Effective Strategic Planning for Tesco: Market Analysis & Strategy

This report provides a comprehensive analysis of Tesco's business strategy, covering its macro environment, internal capabilities, and competitive forces. It utilizes PESTEL and SWOT analyses to assess external factors and internal strengths and weaknesses. The report applies Porter's Five Forces model to evaluate the competitive landscape and explores strategic planning approaches using Bowman's Strategy Clock and Porter's Generic Strategies. The analysis aims to devise an effective strategic plan for Tesco, considering its market position and future opportunities, with the conclusion summarizing the key findings and recommendations.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................................2
EXECUTIVE SUMMARY.................................................................................................................................3
LO1..............................................................................................................................................................4
ANALYSE THE IMPACT AND INFLUENCE WHICH AFFECT THE MACRO ENVIRONMENT OF THE
ORGANISATION.......................................................................................................................................4
LO2..............................................................................................................................................................9
ACCESS AN ORGANISATIONS INTERNAL ENVIRONMENT AND CAPABILITIES...........................................9
LO3............................................................................................................................................................11
P3 APPLYING PORTER’S FIVE FORCES MODEL TO EVALUATE THE COMPETITIVE FORCES OF A GIVEN
MARKET SECTOR FOR THE COMPANY...................................................................................................11
LO4............................................................................................................................................................14
P4 DEVISING AN EFFECTIVE STRATEGIC PLANNING FOR THE COMPANY..............................................14
BOWMAN'S STRATEGY CLOCK MODEL..................................................................................................14
PORTER'S GENERIC MODEL...................................................................................................................18
CONCLUSION.............................................................................................................................................20
REFERENCES..............................................................................................................................................21

INTRODUCTION
Business strategies are the approaches that are needed for the perfect penetration in the
market. It has been seen that companies which are taking a stepwise approach in the strategies
are needed to take the stepwise precautionary steps in the formation and creation of the new
ideologies needed to create the employment (Andjelkovic Pesic, 2013). The business strategies
are created in the proper formation and have seen the changes that are needed for the proper
execution and development needed in the field of the desired capabilities and have seen the
enhancement in the field by participating the formation of the desired strategic model of the
attributes needed in the participation and formation of the field analysis of the desired
formation and updating of the sensitive capabilities needed in the field of desired capabilities
and this have found the enhancement criteria in the settlement of the updated tasks and have
seen the advancements in the field necessary for the proper planning and creation of the well-
equipped set of the strategies needed to perform the tasks and the strategies for the
accommodation and the creation of the entire set of attributes needed for the updating and
making the plans needed for the perfect identical needs (Blind et.al, 2010).
Strategic planning in the organization is the administrative procedure in which the systems and
bearings are characterized to make the procedure as needs are to the made air in the
development and improvement in the vital arranging of the essentialness of the organization's
encompassing structure and arrangement. Techniques in business are characterized and
clarified in various ways and every one of the systems is performed and started variedly. It is
seen that objectives and assets recognized and submerged are the things which are made for
the arranging and execution of the procedure and the plans completed in the organization.

EXECUTIVE SUMMARY
TESCO is a British multinational grocery firm which has its headquarter in the Welwyn garden
city, Hertfordshire, England, United Kingdom. It is awarded as the third largest enterprise in the
world and the extent of the work which is being executed in the firm has been executed by the
profit measurement techniques. TESCO has been graded as the ninth largest retailer in the
world. Tesco was founded by Jack Cohen in 1919 as a group of the market stalls and after that
the never set back theory was applied and it became the multinational brand soon (Boohene
and Agyapong, 2010).
The quality and the freshness adapted by the Tesco have applied the sense of the firm in which
the resources are classified and all other things which are been established are performed in
the original behaviour of the policy adopted by the thing required to be connected to be in
time. It has been seen that there are various institutional organizations working on the same
zones but the quality of the work and services provided by the Tesco is unmatched and due to
this Tesco has been named as the best retail grocery shop.

