Business Strategy Analysis Report: TESCO's Strategic Management

This report provides a comprehensive analysis of TESCO's business strategy. It begins with an introduction to business strategy and its application within TESCO. The report then delves into the macro environment, examining political, economic, social, technological, environmental, and legal factors impacting TESCO's operations. It critically analyzes how these factors inform strategic management decisions. The internal environment is analyzed using SWOT analysis to assess TESCO's strengths, weaknesses, opportunities, and threats. Porter's Five Forces model is applied to assess the competitive landscape, and strategies to enhance competitive advantages are discussed. The report concludes with a strategic management plan that integrates various aspects of the analysis, offering insights into TESCO's strategic approach and its ability to navigate the complexities of the retail market.

Business
Strategy

Table of Contents
Introduction:.....................................................................................................................................1
LO 1:................................................................................................................................................1
P1: Apply appropriate frameworks to analyse the macro environment for an organisation:. 1
M1: Critically analyse the macro environment to determine and inform strategic management
decision...................................................................................................................................3
LO 2:................................................................................................................................................4
P2: Using appropriate frameworks analyse the internal environment and capabilities of a
given organisation..................................................................................................................4
M2: Critically analyse the internal environment of the organisation:....................................6
LO3:.................................................................................................................................................7
P3: Apply porter’s five forces models to the given organisation:..........................................7
M3: Devise strategies to improve the competitive edge in the market places:......................8
LO4:.................................................................................................................................................8
P4. Application a range of theories, concepts and models.....................................................8
M4. Develop strategic management plan that include different aspects..............................10
CONCLUSION:.............................................................................................................................12
REFERENCES..............................................................................................................................13

Introduction:
The business strategy can be refers as the course of action and set of decision which helps
the organisation in achieving the goals and objectives in the most effect manners. In the
another’s plan words, it can be stated that it is a master plan which management of the
organisation implements in the operations levels to secure the competitive position in the market
places and carry on with the operations activities so that they can achieve the desire levels of
outcomes within the set time period. For the long period, it can be considers as sketch for the
desire levels of image of the organisation which needs to be accomplished in the market . it is
schemes of the corporate intents and action, which are planned and are flexibly designed to
achieve the objectives in most effective ways and utilises the opportunities. Under this report, the
TESCO organisation is chosen to examine how the make use of business strategies in their
management so that they can successful capture the business market. Further their will be
discussion on macro-micro environment and different theories which organisation applies in
their management. (Akter and Childe 2016)
LO 1:
P1: Apply appropriate frameworks to analyse the macro environment for an organisation:
Introduction and overview of the Tesco :
TESCO Plc , is a multinational groceries and general retailer having the headquarters in the
England ,UK. It is 3rd largest retailers in the worlds according to the gross revenues. This
organisation has the shops in the seven countries name as Asia, Europe, Ireland, Hungary and
Thailand. and market leaders in the UK market in the groceries items.( Tesco, P.L.C., 2016_)The
organisation focus on expanding the operational activities of the organisation at the international
market place with the help of making effective strategies management plan for the company.
The TESCO was founded in the 1919 by the name called as Jack Cohen and offering the
various product and services such as supermarkets, hypermarket, superstores and convenience
shop and gives such product at international levels which helps them to increase their market
share in the target markets shares. (Amran, and Hashim, 2016)
1

Mission and vision: the TESCO company has a mission to capture the market at the
global levels by satisfying the needs and wants of the organisation. The organisation main focus
is to provide the good quality of goods and commodities to its target audience so that they are
able to achieve the desire results in their management. The vision of the organisation is to
capture the larger market share in the target market by giving them their goods on demands and
in the most effective manners so that costumer can satisfies its needs and wants from time to
time. (Wood, Wrigle. and Coe, 2017)
Objectives: the organisation has a main to expand and grow their business at the
international levels and build the brand image in the target market by offering the good quality of
product and services to the targets audiences. (Bharadwaj . and Venkatraman, 2013)
Macro environment: these are the external factors which affects the business operations of the
organisation in the long runs as these includes factors such as political, social, technology ,
economic and various another factors. These factors are present in the external environment in
which organisation operates its activities and get influences by such factors in getting the desire
outcomes. TESCO is a second largest retailer after the Walmart in the markets in providing
food product and various another services such as finance, mobile, insurance and many more.
The TESCO organisation also gets affected by such factors which are discussed as follows’:
Political factors: under this factors, it includes various things such as tax rates, current
legal legislation, political instabilities, and unemployment rates and another factors which
affects the business operations at the international levels. The TESCO operates its activities in 12
different countries which means it gets affected by the political conditions of such environment .
for example, the import duty on the product and services affects the Tesco as it imports most of
its product forms different countries like Asia and China. Due to ongoing instability in the
financial condition in the world, government encourages retailers to create the jobs for the
domestic population so that TESCO can create more opportunities for its people. (Chen,
Eshleman and Soileau, 2017. )
Economic factors: here all the factors are includes which affects the economic condition
of the organisation such as inflation rates, interest rates, and different polices which can affect
the business operations. as the TESCO company has business at the international levels but still
company is dependent on the UK market as it has a market share of around 30%.. TESCO has
used the internationalization and diversification as two main keys to strategies to get success in
2

