Strategic Management Analysis of Tesco: A Business Report

This report provides a comprehensive strategic management analysis of Tesco, a leading retail company. It begins with an introduction outlining Tesco's core purpose, vision, mission, and objectives. The main body delves into strategic direction, including an examination of Tesco's VRIO framework to assess its resources and competitive advantages. It also incorporates PESTLE analysis to evaluate the external environment, considering political, economic, social, technological, legal, and environmental factors. Furthermore, the report applies Porter's Five Forces to understand the competitive landscape and assess the threats and opportunities facing Tesco. Finally, the report reviews Tesco's overall strategy, drawing conclusions about its strengths and areas for improvement, supported by relevant references.

STRATEGIC
MANAGEMENT

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Strategic direction........................................................................................................................3
VRIO............................................................................................................................................4
PESTLE.......................................................................................................................................5
Porter’s five forces.......................................................................................................................7
Review of organization’s strategy...............................................................................................9
CONCLUSION..............................................................................................................................10
REFERNECES..............................................................................................................................11

INTRODUCTION
All the businesses in the market should have a strategic management for themselves
which is well planned out so that there is a better functioning. The competition in the market is
increasing and also the expectations of the customers is shifting as well which is why it is very
important for businesses to have a strategic management in the organization so that they can
function effectively. Tesco is a public limited company which is a retailer and having its
headquarter in London, England. There are 450,000 employees working in the organization and
the numbers of stores which are present of Tesco are 6,800. The report is going to analyse the
external environment, competitive advantage, competitiveness and the value of the organization.
The aims, objectives, mission, vision, etc will also be discussed in the further report so that the
organization can have a better functioning for them.
MAIN BODY
Strategic direction
Purpose
Tesco’s core purpose in the market is to make what matters better, together. They
function together so that they can have a better functioning and understand the customers’
demands and expectations as well (Rok, 2019).
Vision
Shaping the identity of the organization is the vision of Tesco so that they can have a
brand recognition which is going to get a larger customer base and the competitors in the market
are going to have a difficult time.
Mission
To improve the experience and satisfaction of the customers in the market so that the
profit margins can increase. There is a lot of investment which the company is having in the
market which needs to be overcome and recovered by the organization (Priem, 2018).
Objectives
 To increase the sales by 30% by the end of 2023.
 To have customer satisfaction and loyalty by 20% by the end of 2021.
 Improve the technological aspect and demands of the customers by 40% by the end of
2014.

 To increase the profit margins by 35% by the end of 2024.
VRIO
This is a framework which helps organizations to understand the resources
competitiveness which the organization has in the market share. Tesco is a very experienced
organization which is why it is very important for the organization to use this factor so that they
can have a better functioning for themselves (Certo and et.al., 2020). This is going to help the
company to have a strong market share and also to get in higher profit margins for the
organization which is a very important factor after the competition is increasing in the market.
Resources Valuable Rare Inimitable Organization
Technology    
Intellectual Property   
Human Resource   
Capital 
Valuable
These are those resources which are going to help the organization to analyse their
valuable factors in the organization. This is going to help the organizations in the market to get a
competitive advantage which is a very essential factor and the loyalty of the customers can also
be well maintained in the organization (Koseoglu, 2016). The quality of the products also has to
match the standards of the organization which is a very essential factor so that there is a better
functioning. Technology, human resource and intellectual properties are important valuable
resources in Tesco which is making the value of the customer’s increase which is helping the
organization to get a competitive advantage for a long run in the market.
Rare
There are a lot of rare resources which are being used by Tesco so that they can have a
high brand value and the customers can get attracted to the organization. It is very important for
the organization to use their rare resources in a limited way and save them for a long run in the
market as well which is going to make the customer loyal to the organization. There is a lot of
technological development in the organization like self check out from stores which does not
need much staff and the customers can do it themselves so that there is a higher satisfaction level

