Tesco's Strategic Management: External Environment and Stakeholders

This report provides a comprehensive analysis of Tesco's strategic management, examining its organizational overview, target market, and strategy development processes. It delves into the effects of the external environment, including economic and technological factors, on Tesco's business operations and its strategic re-evaluation. The report identifies the strategies employed by Tesco to gain a competitive advantage, such as value chain analysis and supply chain management, and analyzes various approaches to strategic development, including strategy as experience and strategy as ideas. Furthermore, the report evaluates the impact of external factors, utilizing PESTLE analysis, and assesses Tesco's internal competencies and risk management practices. It also explores stakeholder relationships, corporate social responsibility (CSR) initiatives, and the techniques used by Tesco to engage stakeholders and incorporate CSR into its strategic planning. The report concludes with a synthesis of the findings and highlights key takeaways regarding Tesco's strategic approach.

Strategic Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
TASK A...........................................................................................................................................4
1. Overview of organization .......................................................................................................4
2. Target market of Tesco and core competence of firm ...........................................................5
3. Strategy development .............................................................................................................5
4. Analysing the effect of external environment on company and the way its leads to strategy
re-evaluation . .............................................................................................................................5
5. Identifying the strategy adopted by Tesco for gaining the competitive advantage. ...............6
6. Analysing an enterprise approach to strategy development ...................................................7
7. Identifying the approach which mostly like to benefit company ..........................................7
PART B............................................................................................................................................7
1. Analysing the external factors effecting the business operations of organization. ................7
2. Identifying the country specific issues ...................................................................................9
3. TESCo Porter Five forces analysis........................................................................................9
4. Evaluating the internal competencies of Tesco ....................................................................10
TASK 2 .........................................................................................................................................11
1. Defining the risk and importance of managing risks............................................................11
2 Analysing the way Tesco manages data as a part of strategic planning procedure. .............11
3. Identifying Risk which can effect strategy development procedure ....................................12
4. Incidents related to risk in organization ...............................................................................12
5. Analysing the Techniques used by Tesco for managing Risks ............................................12
6. Evaluating the mitigating approach used by TESCO for dealing with Risk ......................12
Ques 3. ..........................................................................................................................................12
1. Defining stakeholders ...........................................................................................................12
2. Identifying the stakeholders of TESCO and their needs ......................................................13
3. Evaluating the stakeholder theory in context of Tesco .......................................................13
4. Critically analysing the relationship of company with its stakeholders. ..............................13
5. Role of stakeholders in strategic planning and examining the approach adopted by Tesco
for engaging stakeholders ........................................................................................................13

6. Techniques used by Tesco for gaining the support from stakeholders during strategic
development procedure.............................................................................................................14
B. ...................................................................................................................................................14
1. Definition of Corporate social responsibility........................................................................14
2.Identifying the approach used by Tesco in context of CSR...................................................14
3. Analysing the way CSR is incorporated in an enterprise strategic planning process. .........14
4. Determining the effect of CSR of image of brand or company ..........................................15
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Strategic management can be defined as the procedure which includes different activities
such as planning, monitoring and analysing which is very much essential for company in order to
achieve desired business goals. It is basically a part of management which is mainly concerned
with establishment of mission, vision for an enterprise. Strategic management can also be
considered to be as analysis of the different variables associated with the competitors or
customers. An effective strategic management is important in order to drive an organization
towards success. Strategic management also includes management of business resources. It
provides an appropriate framework for decisions making by leaders or managers in an enterprise.
An effective strategic management is specially important for those companies which are
operating business at international level, as it will assist them in maintaining their sustainability
in global environment.
The report emphasizes on identifying the procedure of strategic development. Study will
also have focus on identifying the effect of external environmental factors on organization in
Context of Tesco. It British Multinational company operating business in retail sector. The
strategy which is presently used by the Tesco for gaining the competitive advantage will be
highlighted in the assignment.
TASK A
1. Overview of organization
Tesco is a British multinational organization operating business in retail sector. It is
basically an international grocery as well as merchandise retailers. A saturation is among the
third largest retailer in world in terms or revenue. Business entity has retail outlets in different
countries which assist an enterprise in delivering goods or services to wide number of customers.
The products or services offered by business entity are books, clothes, toys, electronic items ,
furniture. An enterprise consists of team of 460000 highly skilled as well as talented employees
working at different locations. Tesco consists of market share of 28.4 percent in UK (Steiss,
2019).
Mission of Tesco is simple that is an organization wants to gain the loyalty of customers
by providing them with highly valuable products or services. In addition to this, objectives of the
company is to provide quality as well as better products to its customers. Vision of Tesco is to

