Strategic Analysis of Tesco PLC: Market Position and Recommendations

This report provides a comprehensive analysis of Tesco PLC's business strategy within the UK food market. It begins with a company profile, outlining Tesco's mission, vision, and goals. The report then applies frameworks like PESTLE analysis to assess the macro environment's impact and VRIN analysis to evaluate Tesco's internal capabilities, including its strengths and weaknesses. Furthermore, Porter's Five Forces model is utilized to evaluate the competitive forces within the market sector. The report also incorporates the McKinsey 7'S model to analyze various aspects of Tesco's internal environment. The study concludes with strategic recommendations based on the analysis, including a proposed implementation plan. The report emphasizes Tesco's competitive advantage, market position, and strategic planning, offering insights into the company's operations and future strategies.

Business Strategy

Contents
Introduction................................................................................................................................3
Company profile.........................................................................................................................3
Mission.......................................................................................................................................3
Vision.........................................................................................................................................3
Goals and objectives of company..............................................................................................3
Task 1.........................................................................................................................................4
Applying appropriate frameworks to analyse impact and influence of the macro
environment on given organisation and its strategy...............................................................4
Macro environment to determine and inform strategic management decisions....................5
Task 2.........................................................................................................................................5
Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks.............................................................................................................................5
Evaluate internal environment to assess strengths and weaknesses of an organisation’s
internal capabilities, skill set and structure............................................................................7
Task 3.........................................................................................................................................8
Porter’s five force model for evaluating competitive forces of given market sector of an
organisation............................................................................................................................8
Strategies to improve competitive edge market position based on outcomes........................9
Task 4.......................................................................................................................................10
Range of theories, concepts and models as well as interpretation of strategic planning of a
given organisation................................................................................................................10
Recommendations....................................................................................................................13
Conclusion................................................................................................................................13
References................................................................................................................................14

Introduction
The given study is based upon the UK food market, and focuses strongly on the
biggest retailer in the UK, Tesco plc. This section highlights the link between some of
Tesco's strategy design and implementation, vision and objective. This research also includes
structural models which show stability and core competency in the operational climate of
Tesco and other industrial conditions. Projections are hired between SWOT and Porter's Five
Forces. Finally, the strategy formulation of Tesco is included in this report. Some suggestions
included a proposed implementation plan to apply the strategies established in the monitoring
and evaluation process (Cox, 2020).
Company profile
Tesco Plc was formed by Jack Cohen in 1919. It is a leading distributor in the United
Kingdom. It has the highest total income behind Wal-Mart and Carrefour. In 14 nations, they
are almost 500,000 colleagues. They include Tesco supermarkets, the Tesco Express and the
Tesco Home Plus and Tesco Metro. Dave Lewis is the new President of the firm (Ghouri and
et. al., 2021).
Mission
The objective of the group is to keep business good and to promote knowledge about
organic and sanitary food products. The management of Tesco is committed to meeting
consumer requirements and ensuring productive use (Gosling, 2021).
Vision
Tesco's objective is to become the largest organisation for the worldwide food
buying. The corporation grows sales by taking account of the financial, ethical and legal
criteria to satisfy the mission statement. In this approach, Tesco tries to construct a
contemporary community.
Goals and objectives of company
 In order to satisfy customers and employees.
 Revenue maximisation.
 Supporting revenue and business processes.
 To maintain the level of service and price.
 Promoting the firm restructuring and making a competitive profit.

Task 1
Applying appropriate frameworks to analyse impact and influence of the macro environment
on given organisation and its strategy.
Tesco is among the world's leading food and grocery merchants and one of Britain's
leading retailers. After Wal-Mart Stores Inc. & Carrefour SA, it is the third largest retailing
firm. PESTLE analysis of Tesco are as follows;
PESTLE Analysis
Political: Considering Tesco's business is worldwide, global political considerations
impact Tesco's performance. Among other things, are tax levels, laws and government
security under which they exist. As financial volatility continues throughout the world,
numerous authorities are encouraging employment production for retailers. Tesco also
promotes competition for its goods and improves its employees, and Tesco plays a part in
promoting employment incentives.
Economic: Tesco's major concern is that these dynamics should take advantage of
expenditure, competition, revenue and pricing. Any legislative alterations such as tax reform
or any other changes affecting financial accessibility will also be noted in the organisation.
As the firm grows abroad, it must be noted that it remains highly dependent on the UK
market, which has a market share of around 30 percent.
Social: Along with multiple cultural shifts, UK customers have moved to bulk
purchasing and single-stop shopping. Consequently, Tesco has extended the quantity of items
not for sale. The type of items and services bought by clients mostly depends on their chosen
attitudes. With consumers aware of the health problems and their attitude towards food
progressively changing, Tesco adjusts to these adjustments to satisfy the requirements for
organic items.
Technological: Tesco has been provided various new opportunities by technology
developments. Next is Internet shopping and home delivery services growth and introduction.
Second, the self-service check-out stations have made it easy and comfortable for consumers
and have reduced staff expenses. Indeed, in order to reach the long-term carbon footprint
mitigation target, Tesco has invested a large sum on energy savings programmes (Hunter,
2020).

