Tesco Plc Business Strategy: A Comprehensive Analysis
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BUSINESS STRATEGY
1
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Table of Contents
Introduction...................................................................................................................... 3
LO1.................................................................................................................................. 4
LO2.................................................................................................................................. 7
LO3.................................................................................................................................. 9
LO4................................................................................................................................ 12
Conclusion..................................................................................................................... 17
Reference List................................................................................................................ 18
2
Introduction...................................................................................................................... 3
LO1.................................................................................................................................. 4
LO2.................................................................................................................................. 7
LO3.................................................................................................................................. 9
LO4................................................................................................................................ 12
Conclusion..................................................................................................................... 17
Reference List................................................................................................................ 18
2

Introduction
Business strategies are becoming the main weapon with the help of which a business
faces and overcomes various obstacles that are related to the business process. The
business strategies are developed not only for this purpose but also to manage their
actions in the most desired manner. The study discusses various models and theories
of strategy making, with the help of which a business can aid itself in generating better
profit and at the same time creating better value to their targeted customers. The
chosen business for this study is Tesco Plc, which is the one of the largest retail
businesses in UK. The study will further help in assessing the areas, which the selected
business needs to improve in order to create better value out of their actions. Within the
study, the ways in which these tools can help in decision-making will also be
documented. The study will even discuss the ways in which Bowman’s strategic clock
can help in developing better strategy for creating positive perceived value of their
products by their customers.
3
Business strategies are becoming the main weapon with the help of which a business
faces and overcomes various obstacles that are related to the business process. The
business strategies are developed not only for this purpose but also to manage their
actions in the most desired manner. The study discusses various models and theories
of strategy making, with the help of which a business can aid itself in generating better
profit and at the same time creating better value to their targeted customers. The
chosen business for this study is Tesco Plc, which is the one of the largest retail
businesses in UK. The study will further help in assessing the areas, which the selected
business needs to improve in order to create better value out of their actions. Within the
study, the ways in which these tools can help in decision-making will also be
documented. The study will even discuss the ways in which Bowman’s strategic clock
can help in developing better strategy for creating positive perceived value of their
products by their customers.
3
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LO1
P1 Apply appropriate frameworks to analyze the macro environment for a given
organization
Tesco Plc is a multinational company, which is presently ranking amongst top five
retailers in the world. The company has it’s headquarter in UK and the present CEO is
Dave Lewis. Their present figure of their revenue is 5750 Billion GBP up to 2018. The
mission of Tesco Plc is to make products, which matters more to the society and their
vision is to provide better products to customers by working together.
Factors Analysis
Political The departure of UK in Brexit is creating a major negative impact
on the supermarkets and Tesco Plc will face some serious
economical crisis due to this. The reason behind is this, the prices
will go through serious squeeze due to this incident. It will
decrease the amount of their revenue from selling goods
(Kierzenkowski et al., 2016).
The stability in the political condition of UK can be a major factor
for gaining economical benefit for Tesco Plc. There are presently
no riots and disturbances in the country and that are why the
organisation will not suffer from any loss at this point.
Economical The rate of inflation of UK has gone up to 2.5 percent and this is
becoming a challenge for Tesco Plc, as they are facing difficulties
to keep their prices lower for consumers. The company had to
remove brands of Unilever, as they wanted to increase their prices
to more than 10 percent. This is creating a negative impact on
them, as they had lost the business with Unilever
(theguardian.com, 2019).
The economical growth of UK is suffering and their GDP had
decreased in past couple of months. This is causing some serious
economical issues for people and many industries are suffering,
who are related to Tesco Plc. This will cause a severe damage to
the revenue of this organisation in future (bbc.com, 2019).
If UK is able to overcome the changes in economy in future and
stop issues like inflation, deflation and recession, then the
company will be able to make a strong ground in the market.
Social Obesity is a major factor, which is affecting the world right now. A
major percentage of children are obese due to their bad food
habits. Tesco Plc will have to change their food products and
introduce fat free foods to gain more revenues. The older foods
with higher calories and saturated fats may face decline from
customers and it will decrease the revenue from those products
(theguardian.com, 2017).
