Analysis of Tesco's Internal Business Environment and Value Chain

This report provides a comprehensive analysis of Tesco's internal business environment, focusing on its value chain model. The introduction provides a brief overview of the internal environment and the company's background, including its founding, mission, and vision statements. The main body delves into the value chain model, explaining its primary and support activities, such as inbound and outbound logistics, operations, marketing, procurement, human resources, and technological development. The report then applies the value chain model to Tesco, examining how the company manages its supply chain, operations, sales, and customer service. The report also reflects on the benefits of implementing the value chain model, such as improved profitability, material flow, and financial flow. In conclusion, the report summarizes the importance of internal environment evaluation for business firms and the advantages of using the value chain analysis for internal evaluation.

Reflective analysis of
the internal business
environment

INTRODUCTION...............................................................................................................................3
MAIN BODY.......................................................................................................................................3
Value Chain Model............................................................................................................................3
Company...........................................................................................................................................4
Reflection on value chain..................................................................................................................7
CONCLUSION....................................................................................................................................8
REFERENCES....................................................................................................................................9

INTRODUCTION
In business environment, internal environment is a component that is composed of
several elements presented within organisation, that can be affect or affected with the
choices, decision as well as activities of decision making (D'Aquila, 2013). In addition to this,
factors which are consider as internal environment are leadership style, mission statement and
culture of company.
This report is based on Tesco which is British multinational groceries as well as
general merchandise retailer. It was founded in 1919 and founder was Jack Cohen as well as
headquartered at Tesco House, Welwyn Garden City Hertfordshire, England, United
Kingdom. They are serving in several areas such as United Kingdom, Ireland, India,
Malaysia, Thailand, Czech Republic, Slovakia, Hungary and Poland. Respective report will
going to discuss several point such as value chain model, overview of company. Internal
environment and reflection on value chain.
MAIN BODY
Value Chain Model
Value Chain is also known as Porter’s Value Chain Analysis it is related to business
management concept which developed by Michael Porter in year 1995 through his book
which was named as competitive advantages. Moreover, by Michael Porter respective model
defined as a collection of activities that generally an business organisation perform for
creating values for their customers at potential market place. In addition to this, Value Chain
model result in creating values by which an organisation can gain competitive advantages and
also high profitability within market area. Value Chain Model is split within two parts which
are primary activity as well as support activity and it is important for management of business
firm to consider both of these parts while taking decision related to their management. With
the assistance of Value Chain Model management of organisation will be able to understand
how they can value to their offers so that they can ask for more than the cost for additional
value which assist in generating high revenue.
In addition to this, there are various sub elements which are involved in two part of
Value Chain Model such as primary involved operations, inbound logistics, outbound
logistics, marketing and sales. Whereas, support activities involve sub elements like human
resource management, procurement or purchasing, technological development as well as

infrastructure. Moreover, Value Chain Model provide assistance in representing internal
practices of an organisation which are engaged within transforming inputs within outputs so
that an business firm will able to accomplish desired goals and objectives in proper manner.
Along with this, there are several advantages which an organisation gain by implementing
Value Chin Model in their working. It also help in enhancing logistics, customers order
management as well as also increase return on investment. Furthermore, there are several
other benefits which company gain through respective model like high profitability,
increasing competition, lead globalisation of supply and production etc..
Along with these advantages there are some disadvantages also which company will
face able implementing Value Chain analysis within their working. Like, sometimes structure
of business firm is not connected with value Chain that will have effect on process.
Moreover, Value Chain Model is also sequential as well as too linear, it is not able to get fit
within every situation and structure of business. Thus, it is important for management of
business firm to conduct analysis in proper manner of business structure because it will assist
in decision making related to implementation of respective model.
Company
Tesco is British multinational groceries as well as general merchandise whose
headquarter is located in Welwyn Garden city, Hertfordshire, England, United Kingdom.
Respective company was founded in 1919 which was 101 years ago and its founder was Jack
cohen. In addition to this, Tesco is third-largest retailer in world which measured through
gross revenues as well as ninth largest retailer in world measured by revenues. Tesco have
approx. 6,800 shops as per the data of 2019 and serving in area such as United Kingdom,
Ireland, India, Malaysia, Thailand, Czech Republic, Poland, Slovakia and Hungary.
Along with this, Tesco hold leading position within food retailers in Great Britain as
there market share exceeds 15 percent (History of Tesco Plc, 2020). In Wales, Scotland and
England company running their 500 supermarkets in which 257 are superstores which sell
food products along with several other products such as gasoline, clothing, alcoholic
beverages, housewares and many more. In Northern Ireland Tesco have 32 stores various as
77 in Republic of Ireland and 43 in Hungary under the world, 31 in Poland under the Savia
name as well as 13 in Czech Reoublic and Slovakia within Tesco brand. In addition to this,
Northern Ireland have 52 Wine Barrel off-license outlets. Along with this, respective
company is the largest independent gasoline retailer in Britain; its 288 gas stations sell 12.5

percent of the gasoline sold in the UK. Recent company innovations involve the Clubcard
loyalty card and offerings from Tesco Personal Finance, which involve a grocery budgeting
account called Clubcard Plus, a Tesco Visa Card as well as Tesco savings account. Mission
and Vision statement of Tesco are as follows :-
 Mission – Tesco mission statement is “We make what matters better, together.”
 Vision - Tesco vision statement is “to be the most highly valued business by: the
customers we serve, the communities in which we operate, our loyal and committed
colleagues and of course, our shareholders.”
Internal Environment
Internal environment is major component of business environment which involve
numerous elements that are presented within company and it have wide impact on decision
making of company. In relation of Tesco, it is important for company to evaluate internal
environment for which they have to adopt model which is named as Value chain model. This
model will provide assistance in focusing on primary and supportive activities within
effective manner.
Figure 1Value chain model
(Source: Value chain model, 2020)
Primary activity Inbound logistics: The process is related to receiving, storing and distributing inputs
internally. Inbound logistics are also consider as relation with suppliers which use for

