Comprehensive Marketing Report: Tesco Plc's Strategic Analysis

This report provides a detailed analysis of Tesco Plc's marketing management. It begins with an executive summary, followed by an introduction outlining the report's objectives. The core of the report examines the key features of Tesco's external environment using a PESTEL framework, detailing the impact of political, economic, social, technological, environmental, and legal factors. It then analyzes the internal organizational response to these factors, evaluating Tesco's strengths, weaknesses, opportunities, and threats (SWOT). The report further appraises the strategic solutions employed by Tesco, offering a critical evaluation of the company's overall marketing strategy. The report concludes with a summary of findings and insights into Tesco's marketing performance.

Running head: MARKETING
Marketing Management
Name of the Student:
Name of the University:
Author Note:

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Executive Summary:
The report aims at providing an overview of the marketing management of Tesco Plc. The report
provides insight into key features of external environment and their impact on the organization.
The report also discusses about the response of the internal organization to the various factors.
The report also focuses on the appraisal of the strategic solutions used by organization. The
report also portrays an overview of the critical evaluation of organizational strategy.

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Table of Contents
Assessment 1:..................................................................................................................................2
Introduction:....................................................................................................................................2
I. Key Features of the External Environment and Impact on Organization....................................2
II. The Internal Organization Response to Factors..........................................................................5
III. Appraisal of the Strategic Solutions Used by the Organization................................................9
IV. Critical Evaluation of the Organizational Strategy.................................................................11
Conclusion:....................................................................................................................................14

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Assessment 1:
Introduction:
The aim of the report is to provide an insight into the marketing management of Tesco
Plc. Marketing management represents the organizational discipline that focuses on practical
application of the marketing orientation, methods and techniques inside the organization and
enterprise along with management of marketing activities and resources of the firm (Armstrong
et al. 2018). Tesco is a supermarket chain of Britain which was found by Jack Cohen in the year
1919.The supermarket has its headquarters in United Kingdom. It is considered the third largest
retailer based on the gross revenue. Originally based in the UK, Tesco expanded to eleven
countries of Europe and Asia in the earlier part 1990 (tesco.com 2019). Remarkably in the year
2013, the country pulled out of USA. The marketing objective of Tesco lies in decreasing the
price with the aim of making shopping cheaper for average household. In other words, Tesco
aimed at cutting prices and offering more in the store deals. The retailer might adopt varied
objectives in reaching the aim. The report commences by mentioning the key features of the
external environment and the impact they have on the organization. The report also provides an
insight into the response of the internal organizations towards the internal factors. There is also
mention of the strategic solutions used by organization along with a critical evaluation of
organizational strategy.
I. Key Features of the External Environment and Impact on Organization
External environment refers to the outside influences or the factors that impacts the
business operation Gupta (2013). The outside influence mostly includes the political, economic,

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social, technological, environment and legal factors or the PESTEL framework. To understand
the impact on the organization each of the factors is analyzed below:
Political Factors: Tesco has a worldwide operation and hence the global political factors
have an influence on Tesco’s performance. They mostly include the tax rates, legislation and
stability of country in which it operates. The present financial stability of the world encourages
the governments and the retailers in creating more jobs for domestic population. Tesco however
plays a role in creating the employment opportunities that in turn not only help in increasing the
demand for the product but also diversification of the workforce.
Economic Factors: Labor cost represents a vital economic factor that impacts the
supermarket of UK. For instance, the annual wage bill for Tesco amounted to about GDP 4.5
billion (MacKinnon and Cumbers 2014). Tesco is affected by various other factors like cost,
profit and price. The company should thus focus on increasing borrowing cost in United
Kingdom. This increases the price and cost while decreasing profit and has an impact on the
brand reputation and the strategy for cost leadership. The company should remain aware of the
changes in the policies related to taxation and the other factors that could have an impact on
accessibility of the finance. Here it is vital to mention that even if the business grows
internationally the company still remains dependent on UK market where it have a market share
of about 30 percent. For Tesco, internationalization and diversification are the two vital
strategies that have defined the success of the company. The decline in the household and the
disposable income has forced Tesco in shifting its focus to advertising the brands that holds
values instead of the luxurious items.

