Comprehensive Business Strategy Analysis and Planning for TESCO plc.

This report presents a comprehensive analysis of TESCO plc's business strategy. It begins with an introduction to business strategy and its application to TESCO, a leading retail organization. The report then conducts a PESTEL analysis to evaluate the impact of macro-environmental factors, followed by SWOT and VRIO analyses to assess TESCO's internal environment, capabilities, strengths, and weaknesses. Furthermore, Porter's Five Forces model is applied to analyze the competitive forces within the retail sector and their influence on TESCO's profitability. Finally, the Ansoff matrix is utilized to examine strategic options and devise a strategic management plan for TESCO. The report provides valuable insights into TESCO's strategic positioning and future prospects within the dynamic retail landscape.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Macro environmental impact............................................................................................3
TASK 2............................................................................................................................................5
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks.............................................................................................................................5
TASK 3............................................................................................................................................8
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation.......................................................................................................8
TASK 4............................................................................................................................................9
P4 Strategic Planning for TESCO..........................................................................................9
CONCLUSION .............................................................................................................................14
REFRENCES.................................................................................................................................15

INTRODUCTION
Business strategies is course of action and set of decision that help an entrepreneur in
accomplishing specific goals and objectives. Moreover, business strategy is the master place
which use by management for getting competitive position within market area (Hatherly, 2016).
This assignment is based on TESCO plc. which is retail sector organisation founded in 1919 and
its founder is Jack Cohen. It is offering products in several places such as United Kingdom,
Ireland, India, Malaysia, Thailand, Poland and so on. This report will going to conduct PESTEL
analysis for identifying impact of external factor on company. Along with this, SWOT and VRIO
analysis will be conducted for identifying internal factors as well as capabilities of organisation.
In addition to this, Porter Five Force analysis will be carried for identifying competitive
environment of retail sector and its impact on working of TESCO plc. Further, Ansoff matrix has
been utilised for analysing the availability of strategic option and devise a strategic management
plan.
TASK 1
P1 Macro environmental impact
It is essential for each and every organisation to carry out a constant analysis of business
operations as well as its external environment so as to ensure the negative aspects do not cause
harm to functioning of business. This helps them to identify the opportunities that pay wave for
entity as well as threats that pose risk for the sustainability of company (Jocovic and et. al.,
2014). In this regard, PESTLE analysis has been conducted by TESCO Ltd to gain knowledge of
the impact of macro environment upon the activities and processes:
PESTEL Analysis
This is a strategic framework that is used by organisations to gain comprehensive
understanding of the macro environmental factors that have a significant influence upon the
working of corporate enterprise. With the help of this analysis, a company can easily design,
develop and formulate strategies that can sufficiently cater to the needs and requirements of
entity and assists it in gaining a competitive advantage over rival firms present in market place.
This helps in effectively executing the operations of organisation in the desirable manner.
PESTEL analysis applied to TESCO Ltd is as follows:
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Political: This consists of factors associated with government and political system of a
nation. In this regard, TESCO is operating its operations primarily within United Kingdom
where the company takes advantage of political stability. This creates opportunities for the
respected company to effective conduct its operations in a desirable manner. Further, the
government of the major revenue generating country for TESCO (UK) has decided for
decrement in corporation taxes leading to the current rate being around 28%. This helps business
to utilise the saved fund in betterment of its offerings so that customers can be satisfied and their
loyalty can be inflated (Davies, 2016). The management of TESCO is required to devise
strategies that are aligned with the policies enforced by government.
Economical: United Kingdom is an economically strong country. Its strong economy
tends to create opportunities for companies operating within its geographical confines such as
TESCO. However, owing to BREXIT, the corporations operating within this nation are
negatively getting affected by it. The value of pound has also fallen due to this phenomenon
which tends to create risks for the enterprise (Chang, 2016). To tackle the inflation caused
because of this economical adversity, TESCO is required to introduce new products within the
market place at lower prices so that the lowered purchasing power of buyers due to BREXIT
does not impact upon the sales of organisation. TESCO is required to develop a strategy stressing
upon making products by making use of value addition and low cost pricing to gain the attention
of customers.