Environmental: With increased demand from companies for environmental issues and
the implementation of working techniques to help a society, Tesco is devoted to reducing its
carbon emissions by 50 percent by 2020. By boosting consumer awareness, Tesco also
decreases waste in its stores.
Legal: Tesco's success also has a major influence on public policies and laws. For
example, in 2004, the Food Retailing Commission (FRC) suggested a code of practise that
outlawed certain current behaviours, such as pricing changes without notification or
requesting payments from suppliers. Tesco provides its customers price reductions for the
petrol sold at its food outlets in accordance with its cost. Indeed, sales are lower in value.
Macro environment to determine and inform strategic management decisions.
Macro-environmental concerns affect management and business leaders significantly
in decision making. Such elements may be assessed to enable the firm to accomplish the aims
and objectives and to increase its activities, e.g. by making worldwide peace and the most
appropriate manner to move on other markets. Technology is not the same everywhere in the
environment. The company's manufacturing is expected to disrupt its infrastructure
worldwide. Therefore, managers and leaders of Tesco makes use of various external
environment tools to formulate effective strategies through better decision making process in
the business firm.
Task 2
Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks.
Tesco relies heavily on its key competencies to remain competitive. The main
objective of the company is to maintain high levels of assistance and to build a special
relationship for the top consumer. In this respect, the VRIN system should help to better
understand the internal capacity (Watts and Florance eds., 2021).
VRIN framework
The VRIN/VRIO analysis is a strategic technique used to evaluate and evaluate a
company's resources and to determine its strategic benefits and competitiveness. The strategic
tool enables the company to establish a long-term competitive advantage by examining the
company's internal resources and skills, allowing the firm to discover its key competences to
establish a lasting, competitive edge over the long run (Kordon, 2020).

Valuable
 The Tesco's social responsibility
function is well defined and clear.
 The Tesco is consistently involved
and honest in activities on social
responsibility.
 All stakeholders are recognised
through formal papers like the
annual report and website regarding
the operations of the firm and social
responsibility actions.
Rare
 The Tesco operates in several
nations and areas worldwide.
 Tesco has built an increased
consumer base with a global reach
and has generated incomes in several
places.
 The corporation has not only
increased financial strength but also
increased cultural exposure and
international reputation.
Imitable
 Tesco gives consumers high-quality
items which are part of the brand's
appeals.
 The high and constant quality of
Tesco's products leads to repeated
purchases and increased
consumption.
 This is an incomparable resource for
the Company since the company's
senior management knows only
internally the high quality and
specificity of forecast.
Non substitutable
 In addition to its brand strength,
Tesco has considerable financial
strength.
 The financial strength helps the
organisation to explore new product
innovations and launches.
 Financial strength also helps the
organisation to assess prospective
combinations and purchases for
competitive advantage.
The company's resources include knowledge, facilities, organisational systems, the
history of the business, expertise and expertise. However, not all resources are needed, but
certain assets will support the organisation and provide it with a competitive edge. In order to
establish a strategic advantage, four traits must be identified inside the corporate tools. The
VRIN's traits are these four characteristics. VRIN configuration is the following for Tesco
Plc.:
Internal capabilities

First and foremost, Tesco launched in 1995 the Clubcard, which was used instead of
merely a commercial offer, so that it could get particular facts about customers' requests and
utilise card data to fulfil its needs. Sainsbury was originally against this method, yet the rise
of Tesco can be linked to this invention.
Secondly, the attention of Tesco is on knowledge integration. Knowledge integration
plays a vital role in strategic abilities. The inclusion of information is one of the biggest
issues of every organisation since its objective is to coordinate almost every operational
activity. The fundamental goal is to integrate critical knowledge aspects across the whole
organisation. That is why Tesco successfully implemented the IT transformation strategy. In
addition to systems for stockpiling and supplying records and analysing business transactions,
Tesco also used an extranet system. This would help Tesco to keep its ability to manage and
reduce costs with increasing volumes of goods and services (Lochner, 2020).
Evaluate internal environment to assess strengths and weaknesses of an organisation’s
internal capabilities, skill set and structure.
Managers of Tesco evaluates internal environment of the business firm to assess core
strength and weaknesses of the given company. For the purpose being managers of the firm
takes use of several model and techniques which are as follows;
McKinsey 7’S Model
McKenzie 7 S' includes universal policies, organisations, programmes, employees,
styles and abilities. McKenzie's 7 S' was therefore introduced by Tesco in order to increase its
market share and income accordingly:
Shared value: The joint interest of the firm establishes the objectives and confidence
of the firm. Tesco expects that established retail enterprises will be able to expand their
inventive marketing methods and that they will be able to march northwards.
Strategy: The tactics of the organisation to achieve its goals. The usual approach to
Tesco was to incorporate certain approaches using a balanced scorecard (BSC).
Structure: It depends on firms' infrastructure from top to bottom. CEO Tesco thinks
they don't have a leader and a group of individuals working from top to bottom on strategies.