The change in economical condition of people in UK can be a
4
P1 Apply appropriate frameworks to analyze the macro environment for a given
organization
Tesco Plc is a multinational company, which is presently ranking amongst top five
retailers in the world. The company has it’s headquarter in UK and the present CEO is
Dave Lewis. Their present figure of their revenue is 5750 Billion GBP up to 2018. The
mission of Tesco Plc is to make products, which matters more to the society and their
vision is to provide better products to customers by working together.
Factors Analysis
Political The departure of UK in Brexit is creating a major negative impact
on the supermarkets and Tesco Plc will face some serious
economical crisis due to this. The reason behind is this, the prices
will go through serious squeeze due to this incident. It will
decrease the amount of their revenue from selling goods
(Kierzenkowski et al., 2016).
The stability in the political condition of UK can be a major factor
for gaining economical benefit for Tesco Plc. There are presently
no riots and disturbances in the country and that are why the
organisation will not suffer from any loss at this point.
Economical The rate of inflation of UK has gone up to 2.5 percent and this is
becoming a challenge for Tesco Plc, as they are facing difficulties
to keep their prices lower for consumers. The company had to
remove brands of Unilever, as they wanted to increase their prices
to more than 10 percent. This is creating a negative impact on
them, as they had lost the business with Unilever
(theguardian.com, 2019).
The economical growth of UK is suffering and their GDP had
decreased in past couple of months. This is causing some serious
economical issues for people and many industries are suffering,
who are related to Tesco Plc. This will cause a severe damage to
the revenue of this organisation in future (bbc.com, 2019).
If UK is able to overcome the changes in economy in future and
stop issues like inflation, deflation and recession, then the
company will be able to make a strong ground in the market.
Social Obesity is a major factor, which is affecting the world right now. A
major percentage of children are obese due to their bad food
habits. Tesco Plc will have to change their food products and
introduce fat free foods to gain more revenues. The older foods
with higher calories and saturated fats may face decline from
customers and it will decrease the revenue from those products
(theguardian.com, 2017).
The change in economical condition of people in UK can be a
4
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major beneficial factor for Tesco Plc. In a few years, there can be a
significant amount of growth in income per capita. It will enable
consumers to invest more on products from this company.
Therefore, it will increase the sales of Tesco Plc and will help them
to get more revenue from the market.
Any kind of social unrest disturbs a business and increase in
labour wages will add more operational costs for Tesco Plc. This
will decrease their profit to a significant amount.
Technological Technology is changing the way of business on regular basis.
There are several new inventions, which helps a supermarket
company like Tesco Plc to improve their business performance.
Electronic labels are helping organisations to display prices and
nutrition data about grocery products. This is attracting more
customers and increasing the revenue (forbes.com, 2019).
The RFID system can benefit Tesco Plc by making checkout
system faster and saving the valuable time for customers. This is a
major thing, as people like to use fast methods for payment and
waiting in long queues can be very nerve wrecking. This system
will allow efficient time management and will being financial
benefits for Tesco Plc.
The better usage of technology brings in more opportunities, as it
enables the company to work on different techniques for
advertisement using social media. This kind of promotional
techniques will improve the base of customers, which in return can
increase the revenue of the company.
Environmenta
l
The climate change due to global warming is a vital concern for
every country and UK is not out of it. The daily rise in pollution and
carbon monoxide level in UK is going to be fatal for the country.
Therefore, Tesco Plc should not participate in any kind of activities,
which damages the environment by polluting it.
The 25-year environment plan by the government of UK is vital
and Tesco Plc should develop policies, which will support this
cause to create better public image. It will increase their sales, as
people like to relate themselves with brands, which are
contributing to make a sustainable environment (wwf.org.uk,
2019).
The soil contamination in UK is a major issue, which can lead to
serious problems in future. Tesco Plc should indulge in proper
waste management to eliminate harmful chemicals from entering
the soil of UK. It will improve their image and bring in more
revenue for the company.
Legal Any new law implementation from the government can be major
problem for Tesco Plc, as their business operations may have to
go through dramatic changes due to it. The implementation of
stricter laws for business can slow down the business and harm
the revenue. Therefore, it is necessary for Tesco Plc to prepare
5
significant amount of growth in income per capita. It will enable
consumers to invest more on products from this company.
Therefore, it will increase the sales of Tesco Plc and will help them
to get more revenue from the market.