LO1
ANALYSE THE IMPACT AND INFLUENCE WHICH AFFECT THE MACRO
ENVIRONMENT OF THE ORGANISATION
Business strategies are needed for the proper performance of the organizational processes and
to make the capabilities and abilities needed for the execution and maintaining the desired set
of the volatility. It has been seen that there are various strategies which are needed to perform
to make the task needed to be identified in the proper formation and maintaining the sets in
the formats needed to perform in the well-designed planning and making the things needed to
be done on the time.
PESTEL analysis is done so as to see the external factors affecting the organizational setbacks
and also affects the environment in which the proper formulation and the arrangement of the
strategies can be done so as to expect the good and ambient set of the well-defined
characteristic needed to be arranged and formulated to bring the updated set of the
environment to be done in the meantime.
PESTEL ANALYSIS of TESCO
POLITICAL
The grocery sector has been greatly affected by the political policies and regulations, this is
implanted by the government institutions for carrying out the proper formulated policies to
implant the sectors in the company. It has been seen as that there are many implanted
scenarios and services that are needed to be formulated to implant the laws exposed by the
company policies and there are many institutional laws that are needed to be incorporated to
make the laws and policies imparted by the taxation laws. Another major political reason in the
same phase is the implications needed to implant the management of the company (Brotchie
et.al, 2017).

ECONOMIC
This is the factor which is involving its effect on the development of techniques and different
arrangements which are being in the process. The approaches and plan of strategies are the
things which are figuring its proof in the behavioural ramifications of the financial elements.
Tesco isn't confronting any monetary emergency in its inward factor, however, the outer
variables are influencing the arrangements and the definition of techniques. Tesco has
extended its business in the other nations and thus it has implicated its plans and other sources
for the proper planning and accommodating the plans and variables needed for the successful
existence of it.
SOCIAL:
Tesco has been making the financial plans and the certifications for the incorporation of the
services related to the sector it has made several social arrangements for the updating and for
the proper formulating of the systematic varieties of the things which have made the
systematic arrangements in the plans and behaviors of the successfully implanting the scenarios
for the arrangement and execution of the varieties needed for the planning and arranging of
the well-equipped things for the successful implication of the social strategies (Crawford, 2013).
TECHNOLOGICAL:
Grocery sector needs to be technologically prepared for the successful implication and also for
the proper arrangements and setup needed for the creation and maintaining the technological
acceptability of the updated engaging of the beneficial services needed to execute the
introduction and trends needed for the creation of the new varied clarity of the things needed
to generate the order online.
ENVIRONMENTAL:
Tesco uses the local arrangements and all the items are being utilized by the Tesco from the
local grocers and all other things which are needed for the creation and updating of the local

documents needed for the proper execution and creation of the varied services which are
needed for the proper formation and the things needed to execute the varieties needed to
create the things for the environmental creation and its proper attraction for the environmental
aspects needed to formulate the characteristic behavior of the charges and maintaining the
creation and services for it (Dälken, 2014).
LEGAL:
The copyright laws and the information assurance laws are the fundamental legitimate
perspectives which organizations should be considered while setting up the laws and keeping in
mind that setting up the approaches, it is seen that the lawful viewpoints are the information
acquisitions and the patterns which are should have been affirmed while setting up the laws
and the angles for setting up the reports while presenting the procedures in moral behavior.

SWOT analysis of TESCO
STRENGTH WEAKNESS
 TESCO has won various honours for its retail
perfection, client administration, and
general shopping knowledge.
 It is viewed as one of the biggest and most
productive stores and retail arranges on the
planet, which numerous contenders have
endeavoured to imitate.
 The organization has huge money holds and
an extensive variety of property in its
portfolio yet undeveloped, which gives a
solid monetary position to climate a wide
range of financial cycles.
 It has significant brand value in its name
with worldwide acknowledgement and
regard for what it remains for as far as
quality, choice, and administration.
 The retailer has a long-standing history in
the UK, giving it validity and confirmation
that it will keep on operating long into
what's to come.
 Its different store designs bid to nearby and
social needs, helping it offer a more
customized benefit involvement.
 It has enhanced the utilization of
innovation all through its activities, making
more prominent cost efficiencies and
 Many branches of Tesco are not working
well enough and therefore the company is
getting weak in its internal structures.
 Pressures from rivals have led down the
internal procedures and hence the bond has
weakened its resources in the internal
resources.
 Some outlets in the foreign countries have
not performed well and therefore the things
have gone mishap in the positions.
 Consumers have not bought many items
related to the products of the company and
hence some products have remained the
phased out in the situations of it.
 The retailers have been depending highly on
the internal procedures and the resources
developed for the proper outsourcing and
creation of the dependent behaviours have
led the enhancement in the perfect ways.