System: the framework is based on how to perform a job, what the task is vital and
how smart it is. Tesco employed a steering wheel to help staff intelligently in the future in
order to comply with its prior techniques.
Personnel: the number of employees in the firm is represented by workers. Globally
Tesco employed more than 400,000 employees (Wu and Honhon, 2020).
Style: It's the kind of thing the firm is working toward its goals. Tesco employed a
steering wheel to achieve its goals. It has 90 degrees, four fundamental areas, namely
business, consumer, enterprise and employee output.
Skill: It describes the organization's or its staff's ability to do a certain job. Tesco
offers its employees with comprehensive knowledge to operate successfully and efficiently in
the company. It enables the employees to work freely according to the requirements of Tesco
(Lois and et. al., 2021).
Task 3
Porter’s five force model for evaluating competitive forces of given market sector of an
organisation.
Competitive rivalry: In the marketplace, Tesco has three primary competitors, Asda,
Sainsbury and Morrison. These firms are appealing to the market through diverse tactics. The
strategy of Asda is focused on delivering value to consumers whereas Sainsbury is more
focused on offering superior service. Tesco has shifted its approach from a "high stack, sell
cheap" model to a "blended" one, which balances price and quality (Sharma and Sharma,
2021).
Power of buyers: Tesco's consumers have limited impact over Tesco's main company
strategy as far as individuals are concerned. However, because of the low cost and simplicity
of switching, the consumers as a collective have considerable leverage. That is why, with his
"Clubcard," Tesco has made so much effort to understand its clients (Tardieu and et. al.,
2020). This enables Tesco to precisely monitor and adapt its approach to the shifting trends of
its customers. As a result, client loyalty to Tesco Brand has increased significantly
throughout the last few years.
Power of suppliers: Research has demonstrated that vendors in dealing with Tesco are
rather weak. This included the obligation of Tesco to "share the pain" with regard to price
cuts on the ground. This is attributable not to a single big supplier but to Tesco dealing with

several farms. This makes it possible for Tesco to alter its supply chain and to easily replace
its supplier. In comparison with many farmers who frequently relied on the custom of Tesco
to survive themselves. This means that the prices and products of Tesco's suppliers have
limited power.
New entrance: In retail markets, small merchants are getting increasingly difficult to
sustain. This is because of Tesco's 30.7 percent market domination among the "Big Four"
grocery companies. Many new entrants, particularly the ever greater involvement of the
cooperatives, have changed the way they do business. These cooperatives enhance the danger
of new competitors and are a major factor in defining the ultimate competitive strategy of
Tesco (Ruel and et. al., 2020).
Threat of substitution: Tesco also extends to internet selling, although the physical
format is still its major focus. Online commerce will thus continue to be a growing danger to
be managed. Tesco will integrate this new structure of company into its main corporate
strategies.
Strategies to improve competitive edge market position based on outcomes.
There are several strategies adopted by operational department of the company to
improve competitive edge market position based in outcomes. These strategies are as follows;
Market development: Strategies with current items for accessing new markets. Although
Tesco is present in 14 countries, its focus is on the United Kingdom markets, with 71% of
overall sales. Tesco can grow global resources and cash flows by entering new markets,
strategic partnerships and joint venture companies through the strategy of
internationalisation. It will boost the worldwide market share and brand recognition of the
firm. This takes significant study on the different markets and a grasp of local customers'
requirements and preferences for the success of Tesco (Saha, 2020).
Product development: Product Development Strategy for the present market delivery
of new items. The diversity of the product range is referred to in the present area of business
in order to draw new clients. A beneficial strategy for the corporation is further
diversification of the product mix of Tesco. In order to achieve this strategic approach,
however, a special emphasis should be placed on advanced R&D and investment in a
technical and skilled staff.

