Tesco PLC Strategic Management: Market Analysis & Growth Tactics

This report provides a detailed strategic management plan for Tesco PLC, a British multinational grocery store. It includes a comprehensive analysis of the macro environment using PESTLE, the micro environment using SWOT, and an evaluation of competitive forces through Porter’s Five Forces model. The report identifies existing and potential competitive advantages, devising strategies and tactical objectives for the firm's growth. Different strategic directions are critically evaluated, and appropriate growth platforms are justified and recommended. Furthermore, the report assesses methods for monitoring the effectiveness of the strategies, providing a roadmap for Tesco PLC to enhance its market position and achieve sustainable growth. Desklib offers a range of similar solved assignments and study tools for students.

Strategic Management Plan

EXECUTIVE SUMMARY
The present report is going to provide in detail information about the macro environment
factors by using PESTLE AND micro environment by using SWOT analysis. Moreover, Porter’s
Five Forces model has described in order to identify the ways by which the company will gain
competitive advantage in the market. Furthermore, the study has been discussed about the
growth strategies like Bowman has been described in order to increase their sales as well a
dealing with the threats present in the competitive market area.

Table of Contents
INTRODUCTION ..........................................................................................................................3
PART- A..........................................................................................................................................3
PESTLE and SWOT analysis of the organization.......................................................................3
Evaluating competitive forces of business through model..........................................................6
Identification and justification of the organization’s existing and potential advantage .............7
Devising valid strategies and tactical objectives for the firm......................................................8
PART-B...........................................................................................................................................8
Critically evaluating different types of strategic directions.........................................................8
Justifying and recommending appropriate growth platforms....................................................10
Evaluating ways by which the strategies can be monitored......................................................10
CONCLUSION .............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
Strategic management plan refers to the organizational management activities that helps
them to set the priorities and have better resources. This can be stated as the roadmap that helps
the organization to know about the different activities in order to attain the goals. The current
report is based Tesco Plc. It is the British multinational grocery store. This report will indicate on
the evaluation of the internal and external environment by using SWOT and PESTLE analysis.
Further this report will put focus on the evaluation of the competitive forces with the help of
Porter’s five forces. There will be inclusion of the strategies and tactical objectives that helps the
company to grow. Furthermore, this report will include the different types of strategic directions
available to the company. This report will outline the most appropriate growth platform and
strategies and will choose best in order to ensure success.
PART- A
PESTLE and SWOT analysis of the organization
PESTLE analysis: This framework helps the company to know about the changes in the
market and its impact on the company. This used to consist of 6 factors which are described
below:
Factors Description
Political This factor includes the tax rates, interest rate,
stability of the country where it operates, etc.
This is big supermarket in UK so it has the
great influence of these factors in order to
attain the objectives. As there is financial
instability in the market which used to affect
the operations of the company where it
operates. Moreover,Tesco must follow the
rules and regulations of the government which
will maintain the goodwill in the market.
Economic This factor includes the demand, process. Cost
and leverage costs (Distanont and
Khongmalai, 2020). Also ,as there may be
changes in any of the elements which used to

affect the profitability of the company. Also,
due to the declining of the income levels the
company must advertise their products rather
than selling at the higher rates. Moreover, The
company must focus on this factor as it is
directly related with the profitability.
Social There are continuous changes in the retail
industry which used to affect the productivity
of the companies (PESTLE ANALYSIS, 2022).
Also, By changing in the taste and preferences,
needs, wants, culture, etc. will have negative
impact on the productivity and profitability.
Moreover, as the company used to sell the
non-food items that helps them to have
increase in the demands of the product.
Furthermore, Such changes are adopted by
Tesco in order to maintain the reputation in the
market. Thus, The company used to believe
that they can benefit the society by proving
them the best products and employment
opportunities to the people.
Technological There is the great advancement in the market
that has affected the profitability of various
retail sectors. Furthermore,Tesco must adopt
the new and innovative technology that helps
them to operate in the UK market. Also, This
makes the company to have the better
productivity and profitability by adopting the
new technology in the company. Moreover,
The cited company has also invested in the
energy efficient projects that helps them to