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Social Factors: The shopping trend of consumers changes over time. Moreover, people
have tougher schedules and therefore they want faster delivery and flexible return policy for the
goods and prefer one stop shopping (Pookulangara and Shephard 2013). Tesco relies on the UK
customers and understand and provide services to meet the issues. The demand for the goods and
the services remains related to the consumer attitudes and beliefs that are considered a focused
issue. Obesity remains another issue within the society and the customers have become more
health conscious. Tesco should consider the changing demand and behavior for the organic food.
According to the PWC reports, close to 65 percent of the UK shoppers are the loyal shoppers and
hence Tesco must consider the opportunity in developing closer ties and one-to-one connection
with the customers.
Technological Factors: In the recent past, Tesco faced issues like the horsemeat scandal
and a poorer customer experience. The emergence of technological advancements introduced
newer opportunities for Tesco in regaining the trust of the consumers. Tesco embraced the
advancement in the technology as the opportunity through adoption of retrial technologies. The
retailer introduced the RFID technology for increasing the in-store experience for the customers
that also helps in automatically counting in stock and removing it after sales (Fan, Tao, Deng and
Li 2015). The information also acts helpful for the in store suppliers and replenishing it when
required. Tesco have also developed an online payment option through mobile known as the
PayQwid that allows customer in making payment as per their wish. Customer is able to
download the app and link it to the Clubcard and the Near Field Communication (NFC)
technology thereby helping in earning loyalty points (Want, Schilit and Jenson 2015). Tesco also
introduced scan as you shop for those in love with the convenience shopping. Customers shop
and have been found to tag the products thereby saving time and the labor cost.

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Environmental Factors: Various companies faces immense amount of pressure from the
government agencies for addressing the issues of the environment. Companies remain liable in
responding to the issues for the benefit of the society. Keeping in alignment with the
environmental issues, Tesco encourages the customers for shopping at tesco.com. Besides, the
drivers of the Tesco van have not adopted the shorter routes for fuel saving. The vans also
ensured collection of useless plastic bags from the customers and ensured recycling them
(Carrillo, Vakharia and Wang 2014). The retailer has also become committed towards using
renewable sources that would help in generating 100 percent electricity by the year 2030.
Further, the company also promised in minimizing its carbon footprint to about 50 percent by the
year 2020.
Legal Factors: It is vital important for the business in considering the legal environment
without undermining the key areas where the changes in the law might influence the business
performance for achieving the objectives. In the year 2016, close to 17 workers of Tesco
undertook legal action against the employer based on the age and the gender discrimination
(Kukreja and Gupta 2016). The workers became increasingly frustrated after they observed
lower rates of pay for the weekend, nights and bank holidays. The retailer also encountered legal
action for fraud in accounting that also misguided the investors. Tesco should therefore conduct
all the operation based on the strict code of practice put across by the Food Retailing
Commission (FRC).
II. The Internal Organization Response to Factors

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The internal environment of the business comprise of the factors within company that
impacts the approach and success of the operations. Compared to external environment, the
company has control over the factors. It is therefore vital to identify the potential threats and
opportunities outside the operations of the company. Managing strengths of the internal
operations remains the key to the success of the business. Tesco’s response to the external factors
is determined by its strengths, weakness, opportunities and threats.
Strengths:
1. Tesco aims at being one of the grocery retailers and a prominent supermarket in UK. It
has the highest revenue and sales in comparison to the supermarket chains of Great Britain. The
annual operating profit of the company rose to about 28 percent (Wrigley and Lowe 2014).
2. Tesco has a leading share in the market of about 4 percent amongst the four
supermarkets and it dominates grocery retail market of the Great Britain.
3. Tesco is geographically diversified and has a thriving presence with over 6800 stores
in close to fourteen countries. Except from North America and Europe, Tesco have huge market
share in Asian market.
4. Tesco has growing number of stores with close to 6966 grocery retail stores across the
world. It has rising revenue each year due to addition of the new stores in the operational chain.
5. Tesco has diversified stores, market and a product range. In this regard, it can be said
that the retailer has launched various types of stores like Tesco Metro, Tesco Homeplus, Tesco
Express, Tesco Extra, Tesco Superstores and One Stop. The product range varies from clothing
range, mobile phones, home ware items, business, music downloads, DVD rentals, financial and
telecom service and school uniform.

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6. Tesco represents one of the largest private employers offering close to 743K
opportunities for job across the world. In fact, it is one of the largest opportunity builders.
7. Tesco uses superior technology and puts across the optimal means of enhancing
shopping experience of the customers. It not only introduced the RFID barcode system, facilities
of M-commerce and app for mobile payment.
8. Tesco has a simple business model that reduces the incurring cost and the effective
policies of waste management thereby ensuring an effective network of supply chain. Tesco
bears a profitable relationship with the suppliers.
Weakness:
1. Tesco was forced to exit Japanese and American markets in the year 2012. The failed
export operation forced the retailer in closing the stores in Japan after operating for nine years in
Japan and five years in United States(Coe, Lee and Wood 2017).
2. In the year 2017, Tesco have been charged fines due to the declaration of false
accounting and the misinterpretation of the profits.
3. In the year 2018, Tesco faced a decrease in the operating profits due to the fall in the
share prices by 9 percent. This proved as the worst performance of the company.
4. The higher debts and the liability of the credit card profoundly affected the financial
profits of Tesco.
5. In spite of being the price leader in UK, the lower cost strategy of Tesco has led to the
reduced margins in the profit.
6. Tesco had very poor performance in few of its grocery stores and outlets in specific
countries. This has been due to the lack of market research for Tesco before entering the market.