Social: The trends and lifestyles of population keeps on changing at a rapid basis. In this
regard, an entity should constantly undertake measures to address such changes and devise
strategies in accordance with them. By conducting research upon the latest trends and
phenomena prevailing in market, TESCO gains advantage as it develops products as per the
needs and preferences of people. This helps the entity to build a loyal customer base, thereby,
enhancing the sales and profitability of entity in market (Cavusgil and et. al., 2014). However,
there are a large number of substitute brands present in market which deals in same product line,
thus the probability of anticipation or ascertainment of a trend by the rival firms before TESCO
can act as a threat for enterprise. To deal with this, the respected organisation should adopt a
strategy where the entity constantly carries out research on market and analyse the customer
preferences and trends.
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Technological: In the modern era, it is seen that various technological elevations take
place at a rapid pace. This creates opportunities for TESCO to come up with unique and
innovative offerings so as to gain the attention of customers and increase the revenues as well as
profits of business. In this regard, TESCO makes use of latest tools and techniques along with
software so that new product development process takes place in a timely manner and consumer
demands are significantly fulfilled. With the help of latest technologies, the products and
services of entity gets enhanced and are able to reach to larger customer base.
Environmental: In the modern era, companies are largely getting aware and undertaking
activities and processes in a manner such that they do not cause harm to the environment. In this
regard, TESCO has entered online market so that it can lessen the dependence on paper work and
a large proportion of the work can take place over the online channels (Chen and Jermias, 2014).
Furthermore, it has taken initiative to lower the carbon footprints and conduct procedures in an
environment friendly manner. This affects the business strategy as TESCO has now emphasized
upon development and adoption of such processes which strive to protect the environment.
Legal: TESCO makes sure that it abides by all the necessary laws and legislations
stipulated for retail industry. They conduct activities in a manner aligned with the requirements
of law. This helps the organisation to enhance its revenues as well as profits within its revenue
generating market place, United Kingdom. This impacts upon the strategy in a manner such that
the entity is facilitated to operate in the interest of law and the stipulated regulations in order to
avoid getting penalised.
TASK 2
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks
For analysing internal environment of TESCO plc., SWOT and VRIO analysis will be
conducted by manager. Because it will help them in effective management of daily basis
operations and accomplishing objectives. Explanation of these are as follows:-
SWOT analysis -
Strength Weakness
 TESCO plc is one of the leading
grocery retail as well as no. 1
 Respective company had to exit from
Japanese and American market within
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supermarket within United Kingdom. It
has higher sales revenue in comparison
of other same sector companies (SWOT
Analysis of TESCO, 2019). As per the
annual report of 2018 operating profit
has been rose by 28%.
 TESCO have thriving global presence
within more than 6800 stores in 14
nations. Apart from North America and
Europe.
2012 as TESCO Plc. was failed in
export operation which result in closing
stores within respective countries.
 Moreover, TESCO plc. is price leader
within UK market but its low cost
strategy result in reducing profit
margins.
Opportunity Threats
 TESCO Plc. have an opportunity of
doing joint venture within the region
where stores are underperforming.
Because local companies can provide
profound market knowledge that will
assist in enhancing performance within
such regions.
 It has opportunity to expand their
business within emerging nations such
as Indonesia which result in increasing
profitability of business.
 Brexit gives direct impact on the cost of
trade deals which result in threats for
TESCO Plc.
 Increasing competition within retail
sector result in threat for respective
company (Basco, Calabrò and
Campopiano, 2018).
VRIO analysis - For analysing internal capabilities of company, VRIO Model has been
used in relation of TESCO plc. are as follows:-
Factors Valuable Rarity Imitable Organized What is the
result?
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Global
presence
Global
presence
- - - Competitive
Disadvantage
Products Products Products - - Partially
competitive
Software Software Software Software - Competitive
advantage for
temporary
basis
Employees Employees Employees Employees Employees Competitive
advantage
Valuable: It is related to such elements which help company in achieving their predetermined
goals and objectives. These are as follows- Global presence: Presence of TESCO Plc at global level is strong which result in gaining
competitive advantages. Products: TESCO plc. Is offering high quality product which result in gaining customers
satisfaction and loyalty. Software: Company uses software for effectual management of things within desirable
manner for accomplishing goals (Reim, Parida and Örtqvist, 2015).
 Employees: Staff member's of TESCO plc. operate in such manner which help in
achieving targets within required time period.
Rarity: Global presence of TESCO plc. Is not rare as they have large number of organisation at
global level. Below mention are rare resources- Products: Offering of TESCO plc. Are of latest trend and technologies thus, it is hard to
copy them. Software: TESCO plc. Is using software for maintaining record and operation execution
is rare because it developed according to need of entity.