Any kind of social unrest disturbs a business and increase in
labour wages will add more operational costs for Tesco Plc. This
will decrease their profit to a significant amount.
Technological Technology is changing the way of business on regular basis.
There are several new inventions, which helps a supermarket
company like Tesco Plc to improve their business performance.
Electronic labels are helping organisations to display prices and
nutrition data about grocery products. This is attracting more
customers and increasing the revenue (forbes.com, 2019).
The RFID system can benefit Tesco Plc by making checkout
system faster and saving the valuable time for customers. This is a
major thing, as people like to use fast methods for payment and
waiting in long queues can be very nerve wrecking. This system
will allow efficient time management and will being financial
benefits for Tesco Plc.
The better usage of technology brings in more opportunities, as it
enables the company to work on different techniques for
advertisement using social media. This kind of promotional
techniques will improve the base of customers, which in return can
increase the revenue of the company.
Environmenta
l
The climate change due to global warming is a vital concern for
every country and UK is not out of it. The daily rise in pollution and
carbon monoxide level in UK is going to be fatal for the country.
Therefore, Tesco Plc should not participate in any kind of activities,
which damages the environment by polluting it.
The 25-year environment plan by the government of UK is vital
and Tesco Plc should develop policies, which will support this
cause to create better public image. It will increase their sales, as
people like to relate themselves with brands, which are
contributing to make a sustainable environment (wwf.org.uk,
2019).
The soil contamination in UK is a major issue, which can lead to
serious problems in future. Tesco Plc should indulge in proper
waste management to eliminate harmful chemicals from entering
the soil of UK. It will improve their image and bring in more
revenue for the company.
Legal Any new law implementation from the government can be major
problem for Tesco Plc, as their business operations may have to
go through dramatic changes due to it. The implementation of
stricter laws for business can slow down the business and harm
the revenue. Therefore, it is necessary for Tesco Plc to prepare
5

themselves for any kind of drastic changes in the law.
Retail law refers to consumer law and there are various rules and
guidelines in this, which a company needs to follow. This law
states that a company cannot participate in unethical practices,
while dealing with customers. The law binds the company to sell
product according to the contract law of UK (gov.uk, 2019).
Therefore, abiding these laws can cause serious legal troubles,
which will cause the company to lose money due to punishment.
The food act of UK states that a company cannot sell foods, which
does not match the health standards. Tesco Plc should not sell
any rotten products to consumers, and if they do it, then they will
have to face legal consequences. Therefore, it is necessary to
follow these rules and avoiding it will cause them to lose money
and business due to public outrage (gov.uk, 2019).
Table 1: PESTLE analysis of TESCO PLC
(Source: Created by the learner)
6
Retail law refers to consumer law and there are various rules and
guidelines in this, which a company needs to follow. This law
states that a company cannot participate in unethical practices,
while dealing with customers. The law binds the company to sell
product according to the contract law of UK (gov.uk, 2019).
Therefore, abiding these laws can cause serious legal troubles,
which will cause the company to lose money due to punishment.
The food act of UK states that a company cannot sell foods, which
does not match the health standards. Tesco Plc should not sell
any rotten products to consumers, and if they do it, then they will
have to face legal consequences. Therefore, it is necessary to
follow these rules and avoiding it will cause them to lose money
and business due to public outrage (gov.uk, 2019).
Table 1: PESTLE analysis of TESCO PLC
(Source: Created by the learner)
6
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LO2
P2 Using appropriate frameworks analyze the internal environment and
capabilities of a given organization
Strengths
Tesco Plc has capable employees
who can generate more business
for the organisation. These
employees go through proper
training and achieve skills to
dominate the market.
The company uses a strong supply
chain, which enables them to
manage their inventory in an
efficient way and their delivery
system is fast. This point is making
the company strong and giving it a
huge advantage (Evans and
Mason, 2018).
The major strength of Tesco Plc is
that this company is 100 years old
and that is why it already made a
huge impact on the choices of
people. They have a strong ground
for the business already and they
are exploiting this strength to get
more business.
The vast product line of Tesco Plc
is the centre of attraction for
consumers and this is a major
strength for them
Weaknesses
The big stores are a major
weakness for Tesco Plc, as these
are not generating much revenue,
while on the other hand causing
huge amount of operational costs.
Therefore, the company will have to
get rid of it as soon as possible.