(Barney, 2017). To increase the productivity there is a higher skilled and trained employee in the
organization who has a lot of knowledge which is a great factor for the organizations long run.
Inimitable
There are resources and products in the organization which no one copy and those are
going to help the company to increase their market share. There is a lot of innovation which is
taking place in Tesco which is going to help the company to get a competitive advantage. This is
also good for a longer run because the company has taken patent acts seriously and the products
of the company are safe (Hill, 2017). The customers are getting the best at a low price because of
that factor which is making the organization get a strong customer base, market share and high
profit margins.
Organization
A strategy is the most important factor in an organization which makes the businesses to
understand the combination of the resources and helps the organization to achieve their
objectives and goals (Heath, 2018). To have a competitive advantage this is a very important
resource which Tesco has and this can come after a lot of experience which the organization has
gathered and experienced in this industry. There is training and development which is being
provided to the employees from time to time so that there is a better functioning and the
organization will be able to have a better functioning in the market.
PESTLE
It is very important for organizations which are functioning in the market to analyse the
external and internal factors in the company so that there is a better functioning. The competition
in the market is increasing which is why the organization will have to have a strategic planning
and management in the organization so that they can have a better functioning and operations for
themselves in the market.
 Political Factors
There are a lot of political changes which have come in the country because of Brexit which
has been analysed and planned accordingly by the organization. Tesco has gathered a lot of
experience in this industry which is why they are being able to have a smoother functioning for
them (Cosenz and Noto, 2016). There are a lot of laws and regulations which have been changed
for trade policies and Tesco is taking advantage of that factor and expanding themselves

globally. The taxation is also not that high which is why the organization is being able to have a
stable functioning for themselves.
 Economic Factors
There are a lot of employments which the organization is providing to the people and making
the economic growth of the country. The pricing of the product is also done accordingly so that
there is a better functioning which can make the organization get a higher benefit and be able to
deal with the taxations which are being charged to the company (Gaya and Smith, 2016). The
currency exchange is also being a trouble for the company which is why the organization has
priced their products accordingly so that there is a better functioning of the organization. There is
a standard which the organization has set for themselves which is why experienced and skilled
employees are hired in the finance department so that the errors can be minimised and the
organization will be able to benefit in this competitive market.
 Social Factors
There is a change which is visible in the customers’ demands and needs as well which is why
the organization needs to have a strong research and development department in the
organization. Tesco is investing a lot on the R&D department in business so that they can
understand and improve the products according to the customers so that the satisfaction level of
them can increase (David and David, 2017). There is local hiring of employees in the
organization so that the company can have a better functioning which is going to make the
customers get satisfied more and also the services are improving of the company which is going
to make the customers get loyal to the organization as well.
 Technological Factors
There is a use of technology in Tesco so that they can make the customers aware of the
changes in the organization. Technology has helped Tesco to get their operations and
productivity in the market increase which is a great factor for the company and this is making the
company get a competitive advantage as well (Ferlie and Parrado, 2018). There are online
services and delivery which the customers are having from Tesco so that the customers can have
a better experience and the best of products are reaching the customers at their door steps. There
are long queues which are removed from Tesco stores because that caused a lot of inconvenience
for the customers which have been improved by the organization.
 Legal Factors

There are a lot of policies and laws which have to be followed by the organization so that
there is a better functioning in the organization. To have a better functioning and portfolio for the
organization it is very important for the organization to have a strong base for them (Castañer
and Ketokivi, 2018). Tesco has experience that is why they know how important are the laws for
the customers and the employees working in the organization therefore all of them are being
followed in the organization. There are all the information reaching the customers and the
employees of the organization from time to time so that they can function in one direction and
the customer’s decision can be made effectively.
 Environmental Factors
There is zero tolerance level of the organization towards illegal sources which is being taken
care of by Tesco so that they can have a clean portfolio which is going to help the company to
expand easily in other markets. There is an improved environment because of Tesco because the
wage is being disposed off well and that is going to make the organization have a better brand
image (Rees and Smith, 2017). The government also supports organizations which are working
for the benefit of the customers and the environment of the country. There are a lot of voluntaries
which Tesco has done so that they can improve the environment which is going to make the
delivery of end products and raw material is on time which is not going to impact the
productivity of the organization.
Porter’s five forces
This is a framework which can help the organization to understand the competition in the
market so that the decisions can be taken in the organization which is going to be effective in
nature. The competition for Tesco is Sainsbury’s, P&G, etc which the organization will have to
overcome by understanding the competition in the market and improve accordingly. This is
going to help the organization to make decision which is going to result in higher profit margins
and the organization will be able to invest in technologies and expand them globally.
 Threat of new entrants (Low)
There is a requirement of a lot of investment which is required in the market when a retail
company comes up in the market which needs to be understood (Andersen and Andersson,
2017). There are a lot of experienced organizations which are already in the market which is why
it is not possible for new companies to come up in the market. Tesco has a lot of experience

