Strategic Management Plan: Tesco's Competitive Analysis and Strategy

This report provides a detailed strategic management plan for Tesco, a multinational retail company. It begins with an introduction outlining the company's background and objectives, followed by an analysis of the macro-environment using PESTLE analysis and the internal environment through SWOT and VRIO analyses. The report then applies Porter's Five Forces to assess the competitive landscape and evaluates the outcomes of these analyses. It explores Bowman's Strategic Clock to determine strategic positioning and recommends a specific strategy. The core of the report is the strategic management plan itself, which integrates the findings from all previous analyses. The report concludes with a summary of key findings and recommendations, supported by relevant references. The analysis covers the political, economic, social, technological, legal, and environmental factors impacting Tesco, alongside its strengths, weaknesses, opportunities, and threats. The VRIO framework assesses the value, rarity, imitability, and organization of Tesco's resources and capabilities. The Porter's Five Forces analysis examines the competitive intensity and attractiveness of the industry. The report also provides an overview of strategic directions for the organization.

Strategic Management Plan

Table of Contents
INTRODUCTION...........................................................................................................................1
Analyse macro environment and internal environment of organisation and it capabilities.........1
Evaluate and apply the outcomes of analysis using porters five analysis....................................4
PART 2............................................................................................................................................5
Bowman's Strategical Clock........................................................................................................5
Recommended Strategy...............................................................................................................8
Strategic Management Plan.........................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Tesco is British multinational retail company and it was founded in 1919 and it was
founded by the jack Cohen. Company is selling retail goods and groceries as well. Company has
ranked as third largest retailer in world. The report includes the impact of the external and
Internal environment and capabilities of company as well. It also includes the critical analyses of
porters five analysis. Models theories and concepts have been applied on organisation as well.
The report is providing the knowledge regarding the strategic management decisions and the
impact of the strategic management decisions.
Analyse macro environment and internal environment of organisation and it capabilities
Macro environment includes the pestle analysis
Pestle analysis
Political factors are factors which are affecting the sales of company and performance of
company. The political factors include the tax rates and laws which are levied on company and
made for protecting customers. Due to the financial instability government is encouraging
retailers and for creating jobs for people and work In proper way. Tesco is creating the
employment opportunities for people which are unemployed (Rothaermel 2017).
Economic factors include the economic factors which are affecting the company.
Company must be aware about the change in policies and change in taxation rates. Business of
the Tesco is growing rapidly and it is growing in the international market as well. Company is
growing and the company would be increasing the international market as well. Tesco is shifting
it focuses towards the incomes of customers which are buying the products. So the company
could set the price of product according to the selected target market.
Social factors include the social changes like the consumers nowadays want the latest
technology and latest trends in every products. So customers are demanding and the customers
are influenced by the beliefs of Individual and attitudes of individuals. Customers are becoming
aware about the health issues, so they are demanding healthy products and also they are
accepting the healthy products. Tesco is adapting these healthy strategy and providing the
organic products.
Technological factors
In technological factors the company is concentrating on the new opportunities and latest
technology as well (Gürel. and Tat, 2017). The development of the online shopping and facilities
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of the home delivery are attracting customers. Self service points are providing the convenience
and it is easy for customers to buy the products. Company is investing high amount in the energy
projects which would be working as reducing the carbon foot print.
Legal factors are government policies and laws which are affecting the company to work
in efficient manner. Food retail commission has suggested the company to follow the code of
practices. Tesco has decreased price on the fuel and grocery stores as well. Several promotion
offers has lowered the price of the products which are sold by company in market.
Environmental factors
Protecting environment is the prime motive for company and people as well. So the
company has started health free products and environment free products. It is reducing the cost
of products and it is protecting the environment in the effective way. The company has to make
the products which are protecting the environment and to destroying the environment.
Swot analysis
Strengths
Tesco is the biggest retail store in uk and it is delivering the services in the effective way.
Tesco is running the number 1 supermarket in UK and it is having the biggest supermarket chain
in Great Britain. Tesco is having the market share and it is and it is the biggest grocery retail
store in Britain. The company is providing the variety of products in market and company is also
providing the services like the home décor items and electricians and many more. Company is
using the latest technology in market and the company would use the latest technology to attract
the customers (Bull and et.al., 2016).
Weaknesses
Tesco has failed in us and japan because the stores were not running properly in japan.
People of japan has not accepted the product, and they were loyal towards the Japanese
companies. Tesco was also engaged in fraud trail and accoutring Scandal which includes the
services like lot of financial error in reports and misrepresentation of profits in reports. Low cost
strategy has been used by company and the company is also suffering losses due to the low cost
of products.
Opportunities
Tesco is expanding the business and introducing the discounts and products for attracting
the customers. Company has entered In various their sectors of market by the help of the joint
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ventures. Company is using the latest technologies and attracting the customers towards
company by the way of online shopping and b y upgrading the home delivery services. Tesco is
planning it emerges in the markets of the countries as well (Marttunen Lienert and Belton 2017).