The departure of Tim Mason from
the marketing department of Tesco
Plc has weakened the company in a
major way. Their recent campaigns
are not strong as it used to be.
There are many employees, who
are getting lucrative offers from
various supermarket companies of
UK. Therefore, the company may
fail to retain staffs and losing skilled
employees can become a major
weakness for them.
The company is axing their several
food counters and it will make
people lose their jobs, which can
create a serious backlash on the
organization (theguardian.com,
2019).
Opportunities
Consumers are much concerned
about their health these days and
this can be a major opportunity for
Tesco Plc to focus on foods, which
have low curbs. This will generate
more revenues, as it will attract
more consumers.
The recent trend of veganism has
been affecting UK lately. Therefore,
Tesco Plc can host various events
to display their vegan items to
attract more vegan customers. This
will give them an edge over many
Threats
There are several companies
similar to Tesco Plc and they are
posing a serious threat for the
organisation. The huge amount of
competition may lead Tesco Plc to
lower their prices and it will
decrease their profit amount.
The big stores are increasing the
operational costs of Tesco Plc and
it will create a serious threat if they
cannot cut down costs of running
these.
Carl Rogberg of Tesco Plc was
7
P2 Using appropriate frameworks analyze the internal environment and
capabilities of a given organization
Strengths
Tesco Plc has capable employees
who can generate more business
for the organisation. These
employees go through proper
training and achieve skills to
dominate the market.
The company uses a strong supply
chain, which enables them to
manage their inventory in an
efficient way and their delivery
system is fast. This point is making
the company strong and giving it a
huge advantage (Evans and
Mason, 2018).
The major strength of Tesco Plc is
that this company is 100 years old
and that is why it already made a
huge impact on the choices of
people. They have a strong ground
for the business already and they
are exploiting this strength to get
more business.
The vast product line of Tesco Plc
is the centre of attraction for
consumers and this is a major
strength for them
Weaknesses
The big stores are a major
weakness for Tesco Plc, as these
are not generating much revenue,
while on the other hand causing
huge amount of operational costs.
Therefore, the company will have to
get rid of it as soon as possible.
The departure of Tim Mason from
the marketing department of Tesco
Plc has weakened the company in a
major way. Their recent campaigns
are not strong as it used to be.
There are many employees, who
are getting lucrative offers from
various supermarket companies of
UK. Therefore, the company may
fail to retain staffs and losing skilled
employees can become a major
weakness for them.
The company is axing their several
food counters and it will make
people lose their jobs, which can
create a serious backlash on the
organization (theguardian.com,
2019).
Opportunities
Consumers are much concerned
about their health these days and
this can be a major opportunity for
Tesco Plc to focus on foods, which
have low curbs. This will generate
more revenues, as it will attract
more consumers.
The recent trend of veganism has
been affecting UK lately. Therefore,
Tesco Plc can host various events
to display their vegan items to
attract more vegan customers. This
will give them an edge over many
Threats
There are several companies
similar to Tesco Plc and they are
posing a serious threat for the
organisation. The huge amount of
competition may lead Tesco Plc to
lower their prices and it will
decrease their profit amount.
The big stores are increasing the
operational costs of Tesco Plc and
it will create a serious threat if they
cannot cut down costs of running
these.
Carl Rogberg of Tesco Plc was
7
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companies, who are not focusing on
making food items like this
(independent.co.uk, 2019).
Tesco Plc can participate in
researching modern methods of
packaging to decrease wastes and
host several conferences regarding
protection of environment to
improve their image. This will bring
in more opportunities for the
company and will increase their
revenue.
accused of a 250 million Euro
scandal recently. This is damaging
the image of the organisation and
can cause severe financial losses
due to rejection from people (ft.com,
2019).
Table 2: SWOT analysis of TESCO PLC
(Source: Created by the learner)
8
making food items like this
(independent.co.uk, 2019).
Tesco Plc can participate in
researching modern methods of
packaging to decrease wastes and
host several conferences regarding
protection of environment to
improve their image. This will bring
in more opportunities for the
company and will increase their
revenue.
accused of a 250 million Euro
scandal recently. This is damaging
the image of the organisation and
can cause severe financial losses
due to rejection from people (ft.com,
2019).
