Tesco's Global Strategy: External Environment and Strategic Analysis

This report provides a comprehensive analysis of Tesco's global strategy, focusing on the external environment in the UK using tools like PESTLE and Porter's Five Forces. It assesses political, economic, social, technological, legal, and environmental factors impacting Tesco, along with competitive rivalry, supplier power, buyer power, the threat of substitutes, and new entrants. The report suggests corporate-level strategies such as stability and expansion, emphasizing strategic management and environmental sustainability. Furthermore, it recommends business-level strategies to enhance competitive advantage and overall performance. The analysis aims to provide actionable insights for Tesco to navigate the complexities of the global retail market and improve its strategic positioning.

GLOBAL STRATEGY
MANM407

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Overview of company.................................................................................................................1
Analysing the outer organizational environment of the company in accordance with the
county where company performs its operations..........................................................................1
Suggestions about the corporate level strategies for the Tesco...................................................4
Business level strategies for the organisation.............................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
A global strategy refers to the kind of plan of action that is being adopted by any
company in order to develop or expand into the international market. The primary purpose
behind development of this kind of strategy is to increase sales volume all across the world. The
term itself includes international as well as multinational strategies which includes standardized
approaches within the workplace (Baumgartner and Tippmann, 2018). This report will illustrate
the aspects by choosing Tesco company which is a multinational company deals in retail
business situated in UK.
The study will highlight the concepts of outer organizational environment of Tesco
within the UK along with major external factors which influence them appropriately. Apart from
this, the study will also discuss about the corporate level strategies of the company along with
proposing business level strategies in order to improve the functioning of the firm.
MAIN BODY
Overview of company
TESCO PLC is one of the leading firm in retail sector. Headquarter of the company is
established in UK. The company operates in 12 countries and concerned with 2317 stores in
total. Furthermore, the company has employee base up-to 326,000. The firm is providing large
range of retail products in different prices (Moura, 2021). Often, the company is assuring
affordable prices to their customers. As a result, the company has been proven effectively
enough in targeting large number of consumer section from all over the world and this leads to
adding in the growth and success of organization.
Analysing the outer organizational environment of the company in accordance with the county
where company performs its operations
Tools for analysing external environment
It is highly important to analyse the external factors or external environment of the
business as it provide impact over the business operations. The major tools that can be used in
the external environment analysation by TESCO are, PESTLE, DESTEP, PORTER'S FIVE
FORCES AND PERCEPTUAL MAP. PESTEL refers to that external analytical tool that helps
in identifying political, economic, social, technological, legal and environmental factors that can
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affect business. DESTEP is just an alternative of PESTLE. It assures major focus over the
demographics factors that includes age, gender and educational components (Findler and et.al.,
2018). In order to analyse competitors in external market that can affect the business, Porter's
five forces has been considered as best tool and Perceptual map helps the company in term
mapping the competitors and there position where they sit in market.
Most suitable tools for TESCO
PESTLE and Porter's five forces are the best analytical tools that can help in
understanding the external environment factors along with the analysing the extent up-to which
the competition is available in the market. PESTLE enables TESCO in order to understand the
major external attributes in UK that can impact business and Porter's five forces enables firm to
evaluate major five forces that can impact the business and creates high competition.
PESTLE Analysis of TESCO
Political factors- This refers to the factors that can impact the imports and exports of the
company. As different country have different rules and regulation in terms of performing the
business operations. Brexit is one of the biggest political factor that can impact TESCO. Also,
different trade policies of the countries such as, India and Russia where TESCO performs its
operations provides direct impact over the import and export of the goods. For example: India
has the policy of protecting domestic industries (Phan, 2021). As a result, trade barriers has been
applied over MNC'S. Thus, it creates the situation of low exports for the TESCO.
