Business Strategy Report: Tesco Plc - Environmental Analysis

This report provides a comprehensive strategic analysis of Tesco Plc, a major player in the retail sector. It begins with an introduction to the importance of business strategy and its impact on organizational growth. The main body of the report includes an application of the PESTLE framework to analyze the macro-environmental factors affecting Tesco's strategies, such as political, economic, social, technological, legal, and environmental factors. Furthermore, the report delves into the internal environment and capabilities of Tesco using value chain analysis, examining inbound and outbound logistics, operations, marketing and sales, and services. The Porter's Five Forces model is then applied to evaluate the competitive forces impacting Tesco, including the threat of substitution, the bargaining power of suppliers and buyers, the threat of new entrants, and rivalry among competitors. Finally, the report integrates a range of theories, concepts, and models to interpret and devise strategic planning for Tesco Plc, concluding with key findings and recommendations.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
Main body...................................................................................................................................1
P1 Application of appropriate framework top analyse the impact of macro environmental
factors on strategies of the organisation......................................................................................1
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
framework...................................................................................................................................2
P3 Apply Porter 5 force model to evaluate the competitive forces impacting Tesco plc...........4
P4 Apply a range of theories, concepts and models to interpret and device the strategic
planning for Tesco plc.................................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
A proper Business strategy is very important for a trade organisation that will help in
suitable growth and rise in effectiveness of business firm. Besides this, a good strategic
assessment will support an increase in business performance of the organisation. The analysis of
internal and external assessment will help in increasing the business activities and growth of a
business organisation. The report is been presented in context of Tesco Plc which is a public
limited firm working in retail sector. The report will focus on the application of appropriate
framework using the macro environmental factors affecting the business entity and its strategies.
The internal and external capabilities of a business entity is been applied in organisational
context. The porter 5 force model is been applied to evaluate the competitive forces impacting
the cited organisation. Besides this, a wide range of theories, models and concepts are been
applied for better strategic planing in cited business entity.
Main body
P1 Application of appropriate framework top analyse the impact of macro environmental factors
on strategies of the organisation.
The Tesco plc is one of the major impacting element that influence the performance and
execution of business activities by the cited retail entity. The macro environmental factors will
impact the business performance of the organisation to a greater extent form outside. Besides
this, it will also influence the strategic development of the business entity that is been taken in
consideration by management of cited retail entity. The macro environmental factors over a firm
are been evaluated through the means of PESTLE analysis which will give out elaborative
description of extent of influence, macro environmental factors have on cited retail entity is as
follows:
 Political factors: on the local as well as global level, governmental policies and political
conditions have impacted the business performance of the cited retail entity to a greater
extent. It will influence the performance of cited retail enterprise deeply. The tax rates
and policies that are been developed by political authority within a location or a country.
Tesco has to convince this political authorities that it is generating a good amount of jobs
for its people.
 Economic factors: it is the main element of concern that is been looked after by cited
retail entity. This includes rents, establishment cost and profit that is been developed by
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organisation that supports a good rise in strategic management of business activities to be
followed by firm. It also facilitates good access to different sources of finance. As the
globalisation is increasing, the firm will look after proper handling of business operations
which are required to be followed to strategically grow on international level.
 Social factors: it is been varied from location to location and thus has to be monitored by
the cited retail entity. It involves the customers or people who are now moving towards
bulk and one stop shopping. It also influences the sales and provide the firm a detailed
idea about customers needs and requirements. Besides this, it has also impacted the
strategy of company to consider social conditioning and meeting customers requirements
to a greater extent. Other than this, it helps in development of new and innovative
products and services.
 Technological factors: with rise in usage of the latest technologies in different business
operations will impact overall performance of the organisation. It will help in meeting
customers meeds and demands in an effective way. Other than this, the involvement of
the latest technologies like social media and online marketing will help cited business
entity to grow and develop. It will help the firm to draft an appropriate online strategy
that will increase the performance of cited retail entity in a very significant way. Besides
this, it will save time and effort implemented by Tesco plc.
 Legal factors: it is one of the most important and viable factor which is needed to be
taken in consideration by business entity. The effective following of legal obligations will
help the cited entity to avoid any sort of dispute and help in strategic conflict
management. Besides this, it helps in improving ethicalness of the firm.
