Strategic Management Plan for Tesco: Business Strategy and Growth

This report provides a comprehensive analysis of Tesco's business strategy, focusing on both internal and external environmental factors. It examines the macro environment using PEST analysis (Political, Economic, Social, and Technological), highlighting factors influencing Tesco's operations and expansion. The internal environment is assessed through SWOT (Strengths, Weaknesses, Opportunities, and Threats) and VRIO (Value, Rarity, Imitability, Organization) frameworks, identifying key areas for improvement and competitive advantage. Furthermore, the report applies Porter's Five Forces model to evaluate the competitive intensity within Tesco's industry. Finally, the report considers various strategic theories and models to interpret and devise strategic planning recommendations for Tesco, aiming to enhance its market position and achieve sustainable growth. This document is available on Desklib, a platform offering a wealth of study resources including past papers and solved assignments.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
LO1..................................................................................................................................................3
P1 Macro environment................................................................................................................3
LO 2.................................................................................................................................................5
P2 Internal environment..............................................................................................................5
LO 3.................................................................................................................................................7
P3 Porter's five forces..................................................................................................................7
LO 4.................................................................................................................................................9
P4 Range of theories, concepts, models, interpreting and devise strategic planning..................9
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy is a process which is taken up by any company so that the company can
work in one direction and the company will be able to make the most if the strategy of the
company is followed. Analysis of the internal and external factors in the company are done so
that the company's can work better and efficiently so that they can not just capture a larger
market but also make a profit from it. It is very important for any company to go in one direction
so that they can be on the same road to achieve their aims and goals.
The selected company for the report is going to be Tesco. Tesco is a British multinational
company whose headquarters are in England, United Kingdom. According to gross revenues and
revenues it has been numbered the world's third and ninth retailer in the entire world
respectively. The company has stores around 7 countries and it is the leading grocery store in
United Kingdom. The founder of the company is Jack Cohen in 1919.
The report is going to cover the following fields which are the internal and external
factors of the company which are the SWOT and PEST of the company, Porter's five model,
range of theories, concepts and models related to the company.
MAIN BODY
LO1
P1 Macro environment
It is very important for the company to analysis the factor which are influencing the
company and according to these factors the company will be able to take decisions for
themselves. Analysis of the political, economic, social and technological are the macro
environment's factors which have to be studied by Tesco so that they can make decisions for the
company accordingly (Lahtinen, Kuusela and Yrjölä, 2018). There is always a lot of pressure on
the company to make decisions by the stakeholders of the company and accordingly the
company will have to make decisions. The further report is the analysis of Tesco in detail for the
better understanding.
Political Factor
The political factors of the company is not letting the company to expand itself though
the political factors as of now are very much in favor for the company to expand itself. The
political factor of the country is making the company get an opportunity to expand which will
make the company have a competitive advantage in the market. Taxes are high for the company

to invest and will need a lot of investment which the company can afford since they have a free
cash flow in the company. Trading for the company has become better and the company is
making a lot of profit with that factor because the political factors keep changing all the time and
the company must make the most from the political factors.
Economic Factor
Tesco has given a lot of unemployed employees jobs therefore the countries GDP has
increased rapidly (Sparks, 2019). There was a recession in 2009 which made the country face a
lot of problems and this company made them get there confidence back and make the country
rise up again. Over the years the company has gained a lot of confidence on the customers and
now the customers are choosing their products also wisely therefore the company is making a lot
of profit. There is a free flow of cash in the company which they can use wisely for their
development and that will help the company to become even more famous within the customers.
Social Factor
The company has noticed that the people above the age 65 years they tend to eat less and
also not go to supermarkets so the company has come online so that they can get more customers
in the company. There is a growth in technology which is a major reason for the people to not go
to the supermarket and call for the products they require directly at home which will consume the
customers time. Tesco has only targeted places which will make the company get a name for
itself in the market because of the attitude and belief of the customers. There are 65% of the
population of United Kingdom who are loyal to shopping and the advantage over this fact has
been taken by the company which is they are had a one-to-one contact with the customers and
that is very important for the company's. The company is trying it's best to solve all the problem
which the customers are having so that the company can become the best in this field (Um and
et.al., 2018).
Technological Factor
There were a lot of problems which the company was facing with the customers because
they were being able to solve those and now because of the technological factors which have
improved the company is making a great advantage in the market. There are a lot of
technological development in the company so that the sales could increase by meeting the
demands of the cusotmers (Taneja, Pryor, and Hayek, 2016). The technology in the company
will make the labor become even more comfortable with the company so that they do not want to