broaden the scope of business. Business entity has adopted the diversification as well as product
development strategies in order to achieve its mission and vision.
2. Target market of Tesco and core competence of firm
An organization has divided market into small segments which has assisted firm in
fulfilling the needs as well as meeting the expectations of its customers. In addition to this, Tesco
caters for basically two market segments these are customers seeking for high value as well as
those who are mainly conscious about the quality of products or services. Tesco mainly target
the young people belonging to the middle level incomer group. Due to the questionable
investment decisions as well as different scandals Tesco has to face the difficulty in struggling to
attract customers. In addition to this, because of such issues firm has to face short as well as long
term losses which has adverse effect on their financial performance. Due to the scandals, there
has been great decline in the consumer confidence related to the brand which has lead to the
decrease in sales of TESCO. An enterprise in order to overcome such difficulties has conducted
the commercial campaign which has assisted the business entity in changing the perception of
customer about them (Chernev, 2018).
3. Strategy development
Strategic development is also recognized as strategic planning which is done by
management in order to drive firm to success. It can also be defined as a procedure of
researching as well as identifying the different strategic options and selecting the best tactics' in
order to accomplish desired business objectives. Strategic planning is a systematic procedure
which defines organizational objectives end products that can be implemented and evaluated. In
context of Tesco, an organization develop is own label products which helps firm in
differentiating its goods or services from that of competitors. In addition to this, Core business
expansion strategy is that business entity Emphasizes on innovative utilization of technology
(Bailey, Mankin and Garavan, 2018.). Manager in Tesco, has developed different strategies in
order to take full advantage of opportunities as well as for minimizing threats.
4. Analysing the effect of external environment on company and the way its leads to strategy re-
evaluation.
Changes in economic factors can have direct as well as significant effect on the strategic
planning of Tesco. For instance, The economy of Brazil is growing at very fast rate, but the
living standards of people residing in the nation is low. Citizen in Brazil has low spending habit.

It will be very much essential for manager in Tesco to develop the understanding about the
products which firm is planning to introduce in the market of Brazil. In addition to this, before
entering into the Brazil an enterprise will require change it's pricing strategy. An organization
can successfully enter into Brazil and can easily influence people to make purchase by keeping
the price of product low (Slack and Brandon-Jones, 2018).
Other factors such as technological changes can have significant effect on the business strategy
of Tesco. For instance, before entering into market of Brazil, manager in Tesco need to consider
that the adaptation of multi distribution channel in Brazil is low. It is the factor which might
encourage an organization to re-evaluate its business strategies. In addition to this, few
technologies which is utilized by Tesco for conducting different business functions might not be
available in Brazil.
5. Identifying the strategy adopted by Tesco for gaining the competitive advantage.
Value chain analysis
It is an analytical framework which can be utilized by manager in Tesco for identifying
the business activities which are creating the value and assisting the firm in gaining the
competitive advantage. Value chain analysis is considered to be as an effective tool which can be
helpful in increasing the overall business value.
Structure:Business entity is making huge capital investment on IT infrastructure which has
assisted an enterprise in solving problems quickly. It has also supported an organization in bring
positive as well as drastic improvement in customer service (Bryson, 2018.).
Human resource management: Feasible plan as well as different strategies has been developed
by human resource manager in Tesco for managing the people as well as business activities at
global level.
Inbound logistics: Tesco in order to increase its self bargaining power as compared to suppliers
an organization utilities its position. In addition to this, an enterprise has implemented the
ordering system which has provided them an ease in managing the orders and helped firm in
making the quick deliveries of products or services to customers. It has supported business entity
in providing high level of satisfaction to customers.
Supply chain management: Tesco has a very strong supply chain management which supports
firm in smooth production. In addition to this, strong supply chain management has aid an
enterprise in reducing the cost of operations.

