Tesco PLC Business Strategies: A Comprehensive Analysis

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Business Strategy
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Contents
Introduction...................................................................................................................... 3
LO1.................................................................................................................................. 4
P1 Apply appropriate frameworks to analyze the macro environment for a given
organization.................................................................................................................. 4
M1: Critically analyze the macro environment to determine and inform strategic
management decisions.................................................................................................6
D1: Critique and interpret information and data, applying environmental and
competitive analysis to produce a set of valid strategic directions objectives and
tactical actions.............................................................................................................. 7
LO2.................................................................................................................................. 8
P2 Using appropriate frameworks analyze the internal environment and capabilities of
a given organization......................................................................................................8
M2 Critically analyzes the internal environment to asses’ strengths and weaknesses
of an organization’s internal capabilities structure and skill set...................................10
LO3................................................................................................................................ 12
P3 Apply Porter’s five forces model and to evaluate the competitive forces of a given
market sector for an organization...............................................................................12
M3: Devise appropriate strategies to improve competitive edge and market position
based on the outcomes...............................................................................................14
LO4................................................................................................................................ 15
P4 Apply a range of theories, concepts and models, interpret and devise strategic
planning for a given organisation................................................................................15
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M4: Produce strategic management plan that has tangible and tactical strategic
priorities and objectives.............................................................................................. 16
Conclusion..................................................................................................................... 17
References.....................................................................................................................18
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Introduction
Management of business strategies also called strategic management process for an
organization. It is a process in which a company plans about future strategies which
could be helpful for them to improve their market approach. The major types of
strategies and goals could be including from the higher management of the organization
on behalf of the owner. The business strategy could be based upon the inner and
outside environment of an organization, and an organization can operate in it.
“Tesco PLC” is known as the British multinational retailer of provisions and general
products, and head office of the organization is located inside Welwyn Garden city,
Hertfordshire, England, United Kingdom. According to the gross proceeds the
organization is third largest retailer organization of the world. The organization having
their shops beyond Asia and Europe and it is the leader of the marketplace of the UK.
The organization was established by Jack Cohen in the year of 1919. The company
deals in groceries and general merchandise. In the present time, Tesco is having almost
6569 shops and almost 4, 60,000 employees.
In the given report the business strategies of “Tesco” would be described and how they
apply these strategies in their working environment will be explained in the report. The
different types of methods which relate to the company “Tesco PLC” could be
understood from the below report.
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LO1
P1 Apply appropriate frameworks to analyse the macro environment for a given
organization
Macro environment implemented in Tesco PLC is based upon the pestle analysis and it
could be the strategic tool for the company’s strategic planning. The pestle analysis
represents the reasonable, Political, communal, Technological, environmental and the
lawful factors which could affect the macro environment of Tesco PLC. The change in
the macro environment can affect not only the environment of Tesco but also on the
environment of other retailer organizations. Here are some factors which affect the
macro environment of Tesco PLC (Saraç, 2014).
Political Factors: Political factors determine a significant role in analysing about the
elements could affect the extended productivity relates with Tesco in a particular market
or country. Tesco Plc is maintaining their retail market in many countries and it includes
different types of political environment and political risk. Tesco PLC at present time
could be affected by these political factors:
 Risk of military invention.
 Legal structure of for contract enforcement.
 Creation of Anti- conviction laws related to retail.
 Creating necessary employee benefit plans.
 Taxation: incentives and rate of tax.
 The safety regulation of the industry and the customer service centre.
 Labelling of the product and other requirements.
Economic factors: The economic factors like saving rate, rate of interest, foreign
exchange rate, and economical cycle of a particular explains the economic environment
of that country. Tesco PLC can use these factors to improve their identity at the global
level because the stage of economy could be beneficial for them. The economic factors
which Tesco need to include in their strategic planning are:
 Exchange rate and constancy of another county’s currency.
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 Economy’s education level.
 Growth rate of economy.
 Rate of unemployment.
Social factors:
The social factors which Tesco need to involve in the strategic plan are:
 The skill level of population.
 Structure of class and the structure of power in the society.
 Health environment of a country and the attitude of the country.
 Different types of interest of the people.
Technical factors: There are some technical factors which would be beneficial for
Tesco PLC:
 The technological factors which included by the competitor companies of Tesco.
 Impact of the technological factors on product offering.
 Effect on the cost structure in the retail industry.
 Technical circulation’s rate.
Environmental factors: The environmental factors which could affect Tesco PLC are:
 Weather of the particular country.
 Changes of climate in the host country.
 The laws of that county which related to the environmental conditions.
 Waste management law of that country.
 The nature towards ecological products.
Legal Factors: The legal factors which need to remember by the Tesco PLC are:
 The Anti- trust law of the country.
 Law of favouritism in that country.
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 Law of employment.
 Protection and health law of the country.
M1: Critically analyse the macro environment to determine and inform strategic
management decisions.
