Strategic Analysis of Tesco: PESTLE, SWOT, and Porter's Five Forces

This report presents a comprehensive business strategy analysis of Tesco, a multinational retail company. It begins with an introduction to business strategy and its application to Tesco, followed by a detailed PESTLE and SWOT analysis, examining the political, economic, social, technological, legal, and environmental factors, along with internal strengths, weaknesses, opportunities, and threats. The report then delves into the competitive environment using Porter's Five Forces model to assess the industry's attractiveness and competitive intensity. Furthermore, the report evaluates different strategic directions available to the organization and provides recommendations for appropriate growth and strategies, culminating in a strategic management plan with defined objectives, strategies, and tactics. The analysis aims to provide insights into Tesco's current market position and suggest ways to enhance its competitive advantage and achieve its business objectives.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION..........................................................................................................................3
PART 1 ...........................................................................................................................................3
Analyse the PESTLE and SWOT on the organisation................................................................3
Description on analysis of competitive environment with use of Porter's five forces................6
PART 2............................................................................................................................................7
Evaluation on different types of strategic direction avail to organisation..................................7
Recommendation on appropriate growth and strategies.............................................................9
Produce strategic management plan with objectives, strategies and tactics. ...........................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy defined as course of action that aids to accomplish the organisational
objectives. It is termed out as set of competitive moves and action that business attracts
customers, compete successfully, strengthening performance etc. Thus, this is defined as great
tool that helps to set the vision, mission and value proposition that can all be accomplished with
help of business models.
The present report is based on business activities of Tesco. It is British multinational
groceries and general merchandise retailer that headquartered in England, United Kingdom.
This offers wide range of products such as electronic goods, books, broadband and financial
service etc.
Furthermore, assignment will outline the activities appropriate frameworks that analyse
the impact and influence of macro environment such as SWOT and Pestle, Internal environment
analysis can be conducted with use of Porter's five forces. Lastly, recommendation will be given
on strategies that impacts objectives of the organisation.
PART 1
Analyse the PESTLE and SWOT on the organisation.
This is defined as framework that aids to undertake the analysis that influence the firms
operation in the competitive manner. However, political, economical, social, technological, legal
and environmental conditions are defined in following manner as are-
Political- This is the retailing company that operates at the global level but global political
components influence the performance of the Tesco greatly. Due to ongoing financial crisis there
are many retailers in the world that are encouraging retailers to create job for the domestic
population. Thus, it can be stated that Tesco plays the greater role in creating the employment
opportunities for the individual as this operates at the global level. Hence, this entity has also
enhance the demand for its commodities and the workforce of the enterprise also get diversified.
Economic factor- It is the components that is likely to leverage cost, demand, profit and prices.
Thus, the company should be aware of changes in policies, taxation and any other factors that
affects the accessibility of finance. Therefore, the change in price, inflation rates all these
components highly affects the brand image of the enterprise. This enterprise has market share of
30 % in the market of the UK. This can be stated that internationalization and diversification are

the two components and key strategies that pursued by entity over the years and this is major
reason for success. Due to decline in disposal level of income and household incomes Tesco has
shifted their focus towards advertising its value brands rather than more luxurious items.
Social factors- There are variety of social changes and trends that indicates the customers in the
UK that have moved towards the bulk shopping. However, Tesco has enhanced the number of
the non food items that are offered for the sale. This kind of good and services that are offered by
the customers mostly influenced the belief's and attitudes that mainly get influenced by the social
conditioning (Mahat, 2019) . In the present scenario, the customers are becoming more
influenced by the health issues and they are shifting towards to consuming the organic
commodities to maintain their health conditions. In addition to it, Tesco is adapting these
changes by accommodating the demands for the organic products. To maintain the brand image
entity needs to deals with the all kind of changes and preference that can attract the customer and
also helps to maintain the customer retention rate.
Technological factors- The advancement in technological conditions have brought various new
opportunities for Tesco. Thus, online facilities to the customers can be helpful in enhancing the
brand image of the enterprise. This quoted enterprise has invested the significant amount on the
energy efficiency project to full fill its long term objectives to reduce impact of carbon footprint.
Henceforth, technical advancement helps to enhance the brand image of the enterprise. With the
help of adaption of the new techniques of way of producing commodities aids to bring
innovation in commodities and this helps to enhance the profitability (Garcia-Swartz and
Campbell-Kelly, 2019).
Environmental- The increase pressure on firms helps to address the environmental issues and
this also adopts the ways of operation which would benefit the society (Hsieh, Ma and
Novoselov, 2019). It is entity that is clearly committed to reducing the carbon foot print by 50%
by the year 2020. Therefore, quoted enterprise is minimizing waste produce in their store by
increasing the cons in the customers. Thus, pollution, emission and other environmental factor
has huge impact on working of the enterprise.
Legislative- The government policies and regulation also has direct impact on the performance
of Tesco. Henceforth, quoted enterprise provides its customer price reduction on the fuel they
purchase. Thus, there are several promotion in which the price of the commodities gets lowered.

