Comprehensive Strategic Report on Tesco PLC: Environment Analysis

This report provides a comprehensive strategic analysis of Tesco PLC, a UK-based market leader. It examines the macro environment using PEST and STEEPLE analyses, identifying political, economic, social, technological, environmental, and legal factors impacting the company. The internal environment is evaluated through SWOT and VRIO analyses, revealing strengths, weaknesses, opportunities, and threats, as well as the value, rarity, imitability, and organization of Tesco's resources. Porter's Five Forces analysis assesses the competitive landscape, including the threat of new entrants, supplier bargaining power, buyer bargaining power, the threat of substitute products, and rivalry among existing competitors. Finally, the report applies the SOSTAC model to develop a strategic marketing plan, outlining the situation analysis, objectives, strategy, tactics, actions, and control measures aimed at enhancing Tesco's profitability and market position. The report concludes with recommendations for Tesco to navigate the challenges and capitalize on opportunities in the dynamic retail environment. Desklib provides a variety of solved assignments for students.

REFLECTIVE
TEACHING

Table of Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
Macro environment of the Tesco plc. Ltd...................................................................................2
PEST analysis..............................................................................................................................2
STEEPL analysis.........................................................................................................................3
Evaluation of internal environment.............................................................................................3
SWOT analysis............................................................................................................................3
VRIO analysis..............................................................................................................................4
Porters five forces analysis..........................................................................................................5
SOSTAC MODEL.......................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
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INTRODUCTION
The strategic process is the plan of action that includes the decision-making process in
an organization. It includes data from internal sources as well as external sources for the same.
This report is based on TESCO, a UK based company which is leading the market of UK. The
study involves the analysis of the macro environment with the assistance of PEST and
STEEPLE. Simultaneously to determine the internal environment of the corporation will utilise
SWOT and VRIO analysis. The report also includes a strategic management plan that has
tangible and tactical strategic goals and priorities as it relates to TESCO.
MAIN BODY
Macro environment of the Tesco plc. Ltd.
In context to determining the macro environment of the company , PEST and STEEPLE are the
most suitable form of model through which the origination is determining the element which
affecting the company (Riwayadi, 2021).
PEST analysis
Political factors
A few years ago, the UK decided to leave the European Union. This has negatively affected
various brands operating in the country, including Tesco. Tesco export variety of products to
different countries that includes domestic and international market , the UK's departure from the
European Union has created many difficulties for the company.
Economic Factors
There are a number of economic factors that affecting the management and operational function
of Tesco's. These factors contain increasing petroleum charges, increasing wages and increased
industry competition. Rising fuel prices have increased the company's transportation costs, and
increasing rivalry in the industry makes it difficult for the organisation to survive in the
company.
Social factor
In the modern era the consumers are constantly trying to improve health of individual by
modifying diet routines and prefer to have salads, shakes, and many more. Tesco should conduct
market research and try to satisfy the needs of consumers by providing healthy and nutritious
products to individual person rather than offering them junk food.
Technology factor
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The utilisation of technology in commercial activities is increases effectiveness of company.
Tesco deliver customers feature to buy groceries both online and offline. With the Tesco website,
consumers can buy and order the product as per the choice on buyer on individual doorstep.
STEEPL analysis
Social Factors: Consumer income levels are a major source of profitability for businesses and an
integral part for increasing and contributing the economy of the nation. However, with COVID
19, many people lost their jobs and affected the household income of individual person. Further
this also result in affecting the Tesco's growth in negative manner (Elavarasan,2020).
Technology Factors: Businesses can acquire the market effectively by implementing technology
in various features of the business. The introduction of barcodes, payment databases, and storage
capacity has simplified and streamlined Tesco's business processes.
Economic Factors: Inflation rates in the UK economy are steadily rising and the income base is
relatively low, which can adversely affect a company's profitability. Due to continuous increment
of inflation the people are changing their buying preferences.
Environmental factor: Tesco works efficiently to reduce the waste generated from its operation.
It also works to minimize water consumption and save as much as possible. In context to save
the planet the organisation claim that the company will reduce the carbon footprints by 50% in
the forthcoming time ( Vorozhbit, Kuzmicheva, and Sxhnaider, 2018).
Political Factors: the Tesco organisation is enjoying the political relationship with the different
countries as the organisation is able to exchange the product and services in appropriate manner.