creating value within market area (Kuratko, Hornsby and Covin, 2014). In relation of
Tesco, they have hubs of regional warehouse and they also outsource their supply
chain through expert companies such as Unipart, Allport DHL, CEVA Logistics and
many other. They also implement Just in time model for maintain supply chain. Operations: It involve activities related to transforming that change inputs within
outputs and sold to customers (Leonidou and et. al., 2017). Such practices will
provide assistance in creating for creating value to operations system. In relation of
Tesco they process raw materials so that they get end products which they can launch
within market area.
 Outbound logistics: This will incorporate exercises identified with convey of items
and administrations to potential clients. It incorporate capacity, collection,
conveyance framework and a lot more which might be interior or outer to
organization. Outbound coordination’s of Tesco incorporate a few exercises which
help them in conveying of items to potential clients subsequent to going through
quantities of various mediators. Their separate movement incorporate treatment of
material, warehousing, booking, preparing of request, shipping and finally conveying
of items. Marketing and sales: This involve practices which are related with marketing of
company’s offering so that customer prefer their products rather then competitors. In
context of Tesco their sales agents and marketers plays an important role because they
influence customers for purchasing their offerings. Service: these are the activities that related to maintaining value of their offerings in
front of customers after purchasing products. Tesco also provide services to their
customers for their better satisfaction which can be pre or post both.
Secondary Activities Procurement or purchasing: This movement will incorporate discovering merchants
just as haggling at the best cost. In regard of separate general store they do successful
exercises just as they additionally have their expert representatives who manage
merchants so as to get best cost. Human resource management: It characterize how an association lead enlistment,
recruiting, preparing, inspiration, reward framework, etc which help in holding
representatives and improving their work quality. Tesco have encountered HR group
who select ideal individual at right occupation just as they likewise direct

examination, persuasive and instructional course on normal premise which help in
upgrading representatives commitment and execution.
 Technological development: This is identified with overseeing just as preparing
information and ensuring association's proficient data. In setting of Tesco they receive
new and advance innovation which help in offering quality types of assistance just as
items to potential clients.
 Infrastructure: These are fundamentally consider as emotionally supportive network
of an organization which help in keeping up every day exercises or activities like
bookkeeping, legitimate practices, general administration, etc. In regard of Tesco they
lead their business activities and business in legitimate just as lawful way which help
in accomplishing objective effectively.
Reflection on value chain
Value chain model help in developing proper decision and this model work in every
company through this model the internal business environment can evaluate as well as
understand in a successful manner. In respect of Tesco, by executing the value chain model
they get success, from which some majors are given below:-
 Better product research, planning and development: By applying the value chain
model at a largescale supermarket they do planning, development and deliver the
services and products by creating the cross functional team strategies and this strategy
help to attain the customer requirement precise way. There are several advantages
which Tesco will gain by implementing value chain model within there working as it
is the effective way of conducting internal analysis.
 Improve profitability: the wastage will minimised and the cost of production, process
and time will also reduce by applying the value chain model and this will also
increase the profit ratio of the company. With the assistance of this Tesco will be able
to increase their revenue as well as profit margin that result in overall success of
company.
 Improve flow of material and products - By adopting Value chain the executives at
separate organization the board ready to improve stream of materials just as items
since they ready to do precisely figure of deals and request of items. Alongside this it
will likewise help them in leading appropriate stock administration which limit delay.
 Enhance flow of finance - Supply chain management isn't consider as improving
progression of items and administrations however it likewise think about progression

of money (What Are the Benefits of Value Chain Management? 2020). In regard of
this, particular organization receive esteem chain the board which help them in
managing difficulties that are associated with money related stream. Alongside this
that will likewise help the board in making sense of proper arrangement of issues that
are happen at work environment identified with money.
 Standardized procedure - By executing Value chain model individual organization
ready to adequately assess strategy just as that will likewise help in viably the
executives of procedure by guaranteeing clients input and desires get meet effectively.
Alongside this it will likewise help them in limiting by and large operational waste
just as wasteful aspects.
Above mention are some major advantages which Tesco will gain by implementing Value
chain model as it will help them in analysing internal factors in more effective manner.
CONCLUSION
After going through above discussion it has been summarised that, organisation
internal environment play important within working of an business firm. In addition to this,
factors which are consider as internal environment are leadership style, mission statement and
culture of company. Moreover, for an business firm it is important to do internal environment
evaluation because by this it can understand their effectiveness within marketplace. For
internal evaluation purpose an organisation have to adopt theory related to the same such as
Value Chain Analysis because it is mainly use for internal evaluation purpose. Through this
company will be able to get numerous advantages for instance it will assist in reducing time
frame related to conducting work and also assist in minimising operational cost and so on.

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Online
History of Tesco Plc, 2020,[Online].Available through<
https://www.referenceforbusiness.com/history2/11/Tesco-PLC.html>
What Are the Benefits of Value Chain Management?. 2020. [Online]. Available through:
<https://smallbusiness.chron.com/benefits-value-chain-management-70083.html>.
Value chain model. 2020. [Online]. Available through:
<https://www.researchgate.net/figure/Porters-value-chain-model_fig1_319114871>.