Table 2: SWOT analysis of TESCO PLC
(Source: Created by the learner)
8

LO3
P3 Apply Porter’s five forces model and to evaluate the competitive forces of a
given market sector for an organization
It is essential for a business like Tesco Plc in assessing different areas of their business
competitive forces in order to function accurately, which can help them in performing
their actions gaining better profits. In order to do so, it is essential for Tesco Plc to apply
Porter’s Five Force models, which will allow the business to comprehend the
bargaining powers of the buyers and suppliers and to identify any kind of threats from its
competitors (Rothaermel, 2015).
Figure 1: Porter’s Five Force models
(Source: Pdfs.semanticscholar.org, 2019)
Threat of new entrance (low): Tesco Plc being one of the largest retail stores involve
huge amount of money and resources. This limits the start up businesses in entering
the market in which the business is having its presence and thus, the threat of new
entrance is low in this case.
Bargaining powers of buyers (high): It is essential for Tesco Plc to identify the needs,
tastes, and preferences of their potential customers. The customers can change their
tastes and preference, which can affect the business and its process. The potential
consumers of the chosen business can shift their preference from Tesco Plc to other
9
P3 Apply Porter’s five forces model and to evaluate the competitive forces of a
given market sector for an organization
It is essential for a business like Tesco Plc in assessing different areas of their business
competitive forces in order to function accurately, which can help them in performing
their actions gaining better profits. In order to do so, it is essential for Tesco Plc to apply
Porter’s Five Force models, which will allow the business to comprehend the
bargaining powers of the buyers and suppliers and to identify any kind of threats from its
competitors (Rothaermel, 2015).
Figure 1: Porter’s Five Force models
(Source: Pdfs.semanticscholar.org, 2019)
Threat of new entrance (low): Tesco Plc being one of the largest retail stores involve
huge amount of money and resources. This limits the start up businesses in entering
the market in which the business is having its presence and thus, the threat of new
entrance is low in this case.
Bargaining powers of buyers (high): It is essential for Tesco Plc to identify the needs,
tastes, and preferences of their potential customers. The customers can change their
tastes and preference, which can affect the business and its process. The potential
consumers of the chosen business can shift their preference from Tesco Plc to other
9
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companies in order to fulfil their needs. It states that the bargaining powers are high in
this context.
Threats of substitute (low): Any other products cannot replace the retail products.
Thus, the threat of substitute is low in nature.
Bargaining power of the suppliers (low): In a retail chain business, the supply chain
and its elements are in long-term contact with the businesses and it is difficult for them
to get out of the pact. This states that the bargaining power of the suppliers are low
here.
Rivalry among competitors (high): Within the UK economy, there are huge numbers
of retail businesses and this shows that the rivalry powers of the competitors are high
for the case of Tesco Plc. It is relevant for Tesco Plc to understand their potential
competitors in order to develop better competitive strategies in order to receive better
profits.
Justification
From the above-discussed competitive forces, it is understood that the bargaining
power is high in nature followed by the threats of rivalry. It is necessary for the
organisation to understand this in order to create better value out of their business,
which will be attracting better customers within the business, creating better profits. It is
relevant for the business to develop their pricing strategies such, that the customers
might feel interested in acquiring products from Tesco Plc. From the above discussion,
it is also comprehendible that the business need to develop strategies for competing
their rivals in order to attract better customers which can be done though affordable
pricing strategy. This will allow the business in engaging customers that are available
from all the income groups of the economy.
Furthermore, it has been studied that, the only risk is the threat of substitute, which the
business cannot change but this can be avoided if he customers are given quality goods
with better quality products. This will create competitive edge for Tesco Plc. Additionally,
the business can strategize for franchisee, which will give scope for expansion within
the market and will even increase the brand value among the customers. On the other
hand, it will even create scope to increase the employee strength of the business in the
end.
The positioning map of the chosen organization is given below:
10
this context.
Threats of substitute (low): Any other products cannot replace the retail products.
Thus, the threat of substitute is low in nature.
Bargaining power of the suppliers (low): In a retail chain business, the supply chain
and its elements are in long-term contact with the businesses and it is difficult for them
to get out of the pact. This states that the bargaining power of the suppliers are low
here.
Rivalry among competitors (high): Within the UK economy, there are huge numbers
of retail businesses and this shows that the rivalry powers of the competitors are high
for the case of Tesco Plc. It is relevant for Tesco Plc to understand their potential
competitors in order to develop better competitive strategies in order to receive better
profits.