Economic factors- This refers to the situation if inflation in economy. Inflation leads to increase
in the prices of products. Thus, this leads to create the situation in which the company has to
increase its prices. However, TESCO is famous for its affordable pricing policy and this
situation leads to impact the performance of TESCO. Therefore, a keen observation has to be
made over the condition of market so, corrective measure can be taken.
Social factors- It has been determined as the change in taste and preference of customers. There
is a threat to firm that customers may shift to the competitor's product if they do not get the
satisfaction. Therefore, the company needs to analyse the needs and wants of customers and on
the basis of that decision needs to be taken.
Technological factors- It has been found from various studies that, TESCO has been proven less
effective in using of technology in term of assuring their operations and the technology is
changing on a higher note that impacts the business operations in effective manner if it has been
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used (Kardes, Flynn and Dugan, 2020). However, TESCO needs to adopt effective technology
so the threat from the competitors can be managed and effective production can be assured.
Legal factors- It refers to that factor that are concerned with the legislation. Organization must
follow mandatory legislation as it provide impact over the goodwill of business. In UK, Food
and Drug Administration has introduced certain rules related to the organization that sell food
related products. Thus, TESCO is a retail firm that deals in food products, therefore, firm must
perform food standard system and ethics otherwise, it leads to create penalties for firm.
Environmental factors- TESCO is performing corporate social responsibilities towards
environment that includes using sustainable packaging and renewable resources. Thus, the
company is safe from the threat of environmental factor (Widhiyaningrum and et.al.,2019).
Porter's five forces analysis for TESCO
Competitive rivalry- This refers to the current competition exist in market. In context of TESCO,
Sainsbury and ASDA is the competitive firms that can affect the growth and expansion of
company. However, company make focus over analysing competitors strategy and on the basis
of that actions has been taken.
Supplier power- It is concerned with charging high prices of raw materials by the suppliers.
TESCO is a retail firm and there are large number of suppliers available in the context of retail
firm that ensure raw materials and resources (Almeida and Santos, 2018). Thus, TESCO has
available numerous option therefore, there is less threat from suppliers.
Buyer power- Consumer has the biggest power in terms of increasing and decreasing the growth
of business. TESCO is offering large range of products in affordable prices. Therefore, there is
less threat of shifting by the customers. Also, focus over full-filling needs and wants of the
buyers has been made.
Threat of substitute- There are large number of substitute products has been available in retail
sectors (Bruijl, 2018). Thus, there is a threat to TESCO that consumer can start using substitute
product. However, effective customer services by the firm has attracted the faith of customer
towards business.
Threat of new entrants- TESCO is a leading firm in retail sector that has large number of
consumer base from all over the world. Firm has well-captured image in market. Thus, there is
no threat from new entrant as it is not easy for new firm to compete with TESCO.
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Suggestions about the corporate level strategies for the Tesco
Corporate level strategy defines as the strategy which addresses the entire strategic
approach or the highlight the overall scope of the company. For a multinational establishment
such as Tesco, it assists the whole resource allocation procedure through the ways in which the
cash, staffing, equipment and other resources are distributed at the corporate level. It is all about
taking strategic decisions about identification of complete scope along with provide them
appropriate directions to the firm. Such strategies have been created in order to earn above
average profit margin as well as creating value to the shareholders. This highly assist in handling
or addressing the issues related to multi business company in overall context. Some of the
strategies that are highly recommended to the Tesco are:
 Stability strategy: It has been considered when the company is able to identify that they
should continue in the existing business and is doing reasonably well but no scope for
further expansion is there, then the stability is the strategy that needs to be implemented.
Thus, Tesco have to implement this strategy as they serve their customers within the
similar kind of product as well as market and hence requires incremental improvements
of functional performances (Pherali and Lewis, 2019). With this, the company will be
able to do fairly well and perceive themselves as successful.
 Expansion strategy: It is the type of strategy that has been pursued by the firm as it
serves the public into additional service as well as product sector along with ficus
towards focusing over strategic decisions on major enhancement in the pace of activity
in their present business. With the help of this strategy, the Tesco managers may feel
highly satisfied with the prospects of growth and expansion. Furthermore, it provides
more financial as well as other rewards.