attain the long term profits.
Legal This includes the government policies and the
legislations that used to have direct impact on
the company. Also, Tesco used to follow the
legal policies that helps them to have better
growth in the market. Moreover, The company
used to provide the cost reduction in the prices
in order to buy the fuel that can be spent on the
grocery store.
Environmental This is one of the most important factor that
must be followed by the company in order to
have sustainable growth. Also, Tesco has
various initiatives that helps them to have
improvement in the environment and to have
sustainable market. Furthermore, as working
in the retail industry is most challenging for
the company to deal with the changes in the
environment.
SWOT analysis
Strengths
 It is one of the biggest grocery store in
the market of UK.
 It has large market share which is
27.9% of share in UK. The company used to have leading
market hare that helps them to have
greater profitability.
Weaknesses
 The company has failed its operations
in US and Japan.
 It has the poor performance in the
specific market (Assensoh-Kodua,
2019).
 The company used to follow the low
cost strategy that affects the profit.
 Due to happening of covid the
company has decrease in the operating
profits.
Opportunities Threats

 Tesco can have the joint ventures with
the another companies that helps them
to grow in the market.
 It can have the cashless stores that
reduces the line of encashing the bills. The cited firm can have the strategic
partnerships with the other brand that
helps them to grow in the market.
 The company used to have many
competitors which affects the
profitability.
 As due to less operations the company
used to face the supply issues in the
market.
 The changes in the government legal
policies used to have great threat on
the company.
 By the happening of Brexit the
company has suffered a lot which is
the great threat for Tesco.
VRIO analysis
This model consists of four factors that helps the company to know about the internal
capabilities in the market. The VRIO analysis of Tesco is as described below:
Valuable: This element helps the company to know about the needs that helps them to
produce the best products. The production management of the company must be up to date which
helps them to satisfy the needs pf customers.
Rare: This includes the availability of the resources that helps them to have better
production in the company. Tesco must have the availability of the resources that used to
produce the best products in the market.
Imitable: The availability of the resources is so costly to imitate if another company does
not imitate to buy the products at reasonable prices.
Organization: As the resources does not have any advantage to the company so it must be
utilized optimize in order to increase the value in the market. Tesco must have the good financial
resources that helps them to have better production in the market.
Resources/
capabilities
Valuable Rare Imitable Organization
Goodwill Yes Yes Yes Yes

Human
Resources
Yes No Yes Yes
Customer rating Yes Yes Yes Yes
Leadership
team
Yes Yes No No
(Source: Papadas and et.al., 2019)
Evaluating competitive forces of business through model
There are various competitive forces that affects working operations of any firm and for
retail business like Tesco these factors helps top management to devise the best strategies in the
future. Furthermore, this might be better explained through applying the porter five forces model
that is as follows:
Competition in the industry: It is very high for the retail industry as it can be said that
there is increasing demand and supply of various consumer goods in the market. Also, there is
free entry of various small firms in the industry that wish to cater to needs of the particular
segment. However, it can be said that even though this factor is high but small firms are not able
to compete with brand like Tesco that is offering variety of goods in various markets
New entrants : It is also high as the UK market is very large where there is large demand
of consumer goods and services. Although there are new entrants but Tesco does not have to fear
much as it enjoys economies of scale and it has its own competencies that is unique from others.

Power of suppliers: It is low as suppliers cannot exert significant power on company due
to established brand image in market. Also, large number of suppliers wants to be part of the big
brand and hence the firm has the option of switching from one option to other.
Power of customer: It is medium to high for the business as buyers needs have to be
kept in mind while offering large variety of goods and services. Also, Tesco major strength is
low cost of various goods because of which consumers will not benefit while switching to other
big brands.
Threat of substitute products: it is low for this retail industry as even though there are
large number of buyers and suppliers within the industry but the small firms do not have the
adequate resources to deliver the same quality products as of big retail business thus making it
more profitable in long run. Also, extensive market research is required to have completely new
attributes in existing products that is not possible for small retail business in initial days
Identification and justification of the organization’s existing and potential advantage
Availability of Raw material: In order to maintain and have the availability of the resources
the company is required to have the good finance (Monte, 2021). Tesco must have the proper
availability of the raw material that helps them to have the proper availability of the resources.
This makes the company to have and gain the competitive advantage in the market.
Pricing strategy: The company must have the good pricing policy that helps them to gain
the competitive advantage in the market. They must have the cost leadership competitive strategy
that allow them to have the better competition in the market.
Availability of the competitors: As from the above Five forces it is seen that the company
is facing the high competition in the market. This is because of having the more supermarket in
the market of UK. By doing the innovation and have new products it can gain the competitive
advantage in the market.
Differentiation of products: By having the new technology adopted by Tesco, it helps the
company to have the production of differentiated products. The company must sell the new and
innovative products in the market that helps them to have increase in the number of customers.
Leadership style: As this is one of the most common element that helps the company to
lead in the market (Dagnino, Picone and Ferrigno, 2021). By having the good leaders in the
company helps them to have the proper guidance to the employees that helps them to gain the