Out bound logistics: Tesco has both online and offline presence. In addition to this an
organization has wide number of stores which are located at different locations that provide
business entity an ease in distributing goods or services to customers.
Sales and marketing : it is the club card scheme which has provided Tesco in attracting more
number of customers and has an enterprise in increasing sales as well as profitability.
6. Analysing an enterprise approach to strategy development
The different approaches to strategic development are :
Strategy as a design : It is considered to be as rationale approach to strategic development. This
is a concept which is based on the assumption that strategic development is a logical procedure
which forces as well as constraints manager in an enterprise to analyse as well as evaluate the
technique.
Strategy as experience : It is the strategy which provides the direction through which future of
the company can be shaped. Strategy as experience is the approach which is based on the
assumption that future business strategies of firm is completely dependent on adaptation of past
strategies influenced by the experience of managers and others in the organization. Strategy as
experience is the approach which is adopted by Tesco (Lewis, 2019).
Strategy as ideas : It is the strategy development approach which concentrates on innovation.
Strategy as ideas focus on an organization capability as well as characteristics to innovate. Tesco
can adopt Strategy as ideas approach for strategic development as it will help business entity in
shaping bright future.
7. Identifying the approach which mostly like to benefit company
Telco can get benefit by adopting the strategy as an idea approach for developing the
Strategies. The main advantages of the Strategy as ideas approach is that it promotes innovation
which can be helpful for Telco in context of accomplishing success as well as fostering business
growth. In addition to this, Strategy as ideas approach will assist firm in fulfilling the needs as
well as meeting the expectations of customers.
PART B
1. Analysing the external factors effecting the business operations of organization.
Pestle analysis is considered to be as one of the effective technique which can be used by
manager in Tesco for analysing the effect of different factors on the business. The different

variables in external environment which might affect the business plans as well as operations of
Tesco are :
Political factors: It includes the political situation in the nation. In context of Tesco, as company
imports range of products increase in the custom duties might lead to the increase in cost of
operations. In addition to this, UK decision to leave EU can create threat for the Tesco and
political instability in the nation might hinder business operations of Tesco . BY following the
rules Tesco can gain support from political parties which can be helpful in terms of expanding
business (Ansoff, Helm-Stevens and Ansoff, 2019.).
Economic factors: Recession in the country can have negative effect on the financial
performance of Tesco. As economy of UK is growing at rapid pace and it has positive effect on
consumer spending behaviour, therefore it is a positive impact as Tesco can generate high
revenue by offering people with quality products or services.
Social factors: It includes change in lifestyle, taste as well as preferences of customers etc. Due
to continuous changes in social factors Tesco is facing the difficulty in maintaining the demand
and supply. As Tewsco also offers organic food, increase in health awareness among the people
has lead to the increase in demand for organic food item offered by firm.
Technological factors: Advancement in technology has provides Tesco an ease in
communicating with customers and helped an enterprise in improving marketing activities. But
at the same time it has given rise to the stiff competition in the market due to which Tesco is
facing issue in concentrating on core business functions.
Legal factors: Due to failure to comply with the laws Tesco has to face legal issues which has
adverse as well as significant effect on the image as well as business functioning of Tesco.
Introduction of new legislation as well as policies by the government in nation has aid Tesco in
resolving various business issues (O'brien, 2019.).
Environmental factors: The government has intended to launch a new strategy for sustainable
consumption and production to cut waste as well as reduce consumption of resources and
minimize environmental damage which has lead to the increase in pressure on Tesco. New
environmental laws imposed by government has provided Tesco an opportunity to improve
business performance.

2. Identifying the country specific issues
Apart from analysing the key aspects related to the macro environmental factors it is very
much essential to highlight country specific issue which might have effect on Overall strategies
of Tesco. The two potential country related issues are lack of proper infrastructure as well as
high import duties for international companies. These issues have directly effect the business
strategies of Tesco.
Lack of infrastructure : Brazilian economy is growing at faster rate, the infrastructure of the
nation is still required to be improved. It is the issues which is required to be considered by
Tesco before planning to expand business in Brazil, as such problem can have adverse effect on
the growth as well as functioning of company in international market (Dess, Eisner and Lee,
2019.).
Import duties : It is another important factors which is considered to be considered by Tesco
before entering into global market. As in context of Brazil, nation has high imports duties. By
expanding business in Branzil, Tesco might have to face the issue of high operating costs which
may further adversely effect the financial performance of company.
Both the two above issues are required to be considered by manager in Tesco while
developing a strategic plan for entering into international market.
3. TESCo Porter Five forces analysis
Porter Five force analysis considered to be as an effective technique which can be utilized
by manager in Tesco for identifying its position in the market. The retail industry in which Tesco
is operating is highly competitive.
Threat of new entrant: It is low, as there are many giants companies like Tesco which has
captured wide market share because of which small enterprises have to face difficulty in entering
into market. It is required by Tesco to barriers in entry of new firm by setting high quality
standards. If new companies enter into market with unique valuer proposition it might lead to
decline in demands for goods offered by Tesco.
Threat of competitive rivalry among existing firm: High. Tesco has to face intense
competition from domestic as well as international organizations. Competitors can reduce the
price of products for influencing the market. Changes in pricing strategy adopted by competitors
can lead to decline in profitability of Tesco. It is required Tesco to adopt flexible pricing
strategy.