 Employees: Staff member of TESCO plc. are rare as they have their own set of skills and
competence (Laursen and Thorlund, 2016).
Inimitable: It is related to such resources that will not be copied by rivals.
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 Software: TESCO plc. Software designed for meeting organisational need. So it is not
easy to copied it.
 Employees: Skills and knowledge of personnel is unique as this cannot be copied by any
other competitor within market.
Organized: It is related to the elements which need to be organised in appropriate manner for
achieving goals and objectives (Morris, 2016). Software of TESCO plc. Have to update their
regular intervals for accomplishing requirement of company.
 Employees: The staff of company only has to be organised when a modification takes
place within premises of company such as providing training sessions by employer.
TASK 3
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organisation
Porter's five force is a strategic management tool utilised by organisation for industry
analysis as well as to understand underlying levers of profitability within retail sector. Manager
of TESCO Plc. Use porter's five force for understanding that how five competitive forces will
influence profitability of their company (Joseph and et. al., 2019). Along with this, it assists in
developing strategy which will enhance competitive advantages as well as long term
profitability. It has been observed by Michael Porter that five forces have their significant
impact on profitability of company. These five factors in relation of TESCO Plc are mention
below:
Threats of new entrants – It is related to the new entrance within market area and it
shows how easily an organisation get enter within market. In relation of TESCO Plc. It has been
identified that threat of new entrance for retail sector company is low. Because there is
requirement of huge investment for establishing business within retail sector. So threat of new
entrance for TESCO Plc. is low.
Bargaining power of suppliers – For organisation, suppliers are the person who provide
raw material as well as other related material required for daily basis operational activities. In
context of TESCO plc. it can be said that for organisation within retail sector have low
bargaining power of suppliers (Wang and et.al., 2016). Because TESCO plc. is large scale
business firm and have numerous suppliers who will deliver raw material with low prices.
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Although, for respective organisation there is option to switch another supplier for gaining better
quotation rates.
Bargaining power of buyers – For TESCO plc. Bargaining power of buyers is high,
because customers are important for organisation and help them in long term sustainability
within business environment. For respective business firm customer bargaining power is high as
there are many companies who are providing same type of products. Thus, TESCO plc have to
ensure that they will provide best quality of product to their customers with feasible price
because it will result in gaining customers loyalty as well as long term sustainability within
market area.
Threats from substitute products – In retail sector there are several organisations and
everyone is selling similar product so, for TESCO Plc. threat of substitute product is high. Thus,
it is important for respective organisation to focus on customers need as well as want and then
offer product to them. Because such practices will attract customer from market area towards
them and result in generating high profit. Thus, it will result in long term sustainability by
fulfilling customers need and wants.
Rivalry among the existing players – With business environment, if rivalry within
existing players is intense then it will result in decreasing price as well as overall profitability of
entire industry. TESCO plc, is retail sector company and operating in high level of competitive
environment (Goffin and Mitchell, 2016). Although, there are several ways through which
respective organisation can tackle intense rivalry within existing competitors such as through
building sustainable differentiation. Along with this, by doing collaboration within competitors
for enhancing market size instead of being competitive for small market.
After conducting porter's five force model it can be said that manager of TESCO plc. Can
develop appropriate strategies as well as market plan which will assist them in gaining
competitive advantages. Along with this, it also helps company in their long term sustainability
within market area.
TASK 4
P4 Strategic Planning for TESCO
Ansoff matrix is considered as the marketing planning tool which helps large scale
companies in finalising its product as well as market strategy. The specific model includes four
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different strategies with which company can easily grow its business (Goffee, and Scase, 2015).
In context of TESCO, it can be said that the model will help company in selecting best strategy
for expanding their business growth in positive manner. All four growth strategies of this
framework are stated as below:
Product development: According to this growth strategy, companies are suggested to
sell completely new product into the existing market. With reference to TESCO, it can be said
that TESCO could enhance its product portfolio within the existing marketplace that is UK. The
strategy is beneficial for this company as they are aware about needs and requirement of their
localise customer so that if they add some product in their offering then customers will remain
loyal to them (Laudon and Traver, 2016). This leads to increase in business performance of
TESCO in United Kingdom.