Justification
From the above-discussed competitive forces, it is understood that the bargaining
power is high in nature followed by the threats of rivalry. It is necessary for the
organisation to understand this in order to create better value out of their business,
which will be attracting better customers within the business, creating better profits. It is
relevant for the business to develop their pricing strategies such, that the customers
might feel interested in acquiring products from Tesco Plc. From the above discussion,
it is also comprehendible that the business need to develop strategies for competing
their rivals in order to attract better customers which can be done though affordable
pricing strategy. This will allow the business in engaging customers that are available
from all the income groups of the economy.
Furthermore, it has been studied that, the only risk is the threat of substitute, which the
business cannot change but this can be avoided if he customers are given quality goods
with better quality products. This will create competitive edge for Tesco Plc. Additionally,
the business can strategize for franchisee, which will give scope for expansion within
the market and will even increase the brand value among the customers. On the other
hand, it will even create scope to increase the employee strength of the business in the
end.
The positioning map of the chosen organization is given below:
10
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High Price
High qualityLow Quality
Low Price
TESCO
M&S
Boots
Morrisons
Figure 2: Position Map of Tesco Plc
(Source: Created by the learner)
With the help of this positioning map, Tesco Plc can understand the position that they
need to put their business in the near future. The strategy of providing quality products
with mid-ranged pricing can help the business in receiving better eye of the targeted
customers.
11
High qualityLow Quality
Low Price
TESCO
M&S
Boots
Morrisons
Figure 2: Position Map of Tesco Plc
(Source: Created by the learner)
With the help of this positioning map, Tesco Plc can understand the position that they
need to put their business in the near future. The strategy of providing quality products
with mid-ranged pricing can help the business in receiving better eye of the targeted
customers.
11

LO4
P4 Apply a range of theories, concepts, and models, interpret and devise
strategic planning for a given organization.
Ansoff’s Growth Matrix
With the help of this growth matrix, Tesco Plc and its strategy, developers can assess
the best possible tactic to function their action within the selected market of UK. Ansoff’s
Growth Matrix involves four different quadrant and they are:
Market development: In this part of the business strategy, a business aims to expand
its market in order to receive better strategy while offering the same or existing products
that were already developed by the firm (Gurcaylilar-Yenidogan and Aksoy, 2018).
Market penetration: Within this strategy of market penetration, a firm aims to enter the
same market with same product. It can involve pricing strategy, advertisement strategy
and even product packaging strategy. This strategy helps the business in accelerating
the sale of their previously developed product within the existing market.
Product development: This strategy involves development of product, which will be
circulated within the existing market of a business. The main motive of this stagey is to
attract larger customers with newly developed product, creating better sales.
Diversification: The diversification strategy is used by an organization for entering a
newly selected market with newly developed product. With the help of this strategy, a
business enters a new market with the motive to attract customers for their newly
developed products, accelerating profit generation and even increasing customer base.
Figure 3: Ansoff’s Growth matrix
12
P4 Apply a range of theories, concepts, and models, interpret and devise
strategic planning for a given organization.
Ansoff’s Growth Matrix
With the help of this growth matrix, Tesco Plc and its strategy, developers can assess
the best possible tactic to function their action within the selected market of UK. Ansoff’s
Growth Matrix involves four different quadrant and they are:
Market development: In this part of the business strategy, a business aims to expand
its market in order to receive better strategy while offering the same or existing products
that were already developed by the firm (Gurcaylilar-Yenidogan and Aksoy, 2018).
Market penetration: Within this strategy of market penetration, a firm aims to enter the
same market with same product. It can involve pricing strategy, advertisement strategy
and even product packaging strategy. This strategy helps the business in accelerating
the sale of their previously developed product within the existing market.
Product development: This strategy involves development of product, which will be
circulated within the existing market of a business. The main motive of this stagey is to
attract larger customers with newly developed product, creating better sales.
Diversification: The diversification strategy is used by an organization for entering a
newly selected market with newly developed product. With the help of this strategy, a
business enters a new market with the motive to attract customers for their newly
developed products, accelerating profit generation and even increasing customer base.
Figure 3: Ansoff’s Growth matrix
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