Threat of substitute : high, as there are financially strong companies which can launch
substitute product in the market. Such actions taken by competitor can lead to decline in sales of
Tesco. An organization needs to concentrate on providing high value proposition to customers.
Bargaining power of supplier: In context of Tesco it is low, as organization has good reputation
in the market many of the suppliers want to contract with such firm, in order to earn high profit.
It is very much crucial for Tesco to develop strong relationship with suppliers. As they are the
stakeholders which can force firm to increase or decrease the prices of products.
Bargaining power of buyer: Its high as switching cost is low. Customer might force Tesco to
reduce the price of goods or services (Friday, Sridharan and Collins, 2018.). It is required by
Tesco to concentrate on quality of good as well as labeling.
4. Evaluating the internal competencies of Tesco
Swot analysis is considered to be as an appropriate tool for analyzing the internal
strength, weakness, threats and opportunities.
Swot analysis of TESCO.
Strength:
 Tesco has good reputation in the
market.
 An organization sells as well as offers
wide range and variety of products.
 Tesco has been successful in gaining
the customer loyalty.
 An effective marketing strategy
 Tesco has team of highly skilled and
talented workforce.
Weakness :
 Scandals have negative effect on the
image of Tesco.
 Increase ion Loan.
 An organization in order to reduce the
price badly negotiate with suppliers.
 High reliance on single market.
Opportunities :
 Tesco has an opportunity to enter into
new market.
 Business entity has chance to increase
market share and foster business
growth.
Threats:
 Increase in intensity of competitions.
 Changes in social and economic
factors.

In addition to this, core competency of Tesco is that an organization has Integrated IT
infrastructure as well as distinctive brand proposition. Core competencies of Tesco is embedded
at operational level. It is required by an organization to employ advance technology at
workplace, as this strategy will assist business entity in increasing its competitive strength.
TASK 2
1. Defining the risk and importance of managing risks
Risk in context of business can be referred to as the possibility of company making
inadequate profit because of uncertainties. In context of Telco, it is very essential for manager in
an organization to develop an effective strategy , as this will assist them in avoiding the business
risk. In addition to this, risk management is also crucial as it enables firm to control as well as
prevent risk. It also supports business entity in acting more confidently and assists management
in making future decisions.
2 Analysing the way Tesco manages data as a part of strategic planning procedure.
Strategic planning process
Corporate level strategy : The corporate level strategy of Tesco emphasizes on unrelated
diversification strategy. An organization has much concentration on diversification of products
and services in order to gain competitive advantage. It is required by firm to concentrate on
delivering quality products at reasonable price.
Internationalization strategy : In context of Tesco, company has established many subsidiaries
globally. It is required by organization to expand its business in other market by developing an
effective internationalization strategy (Schmitt, Raisch and Volberda, 2018.).
Business level strategy : Tesco has adopted the low cost pricing strategy. It is need by an
enterprise to concentrate on growth as well as market penetration strategy.
Strategy evaluation : The thing which need to be considered by manager in Tesco before
implementing the market penetration strategy is high risk for stakeholders as large amount off
capital is required to be invested in executing the specific project. But by implementing the
market penetration strategy, Tesco can gain high return on investment.

3. Identifying Risk which can effect strategy development procedure
Resistance by employees is considered to be as one of the major risk which can adversely
effect the strategic development and implementation of strategy development process. In
addition to this, lack of trust among the stakeholders can create major hindrance in strategic
planning process. Changes in situations, laws, regulatory requirement might have great influence
of strategic planning process by Tesco.
4. Incidents related to risk in organization
Reputation risk, it is the risk which has been faced by Tesco due to questionable
investment decisions and scandals. This issue has lead to the decline in the customer confidence
related to the products or services offered by an enterprise. It has also leaded to the decline in
sales and profitability which has adversely effected the financial performance of company.
5. Analysing the Techniques used by Tesco for managing Risks
In context of Tesco, in order to deal with the reputation risk an organization has adopted
the risk reduction approach. Business entity has emended value in their practices at each level. In
addition to this, a special committee has been formed for guiding, governing and monitoring
business policies (vory and Brooks, 2018.). In addition to this, management conducts meeting at
regular interval of time and facilitate communication with stakeholders in order to gain
knowledge about their view related to the strategies adopted by firm. An organization has also
conducted commercial campaign for changing the perception of peopple.
6. Evaluating the mitigating approach used by TESCO for dealing with Risk
Risk reduction approach adopted by Tesco for dealing with the reputation risk is
considered to be as an effective as it has assisted business entity in eliminating such types of risk
in the future. In addition to this, Tesco has conducted commercial campaign which as helped an
enterprise in rebuilding as well as enhancing its reputation in the market.
Ques 3.
1. Defining stakeholders
Stakeholders are those people who have direct as well as indirect interest in business.
These are basically those people who can effect or can get effected by actions taken by
company. There are two types of stakeholders these are internal and external. Internal
stakeholders are those who work in an organization such as employees, board of directors,