Market Penetration: It is the first and foremost growth strategy of Ansoff matrix which
clearly states that the company can easily grow by selling its existing product in the existing
market only. In context of TESCO, the company can grow its business turnover by selling
existing products in the existing market as it is easier for them to influence customers to remain
loyal with. This is because, company know its positive as well as negative aspect of the product.
With this understanding, they can easily influence interest of company towards its products
which leads to increase in sales performance.
Market Development: In this strategy, companies emphasise on finding out new
marketplace for the existing product so that growth can be attained by them in effective manner.
For TESCO, this growth strategy is most beneficial for its success as according to it company
can enhance its sales by offering existing product in new country (Lawton, 2017). This will
allow them in attracting more customers which leads to great success for company.
Diversification: As per the stated name, the growth strategies states that business can
grow by introducing new product into new market place. It seen as the most riskier strategy for
large scale companies as the company is not much aware about the product as well as new place.
This increases chances of business failures. Therefore, it is advised that TESCO should not go
for diversification strategy.
As per the above stated discussion, it has been analysed that market penetration and
market development strategies will be used by TESCO. The rationale for this is devised below:-
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Strategy 1: Market Penetration
Market penetration implies increasing share of current markets with the current product
portfolio. This is the lowest risk strategy for a company to sell its existing products into existing
markets as it knows its customers, has established channels and so on. For TESCO it is would be
less risky strategic option to deal with in the existing business market, which may aid in
enhancing the overall chance of expansion. To penetrate in the market TESCO would need to
focus on the marketing mix (such as price discounting and additional promotional activity) at
the expense of competitors.
Suitability of the
strategy
The proposed strategy is suitable for the TESCO. As current business
environment where TESCO is operating is helping companies within the
grocery industry to become sustainable. To increase market share TESCO
can either stimulate the usage of existing customers and win new customers
of its competitors such as LIDL, ASDA, Sainsbury’s and more. It is also
found that People in UK are mainly shifting towards using quality products
and this is what TESCO Is offering to them. Thus, market penetration
strategy will be strategic fit for TESCO.
Acceptability of
the strategy
Market penetration will also be acceptable to the wide range of TESCO’s
stakeholders, particularly shareholders.
Customers will accept this strategy as they will get quality products at a low
cost.
By increasing the market share shareholder’s wealth will be increased.
Internal staff will also accept this strategy as company will grow and
working environment of staff within the TESCO will be improved.
Feasibility of the
strategy
To penetrate in the existing market, TESCO will have all the necessary
resources, and competencies. Heavy supermarket and general grocery stores
in United Kingdom and in other continents as well like Asia. The strong
brand reputation, experience of more than a century and financial resources
will be advantageous for TESCO to successfully implement market
penetration strategy. Financial resources will be made available through
retained earnings and debt.
Actions Responsibility Timeline forResources needed Success
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1.
Promotional offers
and increase in the
advertisement on
the social media.
2. Opening up of
news stores in the
east Asia and in
Europe.
Board of director
will be responsible
to take strategic
initiative of Market
development such
as to buy or rent
out new stores.
completion
Market
penetration
strategy will be
implemented by
December 2019.
 Cash
 Strong
Marketing team
 Strong marketing
campaign in
Social media
 Capabilities to
produce quality
products at a low
cost
 User friendly
website
 Sponsorship
criteria
Increase the
market share in
the existing
market by 5 %
by December
2020.
Strategy 2: Strategy 2: Market Development
In this strategy, companies emphasise on finding out new marketplace for the existing product
so that growth can be attained by them in effective manner. For TESCO, this growth strategy is
most beneficial for its success as according to it company can enhance its sales by offering
existing product in new country (Lawton, 2017). This will allow them in attracting more
customers which leads to great success for company. Currently, TESCO is not targeting the
Australian and African market, it would be beneficial for TESCO to target Urban cities of
Indonesia. Keeping in view that After the Brexit, UK's trade relationship with the other
European countries will be deteriorated, thus, it is beneficial for the TESCO to develop a new
market.
Suitability of the
strategy
Strategy which has been developed by Tesco, it will help them in reaching
to new bodies. Due to Brexit, it has been analysed that present business
environment of United Kingdom is moreover risky than any other business
market due to fluctuations among political, economic and other factors. This
may lead organisation to face range of problems in regards to their business
and profit margins. Along with this, it can be said that Indonesia in present
it is one of the going country, and this can be considered as good decision
for Tesco if it expands more of its business in this country.
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