their target markets. if the inflation rates goes up in the markets then the purchasing power of
the customer reduces which affects the profits of the organisation at the market places.
Social factors: under this condition, the customer taste and preferences are given more
importance in the markets plans, their customer belongs to different culture, backgrounds and
different point of view and opinions which affect their purchasing chose in the organisation. In
the UK markets , customer go with the trends in the market so TESCO focus on offering
product another then foods items so that they can capture the whole market in the shorest period
of time. (Håkansson, and Snehota 2006)
Technological factors: under this factors , all the advance technology techniques are which
helps in performing in better and in fast ways, so that goals and objectives can be achieved in
the most effective manners. The TESCO has used the technology for the development and
introduction of the online shopping facilities and home delivery and provide self-checkout points
for the betterment of the customer which helps in reducing the labour costs.
Environment factors: nowadays, the organisation are facing the pressure from the
government to address the environment issues and provides benefits to the society as whole.
Tesco encourages the consumers to shop from their websites and is drivers will not only use the
fuel-saving routes but collect the plastic bags and recycle them.
Legal factors: here, all those factors which includes government policies and legislations
are directly having the impact on the performances of the TESCO in the target markets . in the
2016, the TESCO workers tool the legal action against the employers as they are paid less for
their nights shifts, weekends, bank holidays and etc. Sometimes TESCIO also faces problems
like legal action for the fraud accounting, misleading the investors and has to conduct its
operations under the code of practice given by the food retailing commission.
M1: Critically analyse the macro environment to determine and inform strategic management
decision
The macro environment are all those factors that affects the business operation activities in the
positive as well as in the negative ways. The positive impact is that its helps in making bet use
of available resources in the best possible manners, these factors helps in conducting the business
activities in the most profitable manners by following the proper guidance and making effective
use of opportunities present to them . whereas the negative impact is that it has to follow various
3

legal and environment laws which includes the lot of money as well as consumer time of the
organisation to perform or to implanted the factors in the management strategies. These macro
environment helps in forming to good and effective strategies management decision which will
benefits the organisation to expand and grow their business at the international levels and make
profits in the long run. The analysis of the macro environment helps the organisation to see the
affects in the performance of the organisation and helps in achieving the desire results in the
management levels.
The critically analysis refers to the method where the organisation examine the effective positive
as well as the negative impacts of the macro environment on the performances of the
organisation.
(Higgins and Phillips 2015)
LO 2:
P2: Using appropriate frameworks analyse the internal environment and capabilities of a given
organisation.
The internal environment refers to all those factors that are present in the inside the
organisation and influences the performance and productivity of the company at the target
market places. These factors are found in the organisation work places which affects the
execution of the activities from time to time so that organisation goals and objective can be
achieved in the most effective manner. TESCO organisation uses SWOT analyses to examine its
internal strength and weakness with the opportunities and threads present in the environments so
that company can best use of opportunities to expand their business at international levels and
reduces the impact of any threads present in the work environment and make effective strategies
management plans for the organisation. (Moseley 2017. )
Strengths: under this factors, all the strengths of the TESCO organisation are examined by the
manager and leaders to make use it at maxi zing levels and earn the profits in the target markets.
secondly, the organisation can match their strengths with the opportunities present in the
environment so that they can make best strategies for the organisation which will helps them to
be more productivity in the organisation. Some of the strength of the TESCO are stated as below:
4