In order to further discuss the corporate level strategies, it has been evaluated from the
perception of Wheeler and et.al., (2017), strategic management is the concept of managerial
decisions as well as actions that are performed by individual and determines the long run
performances within an establishment. It involves the overall scanning of the environment in
micro and macro manner. There are certain phases that exists within the strategic management
such as financial planning, planning forecasting, externally oriented planning and strategic
management. This helps the Tesco to provide long run performance benefits to the company.
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With the help of identification of this aspect, it had been evaluated that environmental
sustainability highly impacts the overall business practices in a way which appropriately able to
reduces the company's impacts upon the physical and natural environment. On the other hand,
according to the viewpoints of Dessler (2016), strategic planning illustrate the company's plan
for how it will match the internal strengths and weaknesses with the help of external
opportunities and threaten them in order to maintain and gain competitive advantages. It is based
on the fact that companies need to adopt certain procedure in which following steps exists such
as defining the business and its mission criteria, performing external and internal audits,
translation of mission into strategic goals, formulation of that strategy, implement them as well
as evaluation of performances takes place.
Thus, for Tesco it is best to adopt a kind of approach which is the combination of overall
all the strategies that highly supports the corporate level strategy into such context which
ultimately provide extreme benefits to the firm in each and every aspect. Moreover, in order to
adopt effectual corporate level strategy, the Tesco can also utilize this type of strategy as in
order to seek appropriate stability in some areas of the activity, expansion in some areas and
retrenchment in other areas are highly demanded. Few reasons in order to adopt such strategy
will be beneficial to the company is that the Tesco is a large company and hence obviously faces
huge amount of challenges in context of complex external environment. Another reason is that
the company composed of different businesses in which each lies within the industry but
requires to be diversified approaches. Basically it is the mixture of expansion, stability and
retrenchment strategy that applied for the betterment of the company either at the same time in
different businesses or at different times within the same type of business activities. The
complex nature of the businesses adopts and need dissimilar strategies that suits the situation in
the best manner. For example, the companies like Tesco which is a multinational establishment
also requires and formulation of expansion plan which are highly focused over strengthening the
remaining business entity and starting new ones by making appropriate acquisitions.
Although if the company adopts stability strategy for certain point of time within the
market place, then it has been considered as the expansion plans which are highly focused
towards the one that has been over the expansion path for long and requires pause in order to
consolidate the business requirements (Putri and Pan, 2022). Multi national business
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establishments have to adopt multiple strategies and so to the Tesco as well on simultaneous or
sequential basis.
In context of discussing over the similarity aspect among the Wheeler and Dessler, it has
been evaluated that both the authors provides appropriate support towards the topic of strategic
planning and operational management concept. Both illustrate the aspects of marketing
strategies that are highly helpful for any organization in order to make their customers satisfied
and thus achieve a considerable position. While on the other hand, in context of dissimilarities, it
has been evaluated that Wheeler highlight the general strategies in overall context while the
Dessler highlight the strategies in context of specifically human resource management. Thus,
each and every aspect that is being described by the Dessler is related to the HRM strategies that
needs to be considered within an establishment while moving towards company benefits along
with betterment of employees as well as customers.
Business level strategies for the organisation
Business level strategy refer as the detailed outline of The policies and approaches which
are implemented by the corporation. It involves the specific actions with this organisation
increase their focus to delivers the values to their business as by providing qualitative services
and products to the customer while also maintaining the competition level (Mirabeau, Maguire
and Hardy, 2018). For the Tesco organisation they already have the large market share, which
are providing valuable products to the customers, thus they can also proceed to use some
business level strategies which are as follows:
Porter generic strategy:
Porter generic strategies helps the organisation to identify the efficient direction for their
business. As per the framework there are four type of generic strategies which are-
Cost leadership strategy: In such the businesses applied this strategy to gain the competitive
advantage as by providing low cost manufacturer of the service and commodity. In this company
have the two choices as to keep low cost for their products as possible and to ensure that they
have the good market share with the average prices. Therefore, Tesco company also uses this
strategy, as the management team of the company aims to decrease the cost for buying and other
operational costs from the economical scale and to set the other measures to provide better cost
advantage to the consumers (Ye and et.al 2018).