Task 4
Range of theories, concepts and models as well as interpretation of strategic planning of a
given organisation.
The plan outlines the short and long-term plans of the Company to achieve its goals.
The main strategy of the firm is to combine creativity continuously and try to establish its
own battery production facility. The strategic planning framework is the system through
which the priority is determined to accomplish the objective of the company (Schneider and
Eriksson, 2020).
Strategic planning tools
SWOT analysis
Strengths Weaknesses
 Strong presence and credibility of
the worldwide market and brand.
 Various product ranges given under
one roof and the goods of excellent
quality are available in the
accessible price plan.
 Tesco Online is a strategic market
expansion tool for both companies
and customers in Tesco.
 Tesco's debit obligations have been
reduced in the previous three years.
 Tesco has huge economies due to its
enormous shop and vast variety of
scope.
 Tesco is primarily dependent on its
market in the United Kingdom,
where it generates over 60% of
revenue.
 The retail sector is extremely
competitive.
 They also maintain the right to
distance themselves from the main
client base.
Opportunities Threats
 The use of state-of-the-art IT to
enhance sales and decrease variable
costs.
 Adoption of internationalisation to
increase growth in non-UK nations.
 Adoption of online shopping instead
 Inflexibility in Britain's future
chance of progress.
 The UK's retail industry shows low
development and growth.
 The question of the European
competition that in the past

of shopping in the middle of the
COVID-19. Can cut labour costs
when self-service is installed.
constrained the expansion of Tesco
when the British retailer Safeway
wanted to acquire it.
To formulate a strategy plan, the Bowman Strategy Clock and Porter's Generic
Techniques analysis of the company's market and competitiveness is used to conduct a
thorough examination of Tesco.
Porter’s Generic Strategy Model
Porter's Strategic Framework is used to gain a competitive advantage, and it is the
oldest method based on an external process. This is usually called an environment to test and
then decide how to get to the desired position. In theory, it is also necessary to choose one of
them in order to be able to compete in the market and benefit from the benefits of balanced
competition.
Cost leadership-
Cost leadership is the first cost management strategy, as Tesco, on the other hand, can
try to ensure low costs in the industry in order to deliver products and services to the broad
market at a very low price. This will be done based on Tesco's ability to effectively manage
their spending systems so that they can competitively price their products and can result in
higher profits that are becoming more competitive.
Differentiation strategy
The firm's long position in the markets and products and / or services section, as
Tesco's strategy is not focused on racial segregation. Then the company becomes a supplier
of goods and services at a higher price. Therefore, on the other hand, Tesco is using a
different differentiation within the strategy, rather than seeking to offer you products and
services from the many features that the preferred method provides. Tesco, on the other hand,
is able to create a product and loyalty towards its offerings, and as a result, the price will not
match the end consumer. A wide range of products, patented technologies, special features
and service, and differentiation methods are also popular.
Bowman’s Clock
Bauman's Strategic Watch

Finding a suitable market positioning, Bowman's strategic watch is not used. With at
least eight different positions, it can also be found. This includes position 1, indicating a low
price, and if there is little customer interest, they will be paid for it and the another one is
very low price which is type of cost leadership strategy of Tesco. Hybrid strategy is the thied
one and are a process that requires low cost and redevelopment of the property. Fourth, it is
the Differeniation all things. The price is based on the fifth level of the release page, the sixth
is the highest premium paid, and not on the most important risk factors for the client.
Monopolistic companies, in companies and in seventh place. The loss of market share in the
latter case is evident by the fact that, according to the company, there are eight styles, and in
addition, it uses a holistic approach to pricing in terms of prices and product range, which
will allow businesses to effectively interact with the global state. If this difference between
the biological property of the material is a common opinion in the store, it recognizes that the
consumer gets the value. Most of these products are available at low prices.
The evolution described above shows that, in addition to this, Tesco uses cost
leadership and low-cost value creation strategies, which helps to create a positive brand
image in the market. In addition, the hybrid strategy used for Tesco is very high quality, but it
has also been suggested that Tesco, on the other hand, focuses on a different ionic strategy,
due to the combination of price and quality characteristics that distinguish their product from
the target market.
Tesco's standard strategy would be to benefit if they were unable to succeed by
splitting up their clothing line to start getting a premium price. In terms of strategy,
Bowman's watch it also uses a hybrid strategy, including both cost leadership and
differentiation. The hybrid strategy aims to simultaneously achieve diversity and lower prices
than the competition. However, it can be concluded that the value of products that are used by
Tesco, on the other hand, does not need to be inherited if any inconsistencies are found. The
reason for this is that Tesco needs to be able to keep its prices at least equal to competitors
like Asda and Morrisons, and they can't do that as Tesco is market leader
Recommendations
On the basis of above evaluation of report document there are several
recommendations that could be drawn out in respect with operational working of the relative
firm. Managers and leaders of the given firm are recommended to focus on the following
comments for pulling better productivity of the company being mentioned below;