which is why the organization will be able to change their strategies and measures according to
the competition in the market which is a great factor for the organization’s long run in the
market.
 Bargaining power of suppliers (Low)
Tesco has made a lot of contacts in the market over the years which are why the organization
has a control over the suppliers in the market. There are a lot of suppliers for the raw material
which is being taken by Tesco so that the organization can find cost friendly suppliers. It is very
important for Tesco to have a lot of suppliers so that they can shift from one to other when and
where required which is going to make the organization have a better functioning for them.
 Bargaining power of customers (Medium)
The customers are well understood by the organization which is why the customers do not
have a control on the company much. Though the trends and demands of the customers are
changing which have to be understood by the organization so that there is a better functioning
(Witcher, 2019). Customers can switch from Tesco to ASDA or Sainsbury’s which is why it is
very important for the organization to be able to control the customers and provide them the best
of services and products.
 Threat to substitute products (High)
There are a lot of competitors in the market which are making the same products as Tesco so
that they can compete with the company which needs to be a great threat for the company
(Lasserre, 2017). Tesco will have to take patents for the products so that no one can copy their
products which are going to give the company a better and stable customer base in the market.
 Competitive Rivalry (Medium)
The competition in this industry is high which is why it is very important for the organization
to find measures which is going to help the company to get a competitive advantage. There are a
lot of companies in the market which want to come in the competition of the organization so that
they can have a better functioning and base for themselves but Tesco is developing themselves
so that they cannot make the other organizations take their advantage and Tesco leads in the
market like they do. There is a standard and that needs to be maintained in the market which is
being done well by Tesco.

Review of organization’s strategy
Tesco has been in this field from a long run which is going to be a great advantage for the
company (Rothaermel, 2016). There are a lot of decisions which the organization has taken in
the past which have not worked out for the company which is going to help the organization to
make the right decisions in the future. The organization has made a great labour turnover in the
past which is making the organization lose on their employees but it is very important for the
company to maintain them so that the functioning of the organization can be better. The
organization is making the customers get aware of the changes which are being got in by the
organization so that there is a transparency and the customers can get attracted and accepted in
the organization. It is very essential for the organization to focus on the satisfaction level of the
customers so that the organization can make the customers have a better experience in retail
industry. There are a lot of technologies which have been added in Tesco and one of them is the
self check out in which the customers have to check out themselves with the products they
bought in the organization which is a great way of having a better functioning and the queues
have gotten shorter (Simandan, 2019). The products are being improved which is helping the
organization to penetrate in the market more effectively and that is a great factor for the
organization. There are feedbacks which are being taken by Tesco and they are working on them
so that the customers can have a better experience and that is going to help the organization to
improve more than the competition in the market.
The organization has made sure that they are giving motivation to the employees from
time to time so that they can give their best in the organization which is going to make the
productivity increase (Hitt and Duane Ireland, 2017). The demands of the customers are
increasing because of the quality standard which Tesco has developed for them in the market. It
is the employees who can help the organization to have a better productivity which is why the
decisions which are being taken in the organization must be taken in front of the employees so
that if they are not comfortable and there is too must pressure on the employees then the
organization can improve that factor and maintain their portfolio in the market. The pricing of
the products is also making a lot of difference in the organization between the competitions in
the market because the company is being able to have a better functioning for them. The pricing
of the products is according to the customers and their income level in the country (Siegel and
Leih, 2018). The products are helping the customers to have a better lifestyle and health in the

country which is making the company have a stronger base for themselves in the market. There
are a lot of unique factors which is present in the products of the company which is adding up to
the standards of the organization which is a very good factor for the organization.
CONCLUSION
From the above report it can be concluded that there is a need for the organization to have
a strategic management in the organization so that the organization can compete in market. The
competition in the market is increasing which is why it is very important for the organization o
plan their measures and strategies which the organization is using. Experience is going to help
the organization have a better decision making and have a larger market share as well in the
market. It is very important for the organizations to analyse the internal and external factors of
the organization so that there is a better functioning of the organization and the measures can be
adopted too quickly. The mission, objectives, goals, etc have to be set by the organizations which
are functioning in the market so that they can have a sense of direction in the market which is
going to help the organization be able to get a higher profit margin.

REFERNECES
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