leave the company and the company will be able to have loyal employees. It is very important to
have loyal employees in any company. If the pressure from the employees is removed then the
efficiency of the employees will increase which will be beneficial for the company.
LO 2
P2 Internal environment
The factors which have an influence on the internal and external factor of the company or
the macro and micro of the company can be studied by analysis of the SWOT. After analyzing
these factors of the company will be able to focus on elements which have to be worked upon
and what has to be made the strengths of the company so that the company can have a
competitive advantage in the market (von den Eichen, Freiling and Matzler, 2015).
Strengths
The company has got in a lot of customers because they have experience in this field and
over the years they have understood the importance of customers. The company has good
employee service, excellent retailer and overall shopping experience. Many competitors have
tried to defeat this company but it is the leading company in United Kingdom. The company has
fulfilled the cultural needs and wants of the customers and the company takes care of the
customers very much therefore the company is what it is today.
Weaknesses
The company will have to focus on the price of the products they are selling because
there is a lot of competition which is coming up in the market and the company will have to get
an advantage over it (Soltanizadeh and et.al., 2016). Though the company is expanded itself in 7
other countries but they are demandent on the UK and Europe markets which is there weakness
because they are not working on the other supermarket and there is a huge growing competition
in the UK and European makret which will create a huge problem for the company later.
Opportunities
The company should have joint venture with other company's so that Tesco can expand
its business so that they are dependent on any other factor. There are opportunities for the
company to grow in the private label market which will make the customers more aware of the
products Tesco is selling. Tesco has opened a new discounted product named Jack's which is a
new addition in the company and this will give the company a great advantage in the market.

There are new stores which are planned by the company which will be coming up for selling this
new product at a discounted rate with good quality and this can turn out to be very good for the
company.
Threats
There is a rise in the raw material in the world which is a great threat for the company to
expand itself. There is a lot of competition in the market which is not letting the company grow
to its full extend. There are a lot of supermarkets which are coming up with better plans and
actions to capture the market which is making Tesco work even harder in the market (Provasnek
and et.al., 2017). There are more innovations and technologies which are coming up in the world
and that is turning out to be a great disadvantage for the company because they are not making
it's moves according to that factor.
VRIO
This is a perfect analysis of the competitive advantage study and evaluation of the
company.
Valuable
The company is having services of products very good therefore the company is having
loyal customers who are coming in the company. The networks of the company have become
better because of the experience this company has because the company is reaching out to their
customers very efficiently and productively which is helping the company in a lot many ways.
There are a lot of innovations which the company has made so that the company can get in more
customers (Habib and Hasan, 2017).
Rare
The company is having a stable economic condition in the market and has a lot of
shareholders with them because of this reason. The company is having easy access to the raw
material which is why they are having easier ways to produce their products, and they are having
a great advantage on the companies. There is a requirement of a lot of investment in the company
because they need to develop according to the customers and that is very important for the
company (Cassidy, 2016).
Imitable
The financial stability of the company cannot be imitated by any other company who is in
the competition with Tesco because the company has loyal customers and have a lot of

experience in this field to maintain their efficiency and stability in the market. Other competitors
in this field are investing a lot to get the same distribution system in the market.
Organization
The company is organized very well in Europe and United Kingdom but the company is
not being able to develop itself in the other fields like beer, automobile, airlines, transport, etc of
the company which will not let the company grow. The company is dependent on the sales of
few countries but the company should develop by organizing the other stores in other countries
so that the company can make a better profit in the market (Rothaermel, 2017).
LO 3
P3 Porter's five forces
To study the work of the competitive environment it is very necessary to analysis the
porter's five forces so that the people can get to know them better. Analyzes of these factors can
make the company know the factors which will make the company grow and the company will
be able to function better (Matt, Hess and Benlian, 2015). The five forces of this factor are threat
of new entrants, bargaining power of buyers, bargaining power of suppliers, threat for substitute
products and rivalry among the existing players. This the best method Tesco can use to get a
competitive advantage over the other threats which are coming up in the industry.
Threat of New Entrants