Threats
Tesco has entered the market but due to the increase in competition the company is
facing the problems for surviving in marmosets. Company has also faced the controversy of the
Christmas advertisement in 2017 and so the company has faced severe losses. Economic crises
are affecting the sales of company and so the company is facing the problems related to
productivity. Brexit has also given the negative impact on the company performance.
Vrio analysis
Valuable
Tesco is working and the company is facing the problems related to the Tesco highly
valuable resources are helped in investing in the external opportunities and working for the
company. Local food products are valuable but this product is consumed by people and these are
affecting the sales of company. Increase In competition in market is affecting the sales and value
of the products.
Rare
Financial resources which are rare and the company need to perform and prepare the
products and improvise the products which are attracting the customers. Company are using the
resources and company is using the resources in the effective way but the resources used by
company must not be wasted. The employees are trained and skilled but it is not in the case of
the firms these makes the company rare and special.
Imitable
Local food products of company are not costly that they need to be imitated. It is because
the firms are using the employees skills and opportunities as well. Company is providing the
employees with the better package sand compensation for attracting the employees. Company
has make the patent of products and so anyone could not imitate the products and use the if
imitated that people would be punished (Aithal Shailashree and Kumar 2016).
Organisation
Organisation of the company is using the strategies and using the identifying the
strategies as well. Tesco is using the network to reach the customers and make them available for
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the products which are provided to them. The resources of the company can use the right place
and right opportunities as well. The opportunities and threats are affecting the sales of the
company. The increase in competition is affecting the sales of the company and performance of
company in market.
Evaluate and apply the outcomes of analysis using porters five analysis
Porters five analysis
Threats for new entrants
In these the company is preparing the product as per the industry and as per the
competition in market. product differentiation is affecting the sales of company and company Is
growing in market as well. Advertising is growing and the company is using the advertisements
in the effective way and for increasing the sales as well. The capital requirement of the industry
is high and company would face problems for settling the expenditure in the company (Racz, and
et.al., 2018).
Bargaining power of suppliers
In bargaining power of suppliers the company would face the problem in the case of
many suppliers and these would put the term and condition on the company and company would
have to follow the term and conditions as well. Suppliers must be single and company has that
power to change the suppliers as per the need of the company and price of the products.
Bargaining power of buyers
Buyers are changing their preferences and using their products in the effective way.
Income of buyers is low and price of products must be according to the buyers if the price is not
per customers they would buy the products and it would be affected. So the company is selling
products in market with the low price.
Threat of substitute products
Threat of the substitute products company would find very few substitutes of product in
markets. Tesco can easily enter the new market and achieve the growth because there are no
substitute products in market as compared to the other substitute products. Few substitutes with
high quality and with high price is affected with the unique benefits and substitute products as
well.
Rivalry among existing firm
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Rivalry is affecting the company and sales of company because rivalry is made due to the
increasing in competition in market and it is affecting the company sales as well. There very few
competitors in market but these need these are business rivals and can time take over the market
towards themselves (Mathooko and Ogutu, 2015).
PART 2
Bowman's Strategical Clock
There are different strategic directions are provided for the organization that can be used
by the company to manage their positioning in the competitive market. In the bowman's
strategical clock there are two dimensions are used which can be used to measure the strategies
of organization in the competitive market (West, Ford and Ibrahim, 2015). These dimensions are
Value and perceived value of product. The strategies that are provided in this model are
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Illustration 1: Bowman's Strategic Clock (Strategic Positioning)
(Source: Bowman's Strategic Clock (Strategic Positioning), 2018)

considered as eight positions that can be used by the organization to position their product in
market place. Strategic direction that are provided in this model are-
Low Price Low Value Added
According to this strategic direction organization can use strategy where they can sell
their product with low price and low added value. This strategy is not considered as one of the
best policy for the organization. Mostly this strategy is used by those organizations that are
selling product that are manufactured in bulk and the marginal profit with each unit is very low.
The purpose of the organization is to gain higher sales of product with help of low pricing
strategy. By this process organization can try to achieve market place advantage. This policy can
not be used by Tesco because their business is based on policy that is related to generating higher
consumer trust.
Low Price
This strategy also can not be consider as good business strategy for organization in long
term business. As per this strategic direction organization reduce the cost of their product
without messing with the quality of product. This thing cause slight decrement in the marginal
profit on each unit product. Because in this process the manufacturing cost of product is
constant. In this case high profit only can be generating where they are selling goods in bulk
quantity. Because Tesco is a retail organization and it sales range of products to the consumers.
This also can reduce the over all profit of company.
Hybrid
As per the Hybrid positioning strategy organization use special combination of value of
product and it price. This can be consider as organization create a product that contents good
added value with effective and reasonable pricing (Andaleeb and Hasan, 2016). This strategy can
be considered as effective business strategy for those organizations that are selling those
products that are basic requirement of consumers and they are looking of good product with
effective pricing. This strategy can be used by Tesco PLC to perform effective business in
market place and gain competitive advantage.