SWOT analysis- This is one of the effective tool that aids to analyse the competitive
environment as well as the stakeholder pressure that helps to analyse the firm's strength.
Therefore, it has been undertaken in following manner as are-
Strengths- These as are-
 Tesco has won various rewards for its retail excellence, customer service and overall
shopping experience.
 This is considered as one of the largest and profitable supermarket chain that highly
invest in producing commodities (Theoharakis, Bicakcioglu and Tanyeri, 2019) .
 The chosen enterprise has significant cash reserve and wide range of property in its
portfolio yet undeveloped which provides strong financial position to all types of
economic cycles.
 This entity has long standing history in the UK that gives credibility and assurance that
will continue to operate long into the future.
Weakness- These are defined in following manner as-
 The competitive pressure led to price wars that have eroded some of the retailer profit
margin in which Tesco must put their focus on other ways to gain competitive
advancement.
 The retailer is highly dependent on the UK and Europe for the sales and has also not
spend the time and resources on developing the other markets where its operates.
 Consumer may not be buying items that in relation to less disposable income and retailer
has not also adjusted its inventory, selection and this also has high cost of inventory.
Opportunities- These as are-
 There are number of the opportunities that are for strategic alliances with the other brands
that admired firms to offer the commodities that attracts the consumers in certain target
market.
 This is the enterprise that has wide number of opportunities in the private label market.
 There are significant opportunities that continually takes the initiatives for the online
shopping for the Tesco as well as this also offers the home delivery service to wide range
of areas.
Threats- These are defined in following manner as are-

 Economic recession and credit crunches continually threaten the market share and
profitability within the areas around the world. It reduces the number and size of
purchase that made by the customers.
 Political landscape and government regulations both are putting pressure on Tesco and
this also adhere new regulation and this also makes significant changes to their
operational expenses (Theoharakis, Bicakcioglu and Tanyeri, 2019) .
 The increase in material cost are also threatening profitability of the TESCO and this also
cause expand the supplier network to get the better pricing on the raw materials.
Description on analysis of competitive environment with use of Porter's five forces.
This is defined as framework that helps to analyse competition of the business. It is tool
that derive the forces to determine the competitive intensity and attractiveness. This,
competitiveness of Tesco business environment examine the five forces model effectively.
Henceforth, these are defined in following manner as are-
Threat of new entrants- The economies of the scale to this enterprise is very typical to achieve
in this industry in which Tesco operates its functions. Thus, this makes the chosen enterprise
producing the large capacities to have the advancement of cost. However, the product
differentiation is strong within the industry, where the entity sell differentiated commodities
rather than standardised price rates. Hence, it can be stated that the access to distribution network
is quite easy for the number of new entrants. In addition to it, Tesco mainly put their focus on the
innovation to differentiate the commodities from the new entrants. Thus, quoted enterprise also
spend on marketing to build the strong brand identification (Theoharakis, Bicakcioglu and
Tanyeri, 2019) . Thus, rivalries of the chosen firm is quite high as there are number of the firms
who are wishes to open super market chain that deals in grocery services. Henceforth, the present
rivalries of the enterprise is as ASDA, Sainsburry's and Aldi etc.
Rivalries among exiting firms- There are number of retail brings innovations and new ways of
doing things and this also put pressure on quoted enterprise. Thus, new pricing strategies,
reduction in cost this all provide new value proposition to the customers. Henceforth quoted
enterprise needs to manage this all kind of the challenges ans must build effective barriers to
safeguard the competitive advancement. With help of building economies of scale and by
reducing the fixed cost per unit aids to enhance the brand image of the enterprise.