 Tesco has won various awards for its retail excellences , customer services quality and
overall shopping experiences.
 It is considered as the 3rd largest retailer in the UK market and giving the competition
in the market. (Scholes and Shevlin, 2014).
 The organisation has ;lot of reserves and ranges of property in the portfolios .
 The TESCO has a brand recognition in the global market and have respect as it
provide good quality of services in the market,
 It operates in different locations across the global providing personalised goods and
services.
Weakness: it is another part of internal environment, here the organisation are aware about its
weakness or the limitation in the markets. under this session the organisation tries to improve
their weakness and converts then into strength by making effective management plans for the
organisation as whole. In the another words, it can be stated that this part reflect the weakness of
the organisation and focus is to reduce the impact of such factors on the productivity of the
organisation. Some of the weakness of the TESCO are discussed as below: (Teece, , 2010)
 The subsidiaries of the TESCO are nor operating well in some of the location
for example, due to credit crisis in the UK market, the TESCO finance profits
are not properly working in the markets.
 The competitive pressures have lower and damage the profits margin of the
TESCO organisation in different stores.
 Sometimes TESCO has not done the enough market research while opening
the stores in the different location which leads in low performance of the
organisation.
 Consumers are not able to purchase their product and services due to having
low income budgets of the organisation.
Opportunities: under this condition, the organisation can finds lot of opportunities which are
present in the environment of the organisation so that they can make best use of resources and
earn the desire levels of profits by providing the product and services to the targets audiences .
these are the opportunities for the organisation to expand their business at different ,location
5

and earn the profits in the long run by offering various type of goods and services in the market.
Some of the opportunities of the TESCO are stated as follows: (Thompson and Gamble, 2015)
 There is a opportunities to make alliances with the another brands in the markets
and attract more customer to the company by giving various kinds of products in
the target markets.
 The location where TESCO is under performing, there is change to go for the
joint ventures with another company , they can do this by having market research
in the markets.
 There is opportunities for their business to on the online shopping websites.
Threads: here all those factors are included which will have negative impact on the
performances of the organisation. Here all those factors which have adverse impact on the
profitable and business operations activities which will delay or harm the performances of
the organisation in the long run. Some of the threads of the organisation are explain as
below:
 The economic recession and credit crisis will continues to damage the
performances of the organisation and reduces the market shares in the
markets. (Woerne and Wixom,, 2015)
 The competition is coming from across the global markets which creates the
pressure on the organisation to lower the prices of their product and have a
effective supply chain in their methods.
 Food prices are likely to increase in the markets so those customer who
income is not much will reduce the consumption of such goods.
 Labours wants more wages which added on the cost for the Tesco company
and create pressure on the pricing strategies.
VIRO Model: it refers to the model which is used by the organisation to examine the internal
factors and capabilities of the organisation so that organisation are able to make the effective
strategy for growth in the long run.’
 Valuable : here the Tesco organisation considered this part as the essential
as it helps in adding value to the organisation goods and services and helps in
6

identify their internal strength as compared to the another organisation in the
market place.’
 Rare: it is opportunity of the Tesco organisation as it resource which are
available with the some company in the market which shows its abilities and
capabilities at the work environment.
 Imitate: here the Tesco organisation focus on having effective resource in
their management level which helps the company to have substituting product
or the duplicate product for the organisation goods and services.
 Organised: according to this , organisation need to have proper management
system, methods and process and structure which have impact on the
organisation outcomes .
 With the help of the VIRO model, the Tesco organisation are able to identify
and understand the its internal strength which helps them to take the
competitive advantage in the market place.
With the effective use of the VIRO model, the organisation are able to examine
their internal capabilities which helps them to understand their management in
the better ways and develop the effective business plan for the organisation.
M2: Critically analyse the internal environment of the organisation:
The critically analyse of the internal environment is that it has positive and negative
impact on the organisation performances in the target markets places. The positive or the
strength of the internal environment is that it helps the TESCO organisation to make use of
resources in the most productivity manners as it helps in achieve the desire levels of
outcomes of the organisation in the most effective manners. The weakness or the negative
impact of the internal environment is that it may not be prepared by the unseen condition
which can come up in the organisation and affects the outcomes of the company in present
as well as in the coming years.
7