shareholders etc. External stakeholders are those who works for the organization and get highly
effected by business performance such as supplies, customers, investors etc.
2. Identifying the stakeholders of TESCO and their needs
In context of Tesco, an important shareholder of organization are shareholder. They are
those people who have made investment in organization. Shareholders have interest in getting
the information about the profit earned by an enterprise during specific financial year.
Customers, They are considered to be as an important stakeholder of Tesco, as these
people make significant contribution in profitability of company. Customers have interest in the
products or services offered by an enterprise.
Employees, they work for company and assist firm in accomplishing desired goals. These
stakeholders have interest in Tesco is being able to be provided with security of employment, the
opportunity to be promoted and good means of rewards.
3. Evaluating the stakeholder theory in context of Tesco
In context of Tesco, an organization has adopted the agency theory for determining as
well as establishing its objectives. The main intention of Tesco for using agency theory is to
provide high level of satisfaction to customers and meet their expectation. Good quality of
products offered by TESCo has assisted an organization in gaining the customer loyalty.
4. Critically analysing the relationship of company with its stakeholders.
Tesco has good relationship with employees. As business entity huge amount of
investment on developing as well as training its workers. Business entity does not have strong
relationship with suppliers, as sometimes an organization facilitates bad negotiation with
suppliers in order to force them to reduce the prices. In addition to this, as an organization
concentrates on fulfilling the needs of customers therefore it has good relationship with its clients
as well.
5. Role of stakeholders in strategic planning and examining the approach adopted by Tesco for
engaging stakeholders
In context of Tesco, the different stakeholders those who have crucial role to play in
strategic planning procedure are customers, vendors, board of directors, employees, investors,
shareholders, unions, regulating authority etc. External stakeholders provide valuable opinions

which can be helpful as well as beneficial in the early stages of planning where they add insight
to understanding the operating environment, as well as to a vision of the organization’s future
(Borwick, 2018.). As Employees are aware about the strength and weakness of company, they
can provide ideas for driving firm towards success.
Stakeholder mapping is the approach which is adopted by Tesco in order to
engage different stakeholders in strategic planning process.
6. Techniques used by Tesco for gaining the support from stakeholders during strategic
development procedure.
An effective communication strategy is adopted by Tesco for gaining the support from
employees during the strategic development process. In addition to this, employee empowerment
is other strategy which has been used by Tesco in order to ensure the engagement of internal
stakeholders especially employees in stratergic development process.
B.
1. Definition of Corporate social responsibility
Corporate social responsibility can be defined as an approach which is adopted by
companies in order to manage their business procedure and also impact of their operation on
environment and society.
2.Identifying the approach used by Tesco in context of CSR
The main purpose of Tesco CSR strategy is to gain the trust of customers by conducting
ethical business practices. Steering wheel approach has been adopted by Tesco for making sure
that corporate social responsibility form part of routine business functioning of an organization.
3. Analysing the way CSR is incorporated in an enterprise strategic planning process.
In context of Tesco, manager in an organization ha establish values in order to make CSR
as a part of strategic planning process. Such values have form the basis for manager decisions
related to different business plan. In addition, tom this, an effective plan has been created by
manager in Tesco, or the integration of ethical values and CSR initiatives into its corporate and
business strategies.

4. Determining the effect of CSR of image of brand or company
In context of TESCO, corporate social responsibility practices performed by an enterprise
has assisted an organization in enhancing the reputation in the market. It has assisted an
organization in getting brand recognition as well as popularity among customers (Lacoste,
2018.). CSR strategy has supported TESCo in changing the perception of customer about the
brand.
CONCLUSION
It has been concluded from the report that changes in internal as well as external factors
have great effect on business plans as well as operations. The other fact which has been
concluded from the assignment is that strategic development is very much essential in order to
drive firm towards success. IT has been concluded from the assignment that CSR strtaergy when
implemented have positive effect on image of companies.
The various strategies have been suggested in the report which can be adopted by firm in
order to engage stakeholders in strategic development procedure.

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ONLINE:
Stakeholder Engagement for Strategic Planning. 2019. [Online]. Available
through:<http://www.everettcc.edu/ccec/enewsletters/stakeholder-engagement-strategic-
planning/> .