Strategic Management: Tesco's Action Plan & Implementation

This report provides a comprehensive analysis of Tesco's strategic management, examining both internal and external environmental factors. It begins with an overview of Tesco's mission, vision, and core competencies, followed by an identification of key issues involved in its strategic planning. The report assesses the effectiveness of various planning techniques and formulates a business strategy based on an organizational audit using SWOT analysis and an environmental audit using PESTEL analysis. The significance of stakeholder analysis in shaping Tesco's strategic direction is highlighted, along with an evaluation of different approaches for strategy evaluation. The implementation of strategic direction at Tesco is explored through a VRIO analysis, leading to the development of an action plan. The report concludes by summarizing the key findings and recommendations for enhancing Tesco's strategic effectiveness. Desklib offers similar solved assignments and resources for students.

Running head: STRATEGIC MANAGEMENT
Strategic Management
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Executive Summary
The report has helped in the entire analysis of the different internal and external
environmental analysis of the company Tesco. Furthermore, the different strategies
implementation has been done for Tesco which helped in understanding the various kinds of
approaches which are required in order to become more effective in the different approaches
which have been adopted by them. The action plan along with strategic implementation has
been done wherein the stakeholder analysis has been conducted in order to understand the top
priority of the company in the market.

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Table of Contents
Introduction................................................................................................................................4
Overview of Tesco.................................................................................................................4
Mission, Vision and Core Competencies...............................................................................4
Objectives and Goals of Tesco...............................................................................................5
Issues Involved in Strategic Planning of Tesco.....................................................................5
Effectiveness of Planning Techniques during Strategic Planning.........................................6
Formulation of Business Strategy..............................................................................................7
Organizational Audit of Tesco...............................................................................................7
Environmental Audit of Tesco...............................................................................................9
Significance of Stakeholder Analysis..................................................................................10
Evaluation and Selection of Approaches for Evaluation of Strategy.......................................13
Strategic Direction Implementation at Tesco...........................................................................16
VRIO Analysis of Tesco..........................................................................................................16
Action Plan...........................................................................................................................18
Conclusion................................................................................................................................19
References................................................................................................................................20

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Introduction
The report helps in the entire investigation of the external along with internal
environment analysis of Tesco Supermarket that is situated in London, United Kingdom. The
analysis of the external along with internal environment of Tesco is required to be analysed
with implementation of the different kinds of theories and tools which will be efficient in
nature in managing the environment of Tesco.
Overview of Tesco
Tesco plc is one of the British multinational grocery stores along with general
merchandise retailer which is headquartered in London, United Kingdom. The number of
locations wherein Tesco is operating their business is more than 6553 and the revenue which
has been earned by the company is £55.9 billion till the year 2017. Furthermore, this has been
noticed that the number of employees working in the entire company is 476000 till the year
2017 and this has helped the company in enhancing the overall growth of the company in a
positive manner as well(Tesco.com, 2018).
Mission, Vision and Core Competencies
The main mission of the Tesco Company is to be the most highly valued kind of
business in the entire market and to provide the different customers with the variety of goods
and services at an affordable rate. Furthermore, Tesco wants to serve the entire community
along with stakeholders with the various kinds of products and services at an affordable rate
and this will help in managing the different activities in an appropriate manner (Bromiley et
al. 2015).
The vision of the company includes the growing of the business with full of different
opportunities. Furthermore, Tesco wants to innovate the various kinds of products and

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services which will help the company in earning trust of the different customers in the market
with proper implementation of different kinds of resources in the entire competitive market.
Moreover, core competencies of Tesco are inclusive of different implementation of strategies
which will be helpful for the company in becoming economical in nature in comparison to
the other competitors in the entire United Kingdom market.
Objectives and Goals of Tesco
 To satisfy the different needs of the customers in the entire market with proper
decrease in the prices of the products which are being sold by them in the entire
market
 To innovate the different kinds of products in the market which will help the company
in becoming more competitive (Armstrong et al. 2015)
 To offer the different customers with best value for money and most competitive kind
of prices as well (Kotler 2015)
 To support the well-being of the community along with protection of the environment
 To work closely with the different suppliers in the competitive market to build long
term relationships along with gaining huge share in the market as well
Issues Involved in Strategic Planning of Tesco
There are various issues which is involved in the strategic planning of Tesco
Supermarket which is inclusive of the following:
 The company do not have adequate knowledge on the customers and culture
 There is perception of low quality which affects the overall profitability of the firm in
a negative manner (Bresler and Lubbe 2014)