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Opportunities:
1. Tesco has expanded the newly introduced discount store Jack which has portrayed
significant growth (Ryle 2013). Therefore, it has put forward opportunities of growth for the
business and successfully compete with the lower cost rivals.
2. The development of the strategic partnership with the reputed companies offers an
amazing opportunity for Tesco. This will enable the company in offering increasing number of
products and thereby attract increasing number of customers.
3. The regions where the Tesco stores underperform there has always been an opportunity
for the joint ventures that provides market knowledge and help in improving the performance of
the regions.
4. Tesco can avail the opportunity of online shopping through upgrading and growing its
online business and the home delivery service.
5. Expansion of the Tesco business in the emerging countries like the Turkey, South
Korea and Indonesia can act as profitable opportunity of the company.
Threats:
1. Tesco faced the backlash of the social media after it launched the Christmas ad in the
year 2017 (Robson and Pitt 2018). People not only boycotted stores by claiming against
disrespectful act of Tesco against the faith of Christianity.
2. Tesco has also been accused of misleading the customers with fake brand names and
thereby marketing the products under Woodside Farms. This also resulted in severe legal
proceedings for Tesco.
3. The absence of Britain from the European Union after the Brexit Referendum has
caused threat for Tesco in terms of cost matter and trade deals.

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4. The competition with the supermarket giants like the Walmart, Aldi and Carrefour, the
market position of Tesco is immensely threatened.
5. The performance and the operational efficiency of Tesco in the critical regions might
be affected by the legal and the tax matters, government regulations, economic upheavals and
credit crunches.
III. Appraisal of the Strategic Solutions Used by the Organization
Tesco have adopted six strategic solutions for creating long term value for the
stakeholders:
1. Focus on Differentiation of the Brand: Tesco is in the journey of rebuilding trust in the
brand and thereby make significant progress. With the strengthening of the brand, Tesco is
marked as unique experience (Mañez et al. 2016). The opportunity lies in differentiation through
the products and services with greater quality and affordable prices and simplification of the
system through online ordering and ensures the delivery of the consistent service in the stores.
With the guarantee of the brands, the customers didn’t have to bother about the prices of the
branded products that they could derive from the retailers. This made the Tesco branded products
a point of differentiation with the unique and the helpful offer that gives a reason for the
customers in choosing Tesco.
2. Reduction of the Operating Cost by £ 1.5 Billion: Tesco have identified close to £1.5
billion in potential savings for the year 2019/20 with the specific opportunities of simplification
of the ways in which stores are run, modernization of the distribution and the fulfillment network
and efficiency in procurement of goods and services that are not for the resale (Lee 2017). The
company have generated close to £455 million of the cost saving by continuing to improving the

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service in store as the absolute priority and recalibrating the way in which Tesco serves the
customers for increasing the customer satisfaction while reducing the cost. As far as the
distribution and logistics is concerned, improving the stock flow and enhancing the efficiency of
the supply chain reduces the cost and helps the retailer in getting the products faster to the
customers so that they are able to benefit from it. To make it work, Tesco changed its
distribution network by announcing closure of the distribution centre at Welham Green and
Chesterfield for ensuring a simple and cost effective way of distribution of food as well as goods.
Besides, Tesco does not consider resale. In the day to day operations the company purchases
wider ranges of services and goods that have not been for resale that covered every aspect from
marketing to the consumables. Tesco have also ensured consolidation of the spending with some
of vital suppliers that allowed the company in making substantial savings. For instance, through
reduction of the number of the haulage partner in the Central Europe from ten to three.
3. Generation of £9 Billion Cash from the Operations: By improving the profitability and
through optimization of the working capital, Tesco aims at generating a positive flow of cash
from the retail operations. Cash from the operations have been the biggest contributor towards
the flow of cash while working capital remains a significant opportunity through tougher
assortment of products and better forecasting in the distribution centre. Tesco also remains
focused on the capital discipline for improving the cash flow and having set of hurdle rates for
the capital allocation.
4. Maximizing the Mix for Achieving 3.5 Percent to 4.0 Percent Group Margin: Tesco
serves the shoppers through adoption of wide services and channels (Katsifou, Seifert and
Tancrez 2014). For ensuring this, the company works towards building longer term profitability
through either investment in the new areas or by improvement of the economics of the recent