Legal Factors the company is paying less taxes in the UK due to financial stability of the
country but in other countries the company is having difficulty in operating because of high
value taxes. The company will now have to innovate the product categories as per the legal
system of the country in order to survive in the international marketplace.
Evaluation of internal environment
SWOT analysis
Strength
Tesco is a leading British multinational company which is listed on the London Stock Exchange,
which means anyone can buy and sell its shares. It has a strong online presence and nurtures
consumer relationships through interactive social posts. The organisation is having grate brand
value in the market period.
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Weaknesses
Tesco's main weakness is operating because of low profit margins due to the existence of
competitors in the industry. Tesco is having difficulty retaining customers. Tesco consumers are
shifting toward different brands.
Opportunities
Key opportunities for Tesco is that the company can provide full time service, satisfying the
buyers with the latest trends , expanding into rural areas and all over the world.
Threats
There are a number of companies for which Tesco faces stiff competition in the market. The
introduction of a sugar tax in the country has increased the tax levied on businesses ( Juliana and
Nyoman 2019.).
VRIO analysis
Resources Valuable Rare Imitation Non
substitutable/
organization
Brand image ✓ ✓
Global presence ✓ ✓
Problem solving skills ✓ ✓
Quality ✓ ✓
Location ✓ ✓
Marketing ✓
Competitive pricing ✓ ✓
Financial strength ✓
✓
Technological
advancement
✓ ✓
Employee training ✓ ✓
Based on the above analysis, it can be concluded that all company resources such as employee
training, technological advancement, financial strength, brand image, location, marketing and
many others are valuable in their nature and essential to the business for increasing the
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profitability and productivity . It give assistance to the company in gaining a competitive
advantages in the UK market. However, not all resources are rare, irreplaceable, and
irreplaceable. Scarcity resources include the company's international presence and solving
business problems, the right resources for the company include quality, location and competitive
pricing. And finally, irreplaceable resources include branding as it requires a lot of investment to
build such a business, global presence, financial strength, technological advancement and
Training Employees.
Porters five forces analysis
The portal five forces model includes the four factors mentioned below:
Threats of new entrants: in the domestic and international markets, the company has difficulty
entering in the ne market. while competitors like Unilever and Sainsbury acquired the company
with the complete information of the market ( Fengyi, 2021)
Supplier bargaining power: Due to the lack of effective supply chain management, bargaining
power is greatly supported by suppliers. As per the current covid 19 situation, the company must
follow all the guidelines in order to deliver the safety to workers as well as customers, which also
lead to certain restrictions on operation and supply chain of the company. For example, a
business enterprise cannot establish a relationship with a supplier due to lack of connection. In
the context of increasing profits by reducing the bargaining power of suppliers, the company
must maintain trade agreements more effectively.
Buyer Bargaining Power: Consumer tastes and tithing preferences are changing rapidly under
the current scenario. As a result, the company is leading in terms of limited potential customers.
Against this backdrop, the scale of bargaining power continues to increase in the market.
Threat of Substitute Products: In the current period, substitute products are increasing in
domestic and international markets which leads to customers switching to different brands. To
reduce the risk of switching to other brands, the company must innovate its products and services
as well as strengthen its marketing activities with the assistance of digital tools and techniques.
Rivalry among existing competitors: The company has faced strong competition from Unilever
and Sainsbury in the domestic as well as international market. Against this backdrop, the
company is expanding its presence in the market through various digital platforms and providing
competitive advantages in the market ( Isabelle and et.al 2020.).
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SOSTAC MODEL
The SOSTAC model is recognized as one of the effective marketing tools that provide assistance
in developing action plans for the well-being of the organization. Along with that, the business
can face the upcoming challenges, which is considered one of the most suitable strategies to
increase the profit and productivity of the business. Also help in increasing the brand value of the
company in the marketplace. The model is consist of different elements referred to as:
Case Analysis : This is one of the essentials for the growth of the business as it determines the
needs and wants of the potential customer from different market segment. It gives assistance to
otgansation by providing business insights that deliver assistance to survive in national and
international markets. Due to this factor, the capacity of the company can be easily assessed in
appropriate manner. In this context, external and internal market factors are needed.
SWOT Analysis
Strengths: The company has good brand value in the domestic and international markets. Along
with that, the company offers a wide range of products and services to consumers which also
increasing satisfaction of buyers.