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Differentiation: In this strategy company wants that they offers the better and unique products
which their industry do not produced. They follow some dimensions so that consumer can
easily differentiates their products from others. Thus in such it is essential for the organisation to
focus on R&D in order to design the products in a unique manner. It is also a organisational
work culture to adapt and pursue the changes in order to meet the innovations.
Cost focus: It is the strategy which is used by the organisation in order to attract the customer on
the basis of pricing. Organisation who employ this strategy are able to beat their competitive
business. In such company seek for the cost benefit in their selected market segment. Tesco
company offers the lowest or cheapest price on their products to the broad market to drive values
in their business.
Differentiation focus: This strategy exploits the specific needs of the consumer in certain market
segments. In such it is important for the organisation to make sure that their products are unique
and are able to compete with other products in the market.
As per the analysis it is found that Tesco company generally uses the hybrid strategy
which is mainly a cost leadership and differentiation strategy (Ruckman and Blettner, 2022).
Thus for the company it is also important to implement this strategy in a manner as for the
differentiation it is essential to do better market research it will helps them in offering better
product at affordable range.
Ansoff matrix:
Product development: In this organisation proceed to develop the new product to deliver it in
existing market. It is one of the important decision which the organisation make in order to
maximise their sales. Thus Tesco also uses this strategy to analyse the requirement of the
market. for instance before company only focuses on providing the organic food but after
changing attitudes of the consumer they have also started offering the mortgages, electronic etc.
they also offer the environmental products such as bio fuel.
Market development: Organisation focus on entering into the new market by offering existing
product to increase the sales. For the Tesco they are intending to increase their market, they have
the different suppliers across the UK as they very well known to the customer segment. It will
help in identifying the potential market segment to sell the existing product. It is analysed that
for the market development Tesco company have undergone to various changes.
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Market penetration: In such firm concentrates on raising the sales for their existing product in
existing market. In such it is essential for the organisation to have the better strategy to sale their
products otherwise it will not be able to drive the attention of the consumers. As for the tesco
they have implemented this strategy to penetrate their market segment as they identified the
different markets to sell their product (Brege and Kindström, 2020). Company identified that
the customer prefers the product most instead of their brand, it helps them to enter in market by
their self promoting website. Thus it helps the company to deliver the affordable products to
their potential customer in existing market.
Diversification: Company usually adapts the new things as to enter the new market with their
new product. It helps the organisation to diversify the risks to the various products and services.
As for the Tesco previously they were only a grocery retailed organisation but they have
diversified their services by offering other products as well. They have also introduced the books
and other rental services. Thus this strategy will help the organisation in increasing their shares
in a particular segment (Aithal and Aithal, 2018).
CONCLUSION
From the above report it is concluded that business strategies and corporate level of
strategies helped the organisation in reaching their goals and objectives. Above report have
discussed the analysis of the outer organisational environment which also covers the porter five
model and pestle analysis, as this tools helps in determining the external factors and their
impact over the organisational performance. Moving on further report have illustrated the some
suggestions for the organisation as they can deploy such corporate level strategies which helps
their business in developing competitive and other advantages. Lastly report concluded with the
illustration of the different business level strategies that helps the organisation to develop their
revenues. It generally covers the description of the porter generic strategies which are cost
leadership, cost focus, differentiation strategy. It also discuss the ansoff matrix with the
descriptions of its different strategy as how organisation can deploy such strategy to maximise
their revenues and increase productivity.
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