upgraded benefit encounters.
OPPORTUNITY THREATS
 Tesco can strategically alliance with the
other parties and it can bring the phase of
the order in the correct sense by
collaborating with the correct sense of the
persons needed for the perfect execution
and creation of the subsidiary theories.
 In the countries where the Tesco is not
performing well, they can collaborate with
the local ventures and create the sense of
the proper formation and creation of the
variety of the storms related to it.
 The opportunities in the private market are
also an essential characteristic needed for
the successful execution of the demands
liberated for it.
 Emerging markets are capturing the lower
levels of the market and thus it can be a
good opportunity to successfully cover up
those markets.
 Economic recessions have created an
enormous threat and the credited crunches
in the world, reducing the size of the
purchase by the customers.
 Competitive threats have been a great
disadvantage in the field of the Tesco.
 Food prices are the same around the world
and it has created the sense of the
enormous capabilities and understanding
around the world.
 Labour threats have been the same around
and have reduced the consumer’s attention
and the grievances of the labour are needed
to solve.
 Government rules and regulations are the
checkpoints that put pressure on Tesco and
compel them to check the policies and
regulations for it.
(Gasmi, F. and Virto, L.R., 2010)

LO2
ACCESS AN ORGANISATIONS INTERNAL ENVIRONMENT AND CAPABILITIES
PORTER’S FIVE FORCES ANALYSIS
THREAT OF SUBSTITUTES
In the grocery retail supermarket, the substitutes of significant grocery retailers are little chains
of stores, off licenses and natural shops which are not seen as a risk to supermarket stores like
Tesco that offer amazing items at extensively lower costs. In addition, Tesco is further getting
hold of these shops by opening Express stores in neighbouring towns and downtown areas
making an obstacle for these substitutes to enter the market. In any case, the risk of substitutes
for non-sustenance things, for example, garments, is genuinely high. It ought to be noticed that
in so far as the economic recessions will flourish, clients will be slanted towards marked down
costs thus Tesco is a risk to the other platforms of the same arena.
THREAT OF ENTRY OF NEW CUSTOMERS
The marginal entry of the new customers which are coming to the market is low as compared
to the other sources and resources needed to the resources for the competitive and to
establish the new and successful brand name for the organizations. It has been a case of the
intense variable to associate and to create a well-established format for the execution and
creation of the things needed for the successful amplification of the things needed for the
analysis (Hussain, 2013).
INTENSITY OF THE RIVALRY
Tesco has been facing the intense rivalry from the competitors who are forcing the Tesco in a
mode which is going to intensify the situations to become a personified sensible in which the
competitive markets can function to perform in the more varied ways. It has been seen theta
the competition rivalry the quality of products increases, as well as the quality of the things,
gets involved in the activities where the target customers can involve in the segments. The

Tesco’s market leadership properties are making it a unique and compatible with other things
initiated in the leadership position.
BARGAINING POWER OF BUYERS
Sometimes it has been seen that the customers do not have enough potential to buy and
enhance the situations in which the formation and updating of the analysis have been done. It
has been proposed that customers who do not have the potential arrangements for the buying
of the things are analyzed and arranged to make the things in the retail shopping and the prices
of products have been made substantially down and have made the benefits to create are
easily compared and then selected in the situations.
BARGAINING POWER OF SUPPLIERS
Bargaining power of suppliers is the arrangements are inclined towards the major food and
grocery. Tesco, Sainsbury’s and Asda have made the arrangements to provide the basic
facilities to be provided to some extent. It ought to be noticed that the providers are slanted
towards real nourishment and basic supply retailers and fear to lose their business contracts
with substantial general stores. (Gruber and Koutroumpis, 2011)
Porter’s five theories enable the perfect gathering of the information needed to carry out the
aspects needed to verify the crucial aspects needed to verify the needs and demands of the
aspects needed for the perfect existence of the needs and demands of it.