competitive advantage in the market. This will also make the company to have the proper
productivity in the market.
Devising valid strategies and tactical objectives for the firm
For company like Tesco that is operating on large scale it can be said that strategic
objectives are one that helps in creating the right path for employees so that proper action might
be taken in the future (Inga and et.al., 2021). Also, all the statements helps in creating the vision
that is good for the successful running of the business in the future. Furthermore, through
establishing the long term goals the company is able to ensure the best utilization of resources
and maximum efficiency in the working processes of the business. Below is list of the objectives
that are as follows:
Vision: To deliver variety of products that are able to satisfy the needs of the customers and
ensure maximum customer satisfaction in long run.
Mission: To become highly valued business that is able to serve the customers and meet the
various demands in most systematic manner (Bolland, 2020). Also, company is continuously
aiming in meeting needs and expectations of the customers through bring differentiated products.
Objectives:
 To maintain the customer satisfaction in the target market
 To enhance market share by 20% in end of 2023.
 To increase the profits by 30% by the end of this quarter
Also, through all this analysis the company would be able to identify the growth opportunities so
that maximum returns are achieved in the end (Fedushko and et.al., 2021). Furthermore, through
systematic plan the firms are able to meet needs of the customers and also make certain changes
in best of manner. Moreover, companies are able to deliver immediate short term plan according
to the mission statement.
PART-B
Critically evaluating different types of strategic directions
There are different types of strategic directions that are available to company the one that
would be analysed is through using Bowman clock strategy that is as follows:

Low Price and Low Value Added: This strategy is concerned over the quantity and thus all
the products that are sold in the company are less in value. Moreover, the major concern is to
make goods available to large number of people at very low value so that greater selling might
be done.
Low Price: It is basically concerned over keeping low profit margins so that it is able to
offer the lowest cost option to the sellers (Introduction to Bowman’s Strategy Clock, 2022).
Moreover, the company sells good under this position when it is aiming for high quantity levels
and keeping the low prices of the product in the market
Hybrid: It is the position that is concern over low price and differentiation within the
products (Aydın, Nyadera and Önder, 2020). Also, here the prices are kept competitive and also
the company is aiming in giving some kind of value within the products so that both aspect
might be met in the best manner.
Differentiation: It is position where the business is focus on providing differentiated
products that have unique features and high value. Also, it provided in wide diversity of products
that have unique features in the products.

Focused Differentiation: It is technique in which company position it goods through
providing high value and high price to the target customers. Also, it is little risky and thus this
might be adopted only when brand image in market is quite established
Risky High Margins: It is one position in the clock where the company goes in delivering
goods in high prices without adding much value goods into It (Demir, 2018). Furthermore, it is
not good strategy for the company that is new in retail business and hence this might cause losses
to the firm and hindrance in it successful operations
Monopoly Pricing: It is type of market where the single seller sells and controls all the
market goods ans services. Also, the price is decided by this seller but such type of market does
not last for longer time period.
Loss of Market Share: It is the position where the company market share is declining and
it is position in clock which is considered the worst situation where the company goods are not
being sold and chances of losses are higher.
Another technique that might be best used by the company to identify the strategic direction
is through porter generic strategies that are as follows:
Cost leadership strategy: it is one that is related with keeping the lowest prices of goods as
possible so that more market areas might be covered in best of manner.
Differentiation strategy: This one is related with adding unique features in existing
products so that it is able to stay different in markets.
Cost focus strategy: It is targeting the particular segment of groups and then catering to
their needs through keeping the lowest price as possible. Thus, it is able to increase the sales of
the business (Nazarova and et.al., 2019)
Differentiation focus strategy: it is one that is related with offering the unique products
that are not already existing in the market and is been offered to only particular segment and not
overall market.
Justifying and recommending appropriate growth platforms
 Thus it can be said that for Tesco the best strategies would be differentiation strategy that
would allow the firm to sustain in the market and offer variety of innovative products to
large number of people (Kose and Kose, 2019). Also, it is recommended to the firm that
it should focus on conducting the extensive market research so that it is able to closely