Tesco PLC uses five forces of Porter’s to manage their worldwide environment and
different factors of the macro environment could be useful to Tesco for investigating the
new demands of the consumers. The strategic management officers of the company
need to know about these factors in the other country and they should try to prepare
their strategic planning according to the factors of that country. The retail industry of the
UK is very broad and it includes many types of difficulties like customer relations,
needs, demands, etc. Tesco is a familiar brand name and citizens believe in product
excellence of Tesco but for the small organization, it becomes hard to make their
identity in the market.
Many companies which are located in the UK are trading in the equivalent business and
Tesco needs to appreciate the competition height of the association. By analysing the
competition rate, they can practice various kinds of policies for its production process.
At present time, a customer has many options for purchase the product they want and
Tesco needs to understand about it. They should try to involve all the quality which a
customer wants from them and the price level of the product must be comfortable for
the customers.
By including these activities Tesco PLC can manage their brand value in the market and
a customer can trust on the product quality of Tesco. Tesco’s top competitor company
in present time is “Mark and Spenser” they provide the same quality of clothing and
groceries in the market of UK. Tesco needs to understand about the strategies of Mark
and Spencer and try to include some changes for attracting the customers towards the
brand value of Tesco (Gunsel, 2012).
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D1: Critique and interpret information and data, applying environmental and
competitive analysis to produce a set of valid strategic directions objectives and
tactical actions
The organization Tesco PLC is facing tough competition in the UK’s market. There are
many types of companies which are providing clothing and grocery products to the
customers. The competitor companies of Tesco PLC are mark and Spencer, Next,
ASDA, farm food, etc. The company needs to understand about the new strategies and
planning which these companies are applying in their promotional and advertising
activities.
One of the competitor companies is ASDA; they are dealing in the same field of clothing
and groceries. At the present time, they are producing some cheap price of products for
the customers and it is becoming a difficulty for Tesco PLC because the customer is
receiving the same type of product at a low price. Tesco needs to focus on the product
quality and need to plan new qualities which they can include in the production process.
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LO2
P2 Using appropriate frameworks analyse the internal environment and
capabilities of a given organization
Tesco is trying to maintain its market presence by using mixed procedures in their
strategic management preparation process. There are many types of internal strategies
which use to apply by the managers of Tesco which assists them to know about the
demand of the local population as well as the international public. To know about the
public demand and needs and interest Tesco created some internal departments and
these are:
• Retail director
• Manager of the department
• Section manager
• Customer assistance
The internal factors of Tesco PLC are:
Recruitment process: A candidate can get these positions by the recruitment process
of Tesco PLC:
• Retail store role
• Head office role
• Graduate scheme
• Trainee management scheme
Market and promotions: By using a different type of planning a company can spread
awareness about their products. Tesco started a new marketing strategy named
“Humour” it is a Christmas related commercial campaign with the new concept of
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promotion. The humour strategy was appreciated by everyone and became successful
for Tesco. The company also shifted to digital marketing activities and invested a big
amount on Press, TV, cinema, and radio. Tesco recognized new technologies for
making the promotional process attractive and effective.
Customer Service: customer services are important for a company and the customer
service representative of Tesco needs to maintain a good relationship with the
consumers. The representatives of Tesco are the main face of the company and they
provide all the product related information to the consumers. They create a belief in the
consumer’s mind about the quality of the product to make them purchase the product.
Online services: Tesco PLC providing their online services across the UK in almost 11
countries, their website www.Tesco.com covers more than 3400 stores of the company
and a consumer can choose a product according to their interest. It offers to clothe;
home products and groceries on the worldwide market and people can choose the
product easily and make a payment at the same time. The company provides home
delivery of the products.
Products: There are various types of products which Tesco is producing for the people
worldwide. They deal in food products, wood, and paper, cocoa, chicken and eggs,
coffee, etc. They provide a different chain of products to a consumer and create
versatility for a customer.
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M2 Critically analyses the internal environment to asses’ strengths and
weaknesses of an organization’s internal capabilities structure and skill set.
Tesco was stared in a form of the stall by Jack Cohen in 1919 and the big industry of
Tesco PLC become broad rapidly. Tesco uses SWOT analysis in their working
environment, here are the different factors of this analysis which explains about the
power, limitation possibilities and intimidations of Tesco PLC (Güre and Tat, 2017).
SWOT analysis of Tesco
Strength of Tesco
Higher business share: Tesco is dominating the trade bazaar of UK amongst all the
four supermarkets with 4% of market share. It also became a well-known supermarket
in Ireland.
Growing number of stores: Tesco rapidly increased their number of stores, the
numbers of their store were almost 3,751 in the year 2008, but now Tesco is operating
around 6, 966 supermarket retail stores worldwide. The income of Tesco is growing
because of the addition of a new store every year.
Diversified business and merchandise variety: The strategy of diversification of
Tesco became prosperous for the corporation and it has big range of products. It
includes different range of clothing, home product’s parts, portable telephones industry,
DVD rental and music downloader’s, financial plus telecom services and cotton fair
trade on a global level.
Weakness of Tesco
Dismissed developments in the US and Japan: Tesco exited from the markets of
America and Japan during the year 2012. The company faced a failure to export their
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