Value Chain Model and Internal Environment Analysis: A Tesco Report

This report provides a comprehensive analysis of Tesco's business environment using the value chain model, SWOT analysis, and VRIO framework. It begins with an introduction to the value chain model, highlighting its importance in developing competitive advantages. The report then delves into Tesco's overview, including its history, market position, and international presence. The internal environment is examined through SWOT analysis, identifying strengths, weaknesses, opportunities, and threats. Furthermore, the VRIO analysis assesses Tesco's resources for competitive benefits. The report concludes with a reflection on the value chain model, emphasizing its role in sourcing materials, building brand loyalty, maximizing operational efficiency, and facilitating global expansion. The analysis underscores the value chain model's significance in gaining a competitive edge and sustaining market presence, suggesting strategies for further growth and innovation within Tesco.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
Value Chain Model-....................................................................................................................3
TESCO-.......................................................................................................................................4
Internal Environment-.................................................................................................................5
VRIO analysis of TESCO:..........................................................................................................6
Reflection on the value chain model ..........................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Value Chain model is introduced by Michael Porter. This framework is helpful for
analyzing peculiar activities by which company can develop value and competitive advantages.
Whereas Inbound logistics consists of storing, receiving, inventory control and scheduling for
transportation.
TESCO plc trade as Tesco. It is the multinational general and groceries merchandise
retailer. The company had its head office at Welwyn Garden City, Hertfordshire, England, UK. It
was established by Jack Cohen in 1919. The above report includes Value Chain Model and
company's overview. Report further carried forward with explanation to the internal environment
and the report ends with the refection on Value Chain Model.
Value Chain Model-
Value Chain Model is also known as the Porter's Value Chain Analysis. It is the business
management concept which is developed by the Michael Porter. The Value Chain Analysis is
being explained in the book of Competitive Advantage in 1985 written by Michael Porter. Value
chain is set of activity which are performed by organization for creating value for their
consumers. Value creation develops added value that lead to the competitive advantages. So that
higher profitability can be created for company (Swinnen and Kuijpers, 2019). The Value Chain
Analysis mainly focus on activities and system with consumer as central principles rather than on
the various department and categories for accounting expenses.
In this system activities and system are linked with each other and thus further
demonstrating effect which it had on profit and costs. It consists of number of activity which are
named as primary activity and support activity. In which primary activity have a direct impact on
production, sales, maintenance and support of goods and service which is to be supplied. Primary
activities are assist by support activity and thus base is formed for a company. The support
activity such as human resource management is important among primary activities operations
but along with that they also support other activity that are outbound logistics and services. It is
an approach in which business functions are break down into strategic relevant activities by
which utility is added in goods and services. The aim of framework is to maximize value
creation along with minimizing cost. It is the internal process by which organization can design,
sell, produce, support and deliver products. Value Chain analysis is thus dependent on basic
fiscal principle of the advantages.

TESCO-
TESCO is leading Britain's food retailing company which employee over 160,000 people
in whole United Kingdom. It has more than 702 stores. It was developed in 1919 by Jack Cohen,
which is an immigrant from Poland to United Kingdom. Among past 5 years company has
explored from traditional United Kingdom based supermarket into the new countries, goods and
service that also includes major non food businesses, internet shopping and personal finance
(Kawharu, 2018). Thus, TESCO had progressed as international retailer and had further
employed 140,000 new employees at their 214 stores in nine marketplaces globally. Increase in
internationalization and scale of TESCO purchasing and sale operations had significantly
contributed in the hike of profitability and efficiency for company. It is the public limited
company. Company has the leading market share of 27% in supermarket sector. There is huge
competition created for company by the rise of Sainsbury, Asda Walmart, Aldi and Lidl etc., The
value chain analysis of TESCO cab be used for competitive decision-making process.
Performance of company can be improved by following-
Inbound Logistics-
It is very essential for a company to maintain strong relationship with their suppliers so
that they can receive, distribute and store products. With the inbound logistics Tesco can face
several challenge in product development phase. In the analysation of inbound logistics company
needs to focus on each and every aspect of the transformation of raw material into the final
goods.
Outbound Logistics-
The outbound logistics contains activities which deliver goods to consumer by crossing
through various intermediaries. Tesco can optimize and analyse outbound logistic for exploring
competitive advantages source and achieving growth and development in the business. When the
outbound activity are managed timely with product delivery and optimal cost process then it is
helpful in maximizing the consumer satisfaction and enhances growth opportunity for company.
Technology Development-
Almost all the value chain activities are depended on the technological development. The
technical integration in distribution, production, human resource and marketing activities are
helpful to TESCO for realization of importance of technology development in company
(Ferranti, 2018). It automated software, product design research, customer service which is