analyse the needs of each individual and based on that it might t think to introduce new
products or services in the market.
 Furthermore, it can be said that for developing proper growth strategies the firm need to
take collective ideas from the employees in form of feedback so that better ideas might
collected for development of variety of newer products
 Also, it is suggested that growth of the Tesco might also be done through monitoring the
internal and external environment activities so that best planning is done for the future
course of events (Naamati Schneider, 2020).
 Furthermore, for the more future growth it is recommended to Tesco to take the help
form the external agencies that are specialized in providing variety of services to the
customers in long run. Also, these agencies are well qualified to suggest the best option
to firm so that there is no wastage of resources and also maximum efficiency is derived in
the end.
Evaluating ways by which the strategies can be monitored
For company like Tesco that is operating on the large-scale it is essential that proper
monitoring controls are been established to ensure that work is carried out according to the set
standards and also there is maximum efficiency of operations. Furthermore, the most common
methods that might be used by the firm to ensure efficiency in work is been described as follows:
Key performance indicators: These one best way that are used by the firm where work
of each individual might be monitored in the best ways through the indicators so that gaps are
easily identified (Tokhirov and Abdurakhimjanov, 2021). Furthermore, certain key permanence
indicators like sales, profits, unite sold etc. are used to identify how much the individual have
contributed based on the targets. Also, through best measurement of outcomes and results the
firm is able to the devise proper action plan for the future improvement in the working of the
business. Moreover, KPI might oversimplify complex issues that might cause problem in
decision-making in the future.
360 degree feedback: It is another way through the top management would be able to
identify whether the set strategy is working within the business or not. Also, it is method where
the collective opinions of each employee are been collected on timely manner so that based on
that certain opinions than might be made (Ma and et.al., 2022). Also, based on that each level
and department output would be easily known to the top management of Tesco thus defining the

success in more clear manner. Moreover, it is easier to spot development opportunities in team or
in departments so that detailed strengths and weakness might be easily found out. Also, through
using method or strategy the firm would be able to analyse how they are seen in the company.
However, if the data is not collected in the best manner than there are chances that negative
feedback is been collected that would only develop the toxic culture without anything falling
apart.
Balance scorecards : It is method where the managers of Tesco would clarify the
business strategy to all its members and communicate the business objectives and priorities.
Also, through such scorecards the firm would be able to easily monitor the progress and extent to
which objectives are been fulfilled. Thus, based on that action plan would than be developed so
that required changes might be made (Krutova and et.al., 2020). Also, this method of evaluation
is best for the business as it can be said that through using this the company would be able to
structure the best business strategy in the future. Also, it would allow in connecting the
individual gaols towards the overall organizational goals. However, using this method certain
complications might also arise as it requires certain time and dedication to understand each
process so that there are no problems in the future. Moreover, it requires lot of data from the
manager and employees so that better discussions is established and greater outputs are
delivered.
Hence, above are some methods that might be used by Tesco to develop and maintain the
best strategy within the business so that success is easily measured. Furthermore, the best
strategy helps in creating increased satisfaction within the employees and management. Also,
with greater motivation level employees are able to deliver the highest results in the future and
also sense of collaboration is been developed within the diverse groups. Moreover, various
strategies helps in increasing profitability within the business and would also help Tesco to
increase the market share in most efficient manner (Petera and Šoljaková, 2020). Also, those
employees that follows the strategies in the best manner are developed increased job satisfaction
that is good for continuous operations of the business in long run. However, it is required that
Tesco managers have clear goals and objective set for the business so that there are no problems
faced by individual departments while carrying out certain routine task on daily basis.

CONCLUSION
From the above report it can be concluded that best Strategic Management had helped
Tesco to become most established brand in UK. Furthermore, present report had provided in
detailed influence of the macro environment factors through PESTLE AND SWOT analysis.
Moreover, Porter’s Five Forces model had been to identify the ways through which Tesco
maintain the competitive advantage. Furthermore, in this report internal capabilities through
VRIO framework had been identified that had allowed the firm to maximize the returns and
profits over the years. Moreover, appropriate strategies to improve competitive edge had been
presented so that business is able to expand into newer region in the future. Lastly, theories and
models had been applied so that best strategic planning might be done by firm for conduct of all
future activities.

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Online
Introduction to Bowman’s Strategy Clock. 2022. [Online]. Available
through:<https://getlucidity.com/strategy-resources/introduction-to-bowmans-strategy-
clock/>.
PESTLE ANALYSIS. 2022. [Online]. Available through: < https://pestleanalysis.com/pestle-
analysis-tesco/ >
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