LO3
P3 APPLYING PORTER’S FIVE FORCES MODEL TO EVALUATE THE
COMPETITIVE FORCES OF A GIVEN MARKET SECTOR FOR THE COMPANY
The company TESCO is the grocery market leader in the UK. There are several competitors of
this company in the market and also there exist various forces and threats that may affect the
performance of the company. The PORTER’S five forces model can be used to analyse the
competition level within the UK market. This model would help the company in analysing
several competitive factors that may affect its performance and the company may plan the
necessary strategies accordingly in order to gain competitive advantage (E. Dobbs, 2014).
Figure 1: Porter's five forces model
[Source: http://crackmba.com/porters-five-forces-model/]
Competitive Rivalry– There exist very high competitive rivalry for the company in the
market. The major competitors of the company include ASDA, Sainsbury and Morrison.
These competitive companies are directly affecting the company’s performance. They
are providing innovative and good quality products to the customers at lower prices to

attract them and gain their attention and support. The company TESCO must plan
effective strategies to fight with its competitors and maintain its position in the market.
Power of buyers– The Company is facing huge problem due to the increase in
bargaining power of the customers. As the competitive companies are providing better
products at lower prices, so the customers have several options to purchase different
products. Therefore, their bargaining power has increased. The company TESCO must
adopt strategies to maintain and increase its customer base by providing them branded
and innovative products to satisfy their needs (Gunawan, et al., 2015).
Powers of suppliers – The supplier’s power has also increased by time as several big
competitive companies have emerged in the market. Companies like Sainsbury and
Morrison provides huge profit to the suppliers and therefore the suppliers have several
options and their bargaining power has increased. The company TESCO must plan
strategies to become economically strong to gain control over the supplier’s power.
The threat of substitutes – The Company TESCO is one of the leading grocery
companies of the UK and therefore there is a very low risk faced by the company due to
its substitutes. It has a brand value in the market and has huge customer base. It is very
difficult for any other small company to take the position of this company in the market.
The threat of new entry – This Company does not have any threat from the new
entrants in the market. Any new emerging company cannot replace it as it is the market
leading company in the UK. The market is very competitive and it is very difficult for any
new emerging company to survive due to strict rules and regulations of the government
of UK and due to high licensing cost. Huge amount of investment is needed to establish
a new company and it is very challenging for the new entry to grow their business and
to compete with the market leader.

TESCO is a very large company having a recognized brand value in the market. It is
very difficult for the other small companies and new entrants to give competition to
TESCO. The major threat to the company is huge competitive rivalry in the market.
Another biggest threat is the increasing bargaining power of the customers.
The company must plan appropriate strategies to gain control over the huge competitive
market and maintain the brand value in the market. It is the duty of the strategic
manager of the company to plan and suggest strategies to gain the competitive
advantage and to control the whole market.
The company must understand and analyse the techniques used by the competitors in
the market to attract the customers. This analysis would help the company to plan
strategies accordingly. The company must adopt innovative and latest technologies in
the development of products and their packaging to gain the attention of customers.
Also, the company must vary the price of products according to the market changes to
gain competitive advantage. It must lower the prices of products for some time to
capture the attention of customers. It must provide quality and branded products at
reasonable prices to the customers in order to generate a feeling of trust and loyalty in
the minds of customers. Once the customers become habitual of purchasing the
company’s products, then they would not think to switch the company even if TESCO
increases the product prises. They would continue to buy the company’s products due
to trust and brand value (Ndungu, 2014).
This strategy would help the company to deal with the bargaining power of the
customers and would also help to gain competitive advantage and maintain its top
position in the market.

LO4
P4 DEVISING AN EFFECTIVE STRATEGIC PLANNING FOR THE COMPANY
Several theories and models have been suggested by different scholars to interpret the
strategic directions available to the companies. These models help the company TESCO in
formulating strategic plans that are required to gain competitive advantage and for the growth
of the business.
The two popular models have been discussed in this section which would help the company to
plan strategies to fight with its competitors and to maximize the profit to gain success.
BOWMAN'S STRATEGY CLOCK MODEL
This is a very popular and widely used model used in the marketing sector to predict the
strategic position of the company in the market with respect to its competitors. This
model suggests the eight possible strategic positions to the company. With the help of
this model, the company may plan strategies to gain advantage over its competitors and
suggest the best possible ways to grow and earn profit in the market (Shakhshir, 2014).
.