Differentiation
The aim of Differentiation strategy is to provide the best quality product to the consumer
without change in the pricing of product. The main objective of this strategy is to offer better and
effective services to the consumers. In this strategy the role of marketing is crucial. In this
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process organization also spent on marketing and branding to improve the brand equity of the
company products and services. This strategy is used by most of organization in current market
to gain higher consumer base. The most important factor in this strategy is consumer loyalty and
satisfaction.
Focused Differentiation
This positioning strategy is also similar to the differentiation strategy where organization
provides the best quality product and services to the consumer to make them loyal to
organization. In this strategy consumer loyalty comes in the first place. The only thing different
in focused differentiation is about the targeting policy that is used by organization. In this
process organization targets and consider the high class and middle upper class for business. The
marginal profit in this strategy is significantly high then previous strategies. This is good for
those organization which are performing business with long term goals.
Risky High Margins
Risky high margin positioning strategy is consider as high profitable strategy for short
term. According to this strategy business organization sell their product to the consumer with
high marginal profit but the quality or value of product is comparatively very low (Moutinho and
Vargas-Sanchez, 2018). In single time organization can generate high profit but it also reduce the
motivation of consumer and reduce their loyalty for organization so, this strategy can not be used
by those organizations which are performing business with long term plans.
Monopoly Pricing
There are some organizations are their in the market place which are offering such
product which are only available to them. This is known as monopoly in the market place. As
they are only trader in the market. Consumer do not have any other option so they have to
purchase these products from particular company. In this case there is huge advantage to
organization because they can sell their products with high marginal price.
Loss of Market share
This business strategy is considered as disaster to the organization which is using it for
business. As per this strategy organization is selling the product which is provided by many other
companies at better price but pricing policy used by company is comparatively high from other
organizations. In this case people prefer alternative sources to meet their demands. It reduce the
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loyalty of consumer that are associated to organization and force them to shift to other service
providers.
These are some possible strategies that can be used by organization like Tesco PLC to
perform business successfully in the market place. The selection of particular strategy is depends
on the future and current goals of organization.
Recommended Strategy
As Tesco PLC is one of the best retailer in UK market and their priority is to attract more
consumer in order to successfully perform business in the market place. There are different
strategy can be used by Tesco PLC to perform business in the United Kingdom. Some of strategy
that are possible for Tesco are Hybrid positioning and Differentiation positioning. This both
strategy are applicable for company because consumer satisfaction is important for them. Hybrid
positioning strategy have different advantages that can help them to earn respective profit for
their services (Hollebeek, Conduit and Brodie, 2016). This strategy can help the organization to
focus on the quality of product and continuous innovative changes in their product. It can be
helpful for organization to make long term positive impact on the organization. The reasonable
pricing also can allow the organization to gain effective profit form the business. But this can not
be used to attract new consumers so in this case Tesco PLC can use Differentiation positioning
strategy in which they can offer better product to consumer without change in pricing of product
along with effective marketing. This strategy can be used by Tesco to attract more consumers.
Strategic Management Plan
Aim
To increase the number of consumer with end of the year 2019.
Objective
1. To improve the profit of company.
2. To implement different positioning strategy in marketing process to gain larger
consumer base.
3. To use Social Media marketing in order to attract more consumer towards the company
product and services.
Strategies
There are different strategies are possible for Tesco PLC to improve their performance
in the target market. As per the differentiation positioning strategy company can focus of social
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media marketing and digital marketing in order to make more people aware of company
products and services (Anfer and Wamba, 2019). Tesco also can use innovations and creativity
in business process and product manufacturing process in order to generate high marginal profit
in target market.
Tactics
There are different method can be used by organization in order to gain higher
productivity in the market place.
1. Utilization of social media site like Facebook, Instagram, LinkedIn and twitter to
promote their product and services.
2. Using TV commercials and digital posters Tesco can attract more consumers.
3. Different effective offers can be provided to the consumers to make them loyal to
company.
4. Direct communication can be implemented to improve the consumer experience in
organization.
Risk
In this business there are certain risks which can be faced by organization process. The
main risk associated with this plan are-
1. Negative marketing is possible with use of social media sites in marketing.
2. In process of consumer tracking organization need to invest high capital.
3. The level of data safety and security is low in E-marketing.
CONCLUSION
This report is concluding the importance of strategic planning for the Tesco PLC. In
market place there are different activities are used by organization to improve their positioning
among other companies in the market place. In this macro factor analysis has been performed to
know the impact of these factor on operation and performance of company in the target market.
The internal analysis of company has been performed through SWOT analysis and VRIO
analysis in order to know the capability of organization in the market place. Different positioning
strategies has been analysed to select one of those strategy for the strategic business plan of
Tesco PLC.
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REFERENCES
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Capabilities: Impact on Firm Performance. In World Conference on Information Systems
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analysis. Reproductive biomedicine online. 37(6). pp.709-715.
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unanticipated outcomes of customer engagement.
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cycle, PESTLE and multi-criteria decision analyses. Clean Technologies and
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Online
Bowman's Strategic Clock (Strategic Positioning), 2018.[Online]. Available
Through.<https://www.tutor2u.net/business/reference/strategic-positioning-bowmans-
strategy-clock>.
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