The analytical statement helps the organisation to examine the situation in the most
effective manners and critically ways so that all the aspect of the impact can be evaluated
and make effective changes business strategies so that results can be seen in the
organisation growth plans.
LO3:
P3: Apply porter’s five forces models to the given organisation:
The porter’s five forces helps the organisation to make the effective strategies for the
company to achieve their desire levels of profits in the most effective manners. This
model will help the organisation to shape their industry in the global levels by
understanding the competition in their markets and enhance the company’s long term
profits. The porters five forces are as follows’
In the relation of Tesco organisation, the manager apply this five force which helps the
organisation to take the competitive advantage in the market places and it helps the
organisation to develop the effective strategy which lead to expanding of the company
 Competition in the industry: under this forces, it includes the competition
present in the organisation and their capabilities to undercut the organisation.
Here, their are larger number of competitors present in the markets offering the
same product and services which TESCO is giving to its customer, which make
the TESCO less powerful in the markets. the costumer can switch to another
product which offered at lower cost. (Yuliansyah . and Mohamed 2017)
 Potential of new entrants: the TESCO organisation power is also gets affected by
the new company entering into markets and taking over the markets as it takes
lesser time and cost for the new companies to capture the already research markets.
the industry with the strong barriers to entry are good for the existing companies.
 Barging power of the suppliers: under this condition, there are less of supplier in
the market which are makes the suppler to charge the more prices to its product and
services in the markets and make difficult for the buyers. In the context of the
8

Tesco organisation the have more prices for its goods and service in the market
places.
 Barging power of buyers: here, the customer are able to negotiates for the lowers
prices for the product and services and make a better ideas for themselves in the
markets . the customer can switch to another product if they are offers at lower
prices. with the reference Tesco organisation, the buyer are price sensitive in the
market place which have impact on the organisation outcomes
 Threats of substitutes products: in the markets there are substitute goods
available for the main or branded good which are at low prices as compared to the
TESCO product and services. customer of the organisation will take product from
another brands if goods are available at lower prices
These force helps the Tesco organisation to understand the market and take the
competitive edge in the market place which leads to growth of the organisation in the
international market places.
With the help of porters five forces the organisation are able to examine the
competition present in the organisation and its surrounding. The porter five forces help
the organisation to take the competitive advantages in the market places so that
organisation are able earn the profits.
\
M3: Devise strategies to improve the competitive edge in the market places:
The porter five forces helps the TESCO organisation to take the competition advantages in
the markets by applying the strategies after examining all the factors which are stated in the
porter models as these forces gives the ideas to make the management plan for their
organisation to take the lead in the competitive markets by elevating the various factors
such as analysis the new entrants which can take over their business and study the power of
the suppliers and buyers in the markets which can also be used to make the strategies
management plan for the organisation in the long run and availability of substitutes goods
and services also effect the business decision of the organisation and all these factors are
to be evaluated to make sound management strategies.
9

The critically analyse of the porter five force helps the organisation to understand the
market and make the strategies which leads to take the competitive advancement in the
market places.
LO4:
P4. Application a range of theories, concepts and models
For the effective development and growth of a business, the administration of Tesco can
adopt different concept and models that will help in improving the existing business of the firm
in proper manner (Pham, Pham and Pham, 2018). For this, firm can use Porter’s generic
strategies and Bowman’s extended model. The description of these concepts as under:
Porter’s generic strategies
It is a strategic framework which can be used by a firm for development of business and
gaining competitive advantages from marketplace of a specific business sector. This framework
consist four strategies and they can be adopt by company in term of making growth in business.
Cost leadership- It is the first strategy which is a tradition method and the objective is to
become the lowest cost producer in a particular business sector. Thos method help in
accomplishing this objective is to manufacture on a large scale which helps the business to
exploit economies of scale. In Tesco, by adopting this growth option, the firm can include the
pursuit of economies of scale, proprietary technology, preferential access to raw materials and
other components.
Differentiation- It is another growth strategy and by adopting, the firm can make changes
in its products or services and cost of commodities that are offered by it. The management of the
firm can offer unique products in business sector along with some dimensions that are widely
valued by purchasers. It chooses one or more attributes that many buyers in a sector perceive as
important and uniquely positions it to meet those needs. By implementing this strategy, Tesco
can produce new innovative products and offered them with a premium prices. It will help the
organisation in making development in business and gaining rival’s advantages.
Cost focus- It is growth strategy which is a method to accomplish the set business
objective. By adopting this growth strategy the management of Tesco can make development in
its business in term of making change in pricing strategies by following lower and discount
pricing strategies (Porter's Generic Competitive Strategies, 2020). It will help the company in
10