Weaknesses: The company faces a weak market problem due to not expanding its network
effectively. In this context, the company must apply marketing skills for the coming period.
Along with that the company need to target the developed markets.
Opportunity: the company has an opportunity to acquire the international market in adequate
manner . Along with that, the company can improve the profitability of the business by
increasing the competitive advantages of the organisation.
Threat: The availability of a large number of competitors is the biggest threat to the
organization, which also reduces the value of the business. Beside that the rules and regulation of
various nation the company is not able to acquire different market like Japan ( Phan, 2021).
objective: Tesco's goal is to upsurge the company's profits by expanding its worldwide network
with satisfied consumers and increase the brand value in the market.
Strategy : To expand the business globally, the business will use digital marketing including
various social media platforms like Facebook, Instagram, Chrome, Google, Pinterest, etc. The
company introduces products to customers on social networking sites, because in the modern era,
peoples are depend a lot on social networking sites. The company will target potential customers
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who are housewives and working women because they prefer products mainly for managing
daily groceries used in the homes or household works.
Tactics: Tesco will interact with customers through social networks to develop business
relationships with consumers that will help them staying in the market for a long period of time.
With this assistance, the company enhances the brand value in the market that leads to increasing
the sales of the company. With that, the company can identify market trends as well as customer
tastes and preferences. The company will solve the customer's problems that the encounters at
the time of purchase.
Action Plan : The company will increase employee engagement by hiring people who are
effective in human resource management to manage employees in the organization in effective
as well as efficient manner. A manager or leader who provides training and development
programs to employees to enhance skills and knowledge in a specific area in order to effectively
improve worker performance and effectiveness of employees. Additionally, the organization will
deal with the digital marketing team to increase the value of the business by managing social
trend of the company. Furthermore, it will aid in boosting the sales of the organization in
adequate manner (Yasobant, Patel and Saxena, 2019). In addition, the company has the ability to
manage functions and operations in a reasonable manner.
Controls: To manage the company's operations, it is important to adequately manage the
performance of workers. To control and monitor the employees in the organization, the company
can use many different employees to keep the performance indicator tools. With the help of this,
the company can determine the employee's performance. In addition, managers can give
performance-based evaluations to employees, which can be both positive and negative. The KPI
tool mange the record of working people working within the organisation. The organization
assigns these roles and responsibilities to a special human resource management team to increase
the business value and profitability and productivity of the business.
CONCLUSION
In the above report, it is identified a number of factors affecting the growth and development of
the business. PESTLE analysis helps to identify macro-environmental factors and SWOT and
VRIO help determine a company's competitive advantage. Furthermore the report shade a light
on the portals five force model and SOSTAC model in context of the company.
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REFERENCES
Books and journals
Elavarasan, R. M., 2020. SWOT analysis: A framework for comprehensive evaluation of
drivers and barriers for renewable energy development in significant countries. Energy
Reports. 6. pp.1838-1864.
Fengyi, Z., 2021. The Analysis of Asda-Tesco’s Merger/Acquisition. Journal of Finance
Research, 5(1), pp.1-6.
Isabelle and et.al 2020. Is Porter's Five Forces Framework Still Relevant? A study of the
capital/labour intensity continuum via mining and IT industries. Technology Innovation
Management Review, 10(6).
Juliana, J.P.E. and Nyoman, Y.N., 2019. Factors influencing competitiveness of small and
medium industry of Bali: Porter’s five forces analysis. Russian Journal of Agricultural
and Socio-Economic Sciences, 89(5).
Phan, S., 2021. The effect of pestle factors on development of e-commerce. International
Journal of Data and Network Science, 5(1), pp.37-42.
Vorozhbit, O. Y., Kuzmicheva, I.A. and Sxhnaider, O.V., 2018. Quantitative assessment of
Primorsky Krai fishery cluster competitiveness factors on the basis of the Porter model
transformation. The Journal of Social Sciences Research, pp.350-357.
Yasobant, S., Patel, K. and Saxena, D., 2019. Hastening One health collaboration in Gujarat,
India: A SWOT analysis. J. Public Health Policy Plann, 3(2), pp.22-24.
Riwayadi, E., 2021, August. PESTLE ANALYSIS OF FINANCIAL TECHNOLOGY IN
INDONESIA. In International Conference on Innovations in Social Sciences Education
and Engineering (ICOISSEE) (Vol. 1, No. 1).
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