supported by technology and data analytics are technological inundation which are introduced by
company in their operation activities.
Marketing and Sales-
Tesco marketing and sales includes advertising, sales force, pricing, promotional,
activities, building relations, channel selection with their channel members. The marketing
funnel approach can be used by company to structure their sales and marketing activities. Wisely
and effectively integrated marketing and sales activities is helpful for TESCO to develop its
brand equity and thus can stand out from competition.
Human Resource Management-
The human resource management can be analyzed by TESCO by evaluating various HR
aspect that includes selecting, recruiting, rewarding, training and performance management.
Effective HR management can allow TESCO for reducing competitive pressure which is based
on commitment, motivation and skills for their workforce.
Internal Environment-
SWOT Analysis-
SWOT Analysis enables company to identify factors that are required by company to be
taken in account while developing corporate and marketing strategy. During the analysis Major
strength, weaknesses and along with related opportunities and threats are being optimized by the
company (Zamora, 2016). It can be described below-
Strength-
The company has leading market share that are currently 28.1%. TESCO renders various
product variety and choices to their consumers. It is the biggest retailer globally. The company is
operating its business in several countries and had 6,809 stores across the world. They had club
cards for their customer's which h is the effective information tool for them. Company had
significant online operations.
Weaknesses-
Company had faced serious brand damage in 2015 because of its commercial income
scandal which had put the negative impact of company on its consumers. They do not motivate
and encourage their employees thus the employees who are working with company had low
morale. The company also faces the weak financial performance in 2015 due to scandal.

Opportunities-
The TESCO can adopt strategy that they can expand their business to the international
marketplace. They can enhance their presence in the financial service industry. Company can
further increase their non-food retail range so that they can have better option to stand in
marketplace. The marketing strategies effectiveness can be enhanced by them.
Threats-
The company had major threats from its rivals which are present in the market and render
the high quality products at low cost. Major fluctuation in currency is also major threat to
company which had slow down the sale of company (Swisher, Ruiz-Menjivar and Koenig,
2018). No agreed deals with European Union that can create uncertainty over the costing when
goods are imported from Europe or performing deal with suppliers.
VRIO analysis of TESCO:
VRIO analysis is helpful for determining internal resource of company and identifying
that these resources can render benefits of competition to business. For TESCO it helps them to
enhance their resources which provides them huge competitive advantage.
Valuable-
The VRIO analysis of Tesco states that financial resources of company are highly
valuable which is helpful for them to invest in the external opportunities which arises for
company. Company can easily compete with external threats. Their local food product which are
valuable resources as they were highly differentiated from other products. Employees are also
valuable resources for company.
Rare-
Financial resource of Tesco Plc are founded as rare as per VRIO Analysis. Strong
financial resource are processed by some companies in industry. Local food product are also not
to be founded as rare by company as this can be easily rendered in market by other competitive
rivals (Janicot, Mignon and Walliser, 2016). The company's patent are also rare which are not
easily available and are not processed by their rivals.
Imitable-
The Financial resources of company are costly imitate by them. This resource is taken by
company for their prolonged profits over year. Employees and local food products are also not

