Threat of New Entrants: Low
Tesco operate their functioning in retail industrial sector thus it is requires new entrants to
invest high cost in order to establish their business. Along with this product differentiation is also
strong in retailing industry as customers always look for differentiated products. In addition to
this there is strong emphasize on advertisements as well as customer service, this makes low
threat of entrance in present industry. As capital requirement in this industry is high this makes
new entrance to set up their business by expending high cost. Along with this it has been defined
that government policy in retailing industrial sector is strict such as legal requirement and
licensing are required to be fulfilled by companies. Tesco by taking advantage economics of sale
in this industry can focus on innovation in order to offer differentiated products and services to
their customers. As company is having strong brand identification thus by innovating products
and services and offering unique merchandisers to Customers Company can ensure their long-
term sustainability in marketplace.
Bargaining Power of Suppliers: High
In retail industrial sector bargaining power of suppliers is quite high as in this supplier is
in a dominant position and can further lead towards decreasing overall marketing profitability of
Tesco. It has been identified that powerful supplier dealing in customer service sector take
advantage of negotiation power in order to gain high price from organisations in retailing sector.
In order to overcome this Tesco can effectively enlarge their supply chain with different type of
supplier from different geographical location. In addition with this Tesco is required to
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continuously experiment with new product design in order to use it with different materials thus
if price for one raw material is high then company can easily shift to another.
Bargaining Power of Buyers: High
Bargaining power of buyers is relative high in respective industry as there are already
existing leading organisations like Asda who offer high quality products and services to
customers at low rate. Buyers in retailing in this industrial segment seek for different products
and services with high quality and as minimum possible price range. This makes pressure on
Tesco to ensure their long run. Along with this customers in this sector ask for high discounts
and offers that make impact upon company profitability. In order to overcome this Tesco is
required to build large base of customers. Along with this company is required to invent new
products and services as customers mainly seek for offerings and discount on already established
products. Thus, if company offer new product in marketplace then they can lower down threat of
bargaining power of buyers.
Threat of Substitute Products or Services: Low
It has been identified that within retailing industry there are few substitutes available in
market of the products and services that are being offered by Tesco. Along with this price range
of Tesco is affordable. This makes other organisations in industry hard to complete Tesco. All
these factors collaboratively weak threat of substitute products and services in respective
industry. Along with this it has been identified that few substitute that are available offer high
quality but the products are more expensive. This makes customer less likely to switch to other
substitutes. Thus, Tesco can effectively take more profitability from this factor and can further
ensure topmost positioning in retail industrial segment by offering great quality in their products
and services at lower price range. Along with this company is required to emphasize on
differentiating in their services and product this makes them to offer unique offerings. In addition
to this company is required regularly engage in the process of research in order to identify
customers needs help them to understand their demand and further satisfy them with best and
unique.
Rivalry Among Existing Firms: High
Threat of rivalry among existing form in retail industrial segment is comparatively high
as there are already large Industries operating in this sector. Entities like Asda offer competitive
price range products and services with an aim to become market leader. In addition with this,
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industry continuously moves towards providing qualitative offerings to customers in order to
increase their market share holding. In order to overcome this Tesco is required to offer unique
products and services to customers. In addition with this company is required to attract attention
of new customers in order to expand their consumer base. Further company is required to
undertake market research as to effectively understand supply demand situation in respective
industries and to prevent overproduction. With the implications of these effective measures and
strategies Tesco can effectively able to overcome rivalry among existing this makes them to
secure competitive position in marketplace.
With the help of Porter five forces analysis Tesco can effectively allow their strategic
planners to understand the different factors and can further take profitability in respective
industry. This analysis help company to analyse all the competitive forces in which organisation
operate their functions. It further allow them to identify game changing trends on early basis that
benefit them to take advantage of strategic measures as to overcome negative forces in time
effective manner (Khalili, Abbadi and Ismail, 2019). This strategic framework allow entity to
gain more competitive positioning in marketplace and can further serve their customers in best
effective manner by exploring more profitability.
PESTEL
Political:
Tesco operates their functions in more than 12 countries that include Europe and Asia.
This makes company exposed to many political factors that affect their functioning. Factors like
political instability, tax rate, unemployment rate, current legislations and economic conditions
are some of the factors that will impact upon organisational functioning. Political stability of UK
provides opportunities to Tesco as to increase their sale. While present scenario of BREXIT
somehow impact of upon functioning of company in number of ways. For this it is essential for
Tesco to take advantage of different type of strategies to overcome a negative impact and avoid
price hike.