Bargaining power of the suppliers- There are most of the companies within the retail industry
that buy their raw material from the numerous suppliers. Henceforth, the high supplier
bargaining power that lower down the profitability of Retail (Galpin, 2019) . With help of
experimenting the design of the commodities by use of the different materials so that prices of
the raw materials can go up. This enterprise has varied chain of suppliers and this affects the
growth of profitability and productivity.
Bargaining power of buyers- The customers in the market are very demanding and they have
different choice and preferences. Thus, they wants to purchase the commodities at the minimum
possible price rates. It is the term that put pressure on profitability in the long run. In order to
attract the large number of customer they needs to take the initiatives in manner as to increase
the discount and offers so that buyers can attracted (Garcia-Swartz and Campbell-Kelly, 2019 .
This can have positive impact on sales growth of enterprise. Therefore, this can be stated that
new commodities can also reduce the defection within the existing customer of Tesco plc to its
competitors.
Threat of substitute product and services- There are number of the alternatives available for
the commodities and in the industry they operates their functions. Thus, there are very few
substitute that are available and produce at the low profit margins (Shende and Panneerselvam,
2019) . Hence, these are the all components that make threat of substitute the weaker force
within the industry. The quoted entity put their major focus on greater quality in the
commodities. In order to have long term customer retention, they need to offer the commodity at
the lower price with greater quality. Thus, quoted enterprise needs to put their major focus on
differentiating its commodities.
PART 2
Evaluation on different types of strategic direction avail to organisation.
The term strategic direction defined as the set of the foundational ideas that provides
consistency to plan of action. It is defined as backbone of the business as it is roadmap that leads
to desired goals. Business strategies is defined as part of business plan (Garcia-Swartz and
Campbell-Kelly, 2019 . With help of choosing effective business strategy the entity also allow to
put their major focus on capitalising the strength of the business that allows to gain competitive

advancement to gain the position in the unique manner. Henceforth, the common type of
strategic direction are defined in the following manner as are-
Competitive strategy- It is the strategy that mainly focus towards to collect the target of the
external conditions. This is the plan of action that mainly aims at gaining the competitive
advancement within the marketplace against the competitors. In addition to it, competitive
advancement comes from those plan of action that leads to have some uniqueness in market.
There are the following examples of the competitive strategy as are low cost strategy, contrast
strategy and market niche strategy. With help of adopting this strategy, the quoted entity can also
able to earn the long term amount of the profitability (Mahat, 2019) . It is one of the effective
technique that is inclusive of varied business approaches and initiatives to undertakes the form to
attract client and deliver better value to customers.
Business strategy- This is plan of action that formulates at the business unit level. Therefore,
this is termed out as business unit strategy. It is that plan of action that mainly put their
emphasise on firms competitive position of product or service. Thus, business plan of action is
comprised of cooperative and competitive approach. Hence, the manager of the entity thinks
over to distinct attitude to gain the competitive advancement over its rivalries in market.
Therefore, the main focus of the business strategy is over the things as to bring development
within the commodities, innovation, market development, integration and diversification etc.
Corporate strategy- It is strategy that mainly formulated by the top level of the senior
management of the diversified enterprise. This is defined as the long term objective that mainly
affect the business units. The firm needs to put their major focus on the corporate plan of action
that brings out the better and effective force.
Functional strategy- It is defined as an approach that helps to put points up on the particular
functional area of the enterprise. This is things that mainly sets down to accomplish the unit of
business with help of maximizing the resource productivity. Henceforth, the functional strategy
is mainly comprised of the human resource strategy, marketing strategy and financial strategy.
Operating strategy- This is defined as strategy that provides firm direction to accomplish the
specific goals within the enterprise. It provides firms to operate units for the organisation.
Henceforth, the operating strategy put their focus on the field level that aids to accomplish the
organisation goals. Thus, operation of the entity must be undertaken in better and effective
manner so that one particular goals to the entity can be accomplished.