 Environmental factors: as the environmental concerns are been raising on the global
level, it has impacted the strategic execution of business operations followed by Teco plc.
It has encouraged cited retail enterprise to develop environmental friendly product and
reduce the carbon footprints by the firm.
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
framework.
Unlike external environment, the internal capabilities and environmental factors impact
the organisation to a greater extent. The internal factors are required to be managed effectively
by management of organisation in order to clarify and improve the performance and profitability
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of the firm. The assessment of internal environment and capabilities for Tesco Plc will be
identifies using Value chain analysis which is as follows:
 Inbound logistics: the inbound logistic facility of the cited firm is more complex and
compound and thus have the various sort of product categories. The economies of scale
are major source of income and value creation for firm, around the world. The company
had poor dealer and supplier relationship that has impacted its performance and growth to
a greater extent. The delays in payment and supply facilities had lead the cited
organisation to face penalties and fines. Thus, the firm is required to improve relationship
with their suppliers.
 Operations: the operations that are been followed by the Tesco plc are been divided in 3
categories: retail, manufacturing and banking. This has improved the core competency
and performance of business organisation that helps in the suitable rise in capabilities and
thus enhance the profitability and customer satisfaction. The diversified business actions
that are been performed within the organisation will help the firm to cater a larger
customer base.
 Outbound logistics: delivering of goods and services to its customers on stipulated time
frame and as per their flexibility is major advantage of Tesco Plc's delivery services. It
also helps the customers to order online and as per their convenience even from their
physical store.
 Marketing and sales: Tesco is well known for its innovative and effective marketing
approach which separates it from its rivals or competitors. The effective strategies help
the firm to maintain the good relations with their customers and generate a good amount
of revenue. Besides this, it has been beneficial for improving the brand image of firm.
Also, the current strategy 'Every little helps' have aided the firm to increase the business
channels.
 Services: the cost leadership and innovative services that are been followed by the
organoisation will help the firm to handle the business activities to a greater extent. It has
allowed the firm to provide its customers with higher standard of services. It has also
helped in reducing the cost and allowed the firm to provide better quality customer
services at lowest price at a same time.
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Besides this, the secondary factors like firm infrastructure, human resource management,
technology development and procurement is the major reason that has helped the firm to increase
its business operations and capabilities to meet customers requirements. These are the additional
or supportive activities that helps the Tesco plc to have a good control over its performance and
meet the operational requirements that are been set by the organisation. It helps the company to
rectify its internal flaws and identify its strength and weakness to work up on in order to improve
its revenue and strategic growth factors. Other than this, it will enable the cited retail entity to
make strategic changes or alterations, adopt and implement various measures which will support
internal rise in capability of retail enterprises. Besides this, it will help the firm to build a good
relation with its suppliers and customers.
P3 Apply Porter 5 force model to evaluate the competitive forces impacting Tesco plc.
Porter 5 force model will help in development of a mindset and strategies against the
forces that impacts the performance and growth of the cited public retail entity. It supports a
better rise in operations and actions that will help in meeting of business operations and thus
facilitates increase in capability of firm to have a strategic development. The Porter 5 force
analysis for Tesco plc is as follows:
 Threat of substitution: As the Tesco plc operates in a wide variety of business
operations and thus will help in improvement of the performance of the firm. The large
product portfolio of the firm enable it to provide its customers with bigger range of
commodity. Besides this, the firm is one of the largest public retail enterprise in world
ahving the maximum number of market share in most of its operating companies. This
gives the Tesco plc a fair chance to emerge as the leading market vendor for its customers
base and nullify any sort of chances for the retail entity to get substituted in market.
 Bargaining power of suppliers: it is the major concerning issue that has to be looked
after by the firm in order to increase the performance and capability of the firm. In the
previous years, the relation of Tesco with its suppliers were not so good and thus the
bargaining power of supplier has to be managed by the cited retail firm in order to
improve its profit. The poor relations with the suppliers has also adversely affected the
brand image and business relations. Thus, in order to mitigate the risk factors that can
impact Tesco plc as an organisation. Besides this, the firm has to work upon improving
its suppliers satisfaction level.