costly to intimate as their employees are trained with time to time training and thus local food
product can also be take over by rivals by investing in research and development.
Organization-
The company had organized financial resource for capturing value which is identified by
VRIO analysis. These can be further used for strategically invest in appropriate place,
implementing opportunities in business operations and coping up with threats (Fanzo and et.al.,
2017). The distribution network of company is well organized and helpful for them in reaching
their customers and ensuring that there products are available to them on time when it is
demanded.
Reflection on the value chain model
With the help of Value Chain Model TESCO could source and select premium quality
raw materials and on the basis of that huge consumer loyalty base is developed by them. They
can build and develop strong brand loyalty among the marketplace and easily compete with the
rivals in market effectively. A competitive advantage is thus set by company by aggressive and
effective marketing and managing coordination among product development and marketing
department. TESCO had maximized its operational efficiency by reducing waste and integrating
sustainability in their business operation thus it is helpful for them in gaining huge consumer
interest and attraction towards their stores. They had also got appreciation for their efforts for
waste reduction along with that they had implemented the paper bags in their stores and less
packaging is done by them for their products. Tesco should use Value Chain Analysis instrument
for its backward integration which is done by purchasing or merging with suppliers for ensuring
availability of raw materials on time (Ouzrout and et.al., 2018). Company can easily expand
itself to the global market so that they can gain huge revenue and profit margin further. The
analysis is helpful for company in rendering huge consumer support so that they are encouraged
to open their more stores globally and expand themselves at large level. It is also allows
company to reduce costing and finding better business deal with suppliers and thus they can
provide high quality goods to their consumers at affordable prices so that their sales can be
enhanced. Innovations are implemented by them in their products and services so that more and
more consumers are attracted towards company and its stores. TESCO highly invest in human
resource practice so that they can gain huge competitive advantage for company. They can create

specific marketing opportunities and extract value from the generic market of commodity with
the help of value chain analysis.
CONCLUSION
From the above study it has been concluded that the value chain model is very helpful for
company in gaining the huge competitive advantage for company among its rivals. Company can
easily sustain in market by the help of this analysis and implement the strategies according to tat
so that they can well perform their operation activities. They brand loyalty can be developed for
their consumer in the market place. By this company can attract wide range of consumers to the
company so that they can raise their sales and profits significantly. Company can achieve huge
success and expand itself to the developing countries by developing better strategies and working
ahead for further expansion and growth of company.

REFERENCES
Books and Journal
Fanzo, J.C and et.al., 2017. Value chain focus on food and nutrition security. In Nutrition and
health in a developing world (pp. 753-770). Humana Press, Cham.
Ferranti, P., 2018. Defining the Concept of Food Value Chain. Encyclopedia of Food Security
and Sustainability. p.1.
Janicot, C., Mignon, S. and Walliser, E., 2016. Information process and value creation: an
experimental study. Journal of the Knowledge Economy. 7(1). pp.276-291.
Kawharu, M., 2018. Reinterpreting the value chain in an indigenous community enterprise
context. Journal of Enterprising Communities: People and Places in the Global
Economy.
Ouzrout, Y and et.al., 2018. Supply Chain Management analysis: a simulation approach of the
Value Chain Operations Reference model (VCOR). arXiv preprint arXiv:1811.01683.
Swinnen, J. and Kuijpers, R., 2019. Value chain innovations for technology transfer in
developing and emerging economies: Conceptual issues, typology, and policy
implications. Food Policy. 83. pp.298-309.
Swisher, M.E., Ruiz-Menjivar, J. and Koenig, R., 2018. Value chains in renewable and
sustainable food systems. Renewable Agriculture and Food Systems. 33(1). pp.1-5.
Zamora, E.A., 2016. Value chain analysis: A brief review. Asian Journal of Innovation and
Policy. 5(2). pp.116-128.