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 There is huge competition in the market which is affecting the different operations of
Tesco and this has created huge impact on profitability and growth of the firm (Baker
2016)
Effectiveness of Planning Techniques during Strategic Planning
Tesco needs to analyse the different kinds of effectiveness of the strategic planning
techniques which will help in managing the different kinds of operations in an appropriate
manner. The different planning techniques which are effective in nature are as follows:
 The setting of short term and long-term goals are effective for Tesco which will help
the company in becoming more competitive with the different kinds of operations.
With the effective planning technique.The effectiveness of the business model is
essential to be adopted by Tesco in order to become more effective in their
approaches (Chambers and Humble 2017)
 Creation of concrete objectives is the other planning technique which is effective and
this can be adopted by Tesco wherein this has been seen that this will help the
company in becoming specific about the goals and this will generate huge amount of
revenue in the entire market as well (Chernev 2018).
 The brand image strategy is effective wherein they sell products to customers at high
quality and cheap pricing strategy. Moreover, Tesco tried to aim on the low-income
group customers wherein Tesco started selling various kinds of products at mid-range
with store price tag (Di Benedetto and Lindgreen 2018).
 Lastly, the strategy related to globalization is powerful which has been analysed by
Tesco as they tried to expand themselves in all over the different markets and this has
increased their brand image as well (Keller and Kotler 2016).

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Formulation of Business Strategy
Organizational Audit of Tesco
With the help of SWOT analysis, the different kinds of internal strengths and
weaknesses along with external environmental threats and opportunities can be analyzed.
Strengths
Tesco is in the leadership position in the entire
United Kingdom market
The online operations are effective and
appropriate in nature (Foxall 2014)
The property portfolio is strong in nature at
Tesco
The club card which has been introduced by
Tesco is strong kind of information tool
(Martín-de Castro 2015)
Weaknesses
The financial performance is weak in nature of
Tesco
Diminished kind of morale of the different
employees in the organization
Reliance in the United Kingdom market
Serious damage to the entire brand image due to
the commercial kind of income scandal in the
year 2015
Opportunities
Pursuing the international market position and
expansion in the market
This can have the opportunity to increase
their overall presence in the financial aspects
in the entire industry (Miquel-Romero,
Caplliure-Giner and Adame-Sánchez 2014)
Enhancing the overall effectiveness in the
Threats
Fluctuations in the currency
There is huge inability of the new leadership in
order to turn over the business
Emergence of the different ethics related issues
in the business (Miquel-Romero, Caplliure-
Giner and Adame-Sánchez 2014)

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marketing strategy (Meyer,Neckand Meeks
2014)
From the analysis, this can be analyzed that there are various types of internal
strengths which helped in becoming more effective in nature. This can be seen and analyzed
that in the year 2015, Tesco plc had statutory loss of GBP 6.4 million and this has pushed the
entire amount of the net debt to GBP 8.5 million. Moreover, this has been identified that
Tesco is one of the largest supermarkets in the entire United Kingdom market with a market
share of 27.9 percentage. The closest competitor of Sainsbury has the share in the market of
16.6% and the share in market of Walmart owned ASDA which is equal to more than 17.6%
(Charter 2017).
Figure 1: Changes in PBT of Tesco
(Source: Chernev 2018)

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Environmental Audit of Tesco
PESTEL Analysis is the appropriate tool which can be used in order to analyze and
identify the different kinds of environmental factors which will affect the overall
effectiveness of the firm.
Political factorsare the first concern which is an opportunity for Tesco in the entire
global market. Furthermore, this has been noticed that since Tesco operates in the global
environment, the different political factors have created huge influence on the performance of
Tesco (Lasserre 2017). The different political aspects are inclusive of rate of taxes, acts of
legislation along with stability of the country in which the company is operating with their
operations. Furthermore, as Tesco plays an essential role in creating opportunities for
employment, this will help in increasing the demand for the different products and services
(Litman 2018).
Economic factorsare the other aspect in which this is considered as the main concern
for Tesco Supermarket which is inclusive of the leverage costs, demands along with profits
and prices (Jarzabkowskiand Kaplan 2015). Due to this, the business should be aware of the
different changes in the policies which is inclusive of change in the taxation policies.
However, this has been seen that economic factors are outside the entire control of the
company and the entire effect is on the performance and marketing mix of the company
(Schaltegger, Burrittand Petersen 2017).
Socio-cultural factorsare the other aspect in which this has been analyzed that due to
the variety of the social changes, the different trends have indicated that the consumers in UK
market have tried to move forward one stop shopping along with bulk kind of shopping.
Moreover, Tesco has tried to increase number of non-food items which are being offered for
sale (Kleinaltenkamp, Plinke and Geiger 2016). The customers are becoming aware of the