Economic:
Economic factors such as minimum wage rate, labour cost are some of the most
important economic factor that affects organisational functioning. UK is having stable economic
growth that provides opportunity to company to increase their profitability. While due to the
dynamics factors like price, cost of raw material and availability resources will create negative
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impact upon company functioning. In this it is essential for company to increase borrowing cost
in UK and take advantage of diversification strategy into international market.
Social:
Consumer shopping trends are dynamically changing in UK that mainly acts as a reason
Tesco to slow down sales. Thus, in order to gain consumer loyalty Tesco is required to
understand beliefs, value and perception of customers and further provide them services
according to their attitude (Kabalina, Zelenova and Reshetnikova, 2019). This has been
identified that nowadays consumers are more concerned about their health that makes increase in
demand for organic food. With the help of the this opportunity TESCO can effectively satisfy
customers.
Technological:
Technological factor is related to advancements in new technology. UK is technological
advanced country that provides number of opportunities to Tesco. In order to attain consumer
trust TESCO by providing them products and services with innovative technology can increase
organisational profitability. In order to implement high tech technology company need large
amount of fund this may negatively impact upon their operations the entire department. In this it
is essential for Company to undertake cost effective strategies in order to provide high tech
services to customers.
Environmental:
Organisations in UK are facing immense pressure from government as to effectively
address environmental issues. Thus, Tesco is required to respond effectively towards
environmental issues in order to benefit society. With the help of this opportunity Tesco can
conduct their service with use of renewable resources. Negligence of this may factor may lead
company to create negative impact upon brand image of company.
Legal:
Business legal environment involve different types of factors and laws that may impact
upon business performance. There are different types of rules and regulations imposed by
government with the implementation of which Tesco can gain opportunity to increase their
market image. Negligence of legal factor in organisational workplace structure leads company to
face legal actions and penalties.
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SWOT
STRENGTH WEAKNESSES
 One of the top 10 most valuable brands
in the UK.
 Tesco boasts the highest trust rating of
any of the grocery retailers in a Mintel
survey carried out last year, having now
largely repaired the reputation and
brand image damage arising from
debacle such as the accounting scandal
of 2014.
 Weak online support acts as major
weaknesses for company (Gökmen,
2019).
THREATS OPPORTUNITIES
 New UK “sugar tax” levy is threat.
 Merger of Sainsbury’s and Asda
(Sainsdas) will squeeze market share
and put pressure on Tesco margins
 Current consumer-focus on healthy
foods and beverages can be opportunity
or threat depending on how Tesco
reacts
 Rise of superfast delivery is fast
becoming the norm and opportunity to
create competitive differentiator
CONCLUSION
As per the above mentioned report, it has been concluded that there are different types of
factors that are prevailing in business environment and are required to be understand by
organisation. All these factors are required to be effectively undertaken by organisation in order
to frame decision, as these factors significantly impact upon functioning of organisations in
negative and positive manner and further effect internal and external decision making of
company. In order to evaluate impact of these factors company is required to take advantage of
strategic Alliance Framework as well as models such as Porter five force analysis this allow
entity to ensure that competitive Positioning and further identify threat and opportunities with the
help of this company can take advantage of prevailing forces and can enlarge their profitability at
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a great extent in addition to this is has been identified that in order to identify strength weakness
Threads and important days of business environment company can effectively take in one plate
of SWOT analysis the help of this entity can identify the strength weakness while taking
advantage of opportunities while overcoming threads with the help of this company can ensure
your eye competitive edge in Marketplace and can increase their market share in a best effective
manner along with this it also allow company to satisfy their customers best products and
services for the this identify that entity is required to identify environment in which they operate
their functioning as it impact upon their statistical decision making in order to evaluate this and
we can take advantage of pestel analysis this will allow organisation to evaluate political
economic social technological mental and legal factors in effective manner with the help of this
company can identify competitive strategies through which they can effectively increased their
profitability and productivity in test effective manner along with this that has been identified that
company by engaging in regular research can satisfy their customers with unique products and
services with the help of research and take and identify current name and demand of customers
through which they can innovate National off ranks buses Pata pension report it has been
concluded that by identify factors within business environment organisation can effectively and
take rest strategic measures through which they can enlarge there competitive positioning in
respective industrial segment business environment organisation can effectively undertake test
strategic measures through which they can enlarge their competitive positioning in respective
industrial segment it was allow them to increase their profitability and productivity in best
effective manner in addition with this organisation can also allow themselves to so that
customers with best that for the benefit of them to ensure their loyalty towards organisation this
effectively it and today to ensure that long term sustainability in respective industrial sector.
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