Figure 2: Bowman's Strategic Clock Model
[Source:http://www.free-management-ebooks.com/news/bowmans-strategy-
clock/]
Low Price and Low Value Products
This strategy suggests the company to produce low quality products and sell them at lower
prices to the customers. This strategy would not provide much benefit to the company as the
customers would not be satisfied with the quality of the products and they would switch to
other possible options. It can only help the company to run their business for a short duration
of time (Eyvrigh, 2016).
Low Price Products
This strategy would be beneficial for the company when it wants to sell the products in a bulk
amount to the customers at lower prices in order to attract them and gain their attention. This
can help the company to compete with the competitors but it would not provide much profit to
the company (Bowman, 2014).
Hybrid
This is a difficult strategy to be followed by the company for a long period of time. It suggests
the company to provide quality products at lower prices to the customers to hold their
attraction. Although it would not provide any profit to the company, but this strategy may help
the company to gain high market share and would also help to gain customer’s trust and
attention.
Differentiation
This strategy would differentiate the company from its competitors with respect to brand
value and customer attention. It suggests the company to provide high quality products
to the customers to establish a brand image in their minds and to compel them to
purchase the company’s product even at higher prices also (Rahman, 2015).
Focused Differentiation

It is an extended form of the differentiation strategy. It suggests to provide very high-
quality products to the customers. All the big companies in the market follow this
strategy to establish a brand value in the market and to gain customer’s support. This
strategy helps in providing high-profit margin to the company (Tassabehji and
Isherwood, 2014).
Increased Price and Standard Product
It becomes very difficult for the companies to follow this strategy as it involves huge amount of
risk of failure of the business. This strategy suggests increasing the price of the products
without performing any change in the quality of products. It can only be beneficial if followed
for a short time period.
High Price and Low Value
It is beneficial for those companies who have very less number of competitors in the market, as
it suggests providing low quality products at high prices to the customers. If there are less
competitive companies then the customers have no option rather than purchasing the products
at higher prices.
Low Value and Standard Price
This strategy would not provide much benefit to the company as it suggests selling low quality
as well as the high quality products at the same prices. The customers would not purchase the
low quality products at the high prices and it would create heavy loss for the company.
The company TESCO may use the Bowman's model in order to determine its strategic position
in the market. Based on the proper analysis of the model, it would be beneficial for the
company to follow the focussed differentiation approach to gain competitive advantage in the
market. This approach would differentiate the company from its competitors with respect to
the quality of products provided to the customers. The customers would be highly satisfied with

the high quality and branded products. This strategy would help the company to hold
customers attraction and trust and would also establish strong and effective brand value in the
market (Utrilla, et al., 2012).

PORTER'S GENERIC MODEL
This model suggests the four generic strategies to the company to gain competitive advantage.
It classifies the business into two factors that are the price of the products and the
differentiation of products with respect to the other companies (Magretta, 2011).
Figure 3: PORTER’S Generic Model
[Source:https://www.tutor2u.net/business/reference/porters-generic-strategies-
for-competitive-advantage]
Cost leadership- It suggests the company to sell the products at low price in the
market to attract more customers (Manteghi and Zohrabi, 2011).
Differentiation leadership- It suggests the company to provide highly differentiable
and innovative products to the customers to gain their attention.
Cost focus- Here the company focuses only on the target market and lower down the
prices for the targeted customers.
Differentiation focus- Here the company focuses on the targeted customers by
providing them unique and quality products.
The company must follow the cost and differentiation leadership approach to hold
customers attraction along with maintaining its top position in the market

CONCLUSION
The business in the present circumstances continues changing and henceforth it is prescribed
that innovative utilize must be done with a specific end goal to give the best of best openings
and difficulties. The media transmission segment is featured and is grasped by the mechanical
utilization and progressions. The report has been separated into four sections and it can be
finished up from the report that it is the utilization of innovation which has made the telecom
division an accomplishment in the present mechanical upset. The utilization of VRIO and SWOT
is utilized to make a diagnostic conduct of the organization, the systems and qualities or
shortcomings of the organization with a specific end goal to overcome the change into
circumstances in future.
The TESCO Company is one of the leading companies of the UK grocery market. It has a huge
customer base and a powerful control over the market. But there exist several competitors of
the company including Sainsbury and Morrison which are continuously finding ways to become
the market leader. So, the company must adopt appropriate strategies to maintain its position
in the market.
The above assignment suggests several strategies to the company TESCO to gain competitive
advantage and hold customers attraction. Before planning strategies, it is necessary to analyse
the internal and external factors affecting the company’s performance. The company may plan
strategies based on the analysis of the several factors. PESTLE and SWOT analysis models have
been discussed in the assignment to analyse the company’s performance. Also, several models
have been discussed to determine the position of the company in the market with respect to its
competitors and suggestions have been provided to the company to gain advantage over the
competitors.

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