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health issues wherein the approach towards the foods is changing constantly. Tesco is trying
to adopt the changes by accommodating the demand for the different organic products
(Galliersand Leidner 2014).
Technological factors are the aspect in which this has been noticed that
advancements in the technology will bring various kinds of opportunities for Tesco and this
helps in managing the different operations in an efficient manner. Furthermore, the self-check
out system of Tesco has helped in managing the various kinds of operations in the retail
market and gained huge opportunities from the same (Hill,Jonesand Schilling 2017).
Environmental Factors is the aspect in which there is increased pressure on the
different organizations as this will help in addressing the different kinds of environmental
pressures. Tesco is committed in reducing the carbon footprint by more than 50% by 2020
and this has helped the company in minimizing the wastes which has been produced in the
stores by increasing the social conscience in the customers (Proctor 2014).
Legislative factorsare the other aspect in which the different government policies and
regulations directly impact the performance of Tesco. For instance- Food Retailing
Commission in the year 2004 suggested the code of practice should be introduced by current
practices (Hitt and Duane Ireland 2014). Tesco tries to provide the customers reduction in the
prices on the fuel they purchase along with the different kinds of promotional offers in an
efficient manner (Wheelen et al. 2017).
Significance of Stakeholder Analysis
The stakeholder analysis has helped Tesco in managing the different kinds of aspects
in an effective manner. The stakeholders of Tesco have influenced the strategic direction of
the company wherein these groups are the individuals which affects the business directly or

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indirectly as well. With the large size of the organization along with global scope of the
different kinds of operations of Tesco, the company has various stakeholders which is
inclusive of employees, customers, investors and suppliers in the market as well
(McDONALD 2016).
The stakeholder groups of Tesco are inclusive of the following:
 Customers
 Employees
 Suppliers
 Investors
Investors – They are the top priority in the Tesco supermarket wherein this has been
seen that Tesco tries to prioritize their investors in their different kinds of strategies. This is
one of the reasons why Tesco helps in minimizing the different costs with the help of
minimization of the wages. The theory helps in suggesting that the primary objective of the
business is to generate profits and there would be no business at all and this helps the
company in prioritizing the primary objective of the business in an efficient manner.
Customers- The different customers are included in the stakeholder group in the
business of Tesco as this has been analyzed that the customers of Tesco are interested in low
kind of prices or the affordability of the different products and services which will be helpful
in managing the overall profitability of the firm (Rothaermel 2015).
Furthermore, Tesco tries to address the various kinds of interests of the different
customers as the different stakeholders and the organization tries to maintain the cost
leadership strategy which includes the different offerings to the customers at the lowest
possible price. Additionally, the company is famous for the different kinds of low price

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strategy which has been adopted by the company in an effective manner (Helfatand Martin
2015).
Employees- The employees are the third priority of Tesco who play an essential role
in the entire decision-making process. The employees at Tesco have two major interests
which is inclusive of the job security and higher wages. The job security among the different
employees helps in guaranteeing that Tesco will be keeping the different employees as part of
the business and high wages which will be provided to the different employees will motivate
the employees in performing the different kinds of activities in an efficient manner.
Suppliers- The Suppliers of the organization are the least kind of priority of Tesco in
which this has been seen and mentioned that suppliers of Tesco are interested in receiving
more products in a much profitable manner. The different interests include the selling of the
similar kinds of products at a less price which will be beneficial to the suppliers of the
company (Robson 2015).
Therefore, from the stakeholder matrix, this can be analyzed that the Tesco is
effective and efficient in addressing the different kinds of interests of the group of the
stakeholders such as investors along with the different customers of the company. In order to
improve the overall efficiency of the firm Tesco, Tesco needs to implement few changes in
the entire process which will help the company in improving the relationship between the
different suppliers and the company in order to become more effective in the different
approaches and gain more competitive advantage in the overall market which is competitive
in nature (Hill 2017).