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 Threat of new entrants: Although, Tesco plc is one of the largest retail enterprise in the
world, in recent time the firm has faced the severe threat from new entrants that have
emerged in retail sector. This has impacted the profitability and revenue generation of the
firm to a greater extent that has impacted the performance of firm to a greater extent.
However, the substitutes are not much successful in diverting Tesco Plc's customer base
towards themselves, but the availability of an extra option is a major challenge for the
market share of the company. The major retailers like Sainsbury, Morrison and ASDA
are the major threatening firms for the cited entity which has infiltrated the market base
of chosen retail enterprise to some extent.
 Bargaining power of Buyers: the availability of high product and service portfolio has
been the major advantage for the cited retail entity to cater a good number of buyers and
consumers. However, the availability of the other retail firms offering the same quality of
product at a lower price than the cited enterprise has increased this has created the
condition of breaking down of customer base for the cited retail firm. This will also lead
to increase in competition for the organisation, influencing its revenue generation. In
order to avoid such situations, the firm has to look after the effective pricing and
improving the product quality for sustaining its loyal customers in market.
 Rivalry among competitors: the rivalry among the firms in retail sector has increased to
a greater extent. The newly emerging companies are giving a stiff competition to the
chosen firm. Although, to influence the market share of Tesco plc will be a tough call for
the firms like Sainsbury, ASDA etc. but t has impacted the market share of the cited
business entity to a greater extent. The firm has to look after the effective planning for
meeting this competition.
P4 Apply a range of theories, concepts and models to interpret and device the strategic planning
for Tesco plc.
Some major theories, concepts and models that will be implemented within the Tesco plc
which will help in developing strategic planning for the firm are:
Ansoff's matrix: It will help in developing a good strategy that will support a positive
development of business strategy for the firm is as follows:
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 Market penetration: it is the strategy to operate in market using the existing product
portfolio in current operating market in order to improve revenue and functionality. It is
the safest of all the strategies that can be used by the business enterprise.
 Market development: this involves the development of existing product and services by
the firm for the new market. This will help the firm to improve the customer satisfaction
level. It is quite risky as the firm is entering in a new market with is current product
portfolio.
 Product development: this strategy of Ansoff Matrix involves the Tesco plc approach to
develop a new range of products and services for the customers in its existing
marketplace. Its is comparatively risky strategy that the other two as it possesses the
uncertainty about the success of the newly developed products and services.
 Diversification: it is the most risky approach as it includes the development of new range
of products and services in a new marketplace that consist of unknown and unanalysed
customer base. Failure of this strategy can cost the firm its valuable resources and brand
image.
Growth share matrix: this is the strategic concept that helps the individual firm to expand its
business operations and activities to a greater extent. This involves the following factors:
 Stars: its involves the product range and portfolio at the organisation that has the highest
demand and hence has the strong position as compared to its competitors. They usually
need higher investment in order to maintain the growth rate. As the growth decreases, the
elements of star category becomes the cash cows.
 Cash cows: they are the products or services with low ration of growth but higher market
share. It consists of low requirement of investment to increase the market share. In case
the cash flow is in surplus and the firm faces the high profit, they convert to stars.
 Question mark: it is a condition when the firm has the low market share but is operation
in a high growth market. They require high range of investment in order to effectively
work in market. Their expanses is higher than their competitor and are susceptible to
failure or success.
 Dogs: they are the commodities or conditions with low market share in low growth
market. They create a break even point for a business and are either sold or closed.
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CONCLUSION
Thus, it can be concluded from the report that the strategic planning is very important for
a public retail entity, Tesco plc. The firm will look after the proper meeting of the business
operations and activities that will help the organisation to improves its strategic performance and
thus will help in the effective rise in productivity and profitability of the firm. The impact of
macro environmental factors on the firm is been analysed using PESTLE analysis. The internal
factors are been evaluated using the value chain model, Porter 5 force model is been
implemented within the firm to identify the competitive forces impacting performance of the
firm. Besides this, various theories, concepts and models like Ansoff's growth model, or BCG
matrix are been interpreted for effective and strategic planning for cited retail entity.
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