Recommendation on appropriate growth and strategies.
Good and effective strategy helps to define the strategic direction of the enterprise that
allows to get the things done. There are number of the enterprise that mainly fails to accomplish
the growth targets within revenue and profitability. In order to enhance the growth within the
enterprise, the suggestive measure are defined in the following manner as are-
 In order to have growth within the market, the quoted enterprise needs to understand the
needs of local market and must taken initiatives to develop the collaborative approach.
This can be one of the effective things that helps to understanding the preferences of
customer and also assist to establish close relationship with local marketing teams.
 The quoted enterprise should adopt the innovative approach, by bringing up the
modification within the existing commodities entity can highly supports to firm to
undertake better steps and this can helps to build competitive advancement within the
market.
 The offer, discount and coupon promotions all are the way that needs to be adopted by
Tesco, as this helps to gather the attraction of the customers. It is one of the effective
strategy to build the long term customer base. It is one of the effective medium that helps
to increase the market share by raising profitability and productivity of the chosen entity.
 The Tesco need to put their more focus on their strength rather than finding the lacking
areas and trying to improve it. This can be one of the effective way to establish the
growth strategies. This kind of plan of action can be assistive to grow the business.
 To develop the growth within the enterprise, the entity needs to overlook to delivering the
superior level of customer value that requires uninterrupted flow across the organisation.
It is defined as one of the crucial step that helps to building an organisation strategic
capabilities regardless of the specific capabilities.
 The entity must undertake product development strategy that can assist the firm to bring
development within the product and services. It aids to firm to undertake the better course
of action and to do the things in effective and efficient mode.
 Chosen enterprise should take the approach as customer assistance approach, this is
defined as providing timely services to customer and to sort their complaints within
periodical manner. It can be helpful in terms to enhance the customer management theory
and effective things can be undertaken with use of it.

Produce strategic management plan with objectives, strategies and tactics.
Strategic management plan termed out as art and science of formulating executing and
evaluating the cross functional decision that enables an enterprise to accomplish its core
objectives. This is defined as continual process of strategic analysis, creation, execution,
monitoring that used by enterprise with one particular aim to achieve and maintain competitive
advancement. Therefore, strategic management plan defined as-:
Strategies Objective Tactics Time line Feedback
evaluation
Enhancement in
sales
To enhanced 40%
profits within 3
months.
It can be done
with help of bring
development in
product quality
and price to
commodities.
2 weeks The process of
evaluation needs
to be conducted
in terms to
analyse the
profitability of
months.
Product
development
To bring product
development
The needs of the
customer must be
analysed so that
commodities and
services can be
effective
accordingly.
3 weeks It can be
undertaken with
help of evaluation
in the sales of old
commodities and
after bring
product
development.
Diversification To bring
diversification in
business activities
The
diversification
within the
business activities
helps to
accomplish end
goal to the
2 weeks By took entry in
new market the
profitable growth
of the enterprise
can be identified.

enterprise.
CONCLUSION
From the above report it can be aforementioned that Business strategy termed out as
course of actions that assist the entrepreneur in terms to accomplish specific objective to the
enterprise. In this competitive environment, the business plan of actions has become apparent
and there is also huge increase in type of business strategies that used by firms.
The present report is based on business activities of Tesco, it is global leading retail
sector that deals in wide range of commodities as electronic goods, books, broadband and
financial service etc.
Furthermore, report has SWOT, PESTLE and Porter's five forces analysis to undertake internal
and external conditions within the market. Thus, study will emphasised on strategic direction that
aids to gain competitive advancement within the market. Lastly, recommendation has been given
to undertaken growth and to enhance brand image of the enterprise.

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