There are a lot of entrants in this field of the industry but because Tesco has an
experience in this field for a long time now, that is the main reason why others can not come in
the competition with this company. The company has made its place in this industry from a long
time and is still developing according to the customers wants and demands which they have so
that the company can fulfill them. Tesco has introduced a lot of new products which are only
being served by Tesco and the quality of the products which Tesco is providing at the price is
unbeatable.
Bargaining Power of Buyers
The customers are the main reason because of which a company can work and Tesco
takes care of that factor the most because they want to remain in the industry for a long run. The
company's gain their profitability and it is possible when the customers are getting satisfied with
the products which the company are giving out to them. TESCO have to try different methods so
that the company can get more customers in the company. Tesco is serving good quality products
and services which are making the company have a control over the bargaining power of the
customers (Christ, Burritt and Varsei, 2017). The customers can also get attracted because of the
discounts and offers that the company is providing and Tesco does give these advantages to the
customers time to time which makes the company have a lot of customers coming in the
company.
Bargaining Power Of Suppliers
Tesco has a great advantage over the suppliers because the company is not dependent
over only one supplier, and they have many suppliers who are giving the company the raw
materials so that the company can grow easily. Tesco does take advantage of the suppliers who
are completely dependent on the company and Tesco makes the suppliers have no command over
the company so that the company can cut the cost on the raw material so that the company can
make a profit.
Threat For Substitute Products
It is very easy for the other companies to have a substitute for the products they are
having in the company because everyone will copy the company which has a great customer
loyalty so that the other companies can make that change too in their company so that they can
get more customers. Substitute products are made so that the customers can get that products
anywhere and everywhere so that the company can make a profit. Tesco has a uniqueness to its

brand therefore no other company can come close to this company. Uniqueness is required by all
the companies so that they can attract a lot of customers.
Rivalry Among The Existing Players
The company must collaborate with other small companies so that they can expand
themselves which will make them capture a larger market. There is a lot of rivalry which can be
seen in this field which why Tesco is not being able to grow to the fullest. The prices of the
products which the company is selling have to be reduced so that the company can make a profit
accordingly (Dranove and et.al., 2016). This will help the company get more customers and will
be able to make profits in the market for a longer run.
LO 4
P4 Range of theories, concepts, models, interpreting and devise strategic planning
Mission
The mission of the company is that they want to earn their customer's lifetime loyalty,
and they want to create the value of the customers.
Vision
The vision of the company is that they want to gain value between the customers they
serve, the shareholders of the company, colleagues and the community they are serving within.
The company is loyal and committed, and they want to make the people aware of that factor.
Core Values

The company wants to serve the customers with products with the right price and value
the customers in the company. The company wants to serve the customers with the right products
with good quality and the right way so that the company can satisfy the customers.
Objectives
 To increase sales of new product of Tesco by 10% till the end of year 2020.
 To increase the market, share by 30% till the end of year 2022.
 To enhance consumer experience by 10% in upcoming 6 months.
Ansoff Matrix
Market Development
The company will have to focus on the other countries too for the development in the
market which are except the European and United Kingdom market because the company is
completely dependent on these companies. The company will never fail because the population
in the world is increasing and there are more mouths and demands which are increasing because
of that factor therefore supermarket is a great market for Tesco to invest in (Mårtensson and
Westerberg, 2016).
Diversification
The company is innovating but the research and development department of the company
will have to make more progress if the company wants to capture a large market in the world.

The company is not doing something about the price as well because the company will have to
reduce the prices according to the market prices.
Market penetration
The company must try to give more discounts and offers if they want to penetrate into the
market. Innovation and creation are also new ways to get into the market and so is getting new
methods and strategies according to the present time (Johnson, 2016). The strategies and
methods keep changing according to the needs of the customers and this must be adopted by the
company.
Product Development
Innovation and creative ideas really make a lot of difference in any company and it is
very important in Tesco also because if they want to capture more customers than the company
will have to develop the products they are selling. The will have to be regular with the new
product they are coming out with so that they can find out that what is the demand of the new
product so that they can accordingly match up to the expectations of the customers.
Porters generic strategy

Cost leadership
The company will have to find ways to make the product at the lowest productivity range
so that the company will not be facing any lose in the end of the product being launched
(McAdam, Bititci and Galbraith, 2017). The investments which are going to be made in the new
product must be low so that the company will make profit out of it and loss.
Differentiation
The product which the company is coming out should be innovative and creative and it is
so according to the analysis the product will be able to make a good place for itself. It is very
important for the products to make a place for themselves because they will be able to make the
customers happy and make them loyal to the company.
Focus
The company will have to focus on the uniqueness and the cost leadership of the product
so that the company does not make any lose and the company will be able to live up to the
expectations of the customers which they have towards this product.
Market Tactics
Promotions
The company is already online, so they must try to promote this new product they are
coming up with, with the help of the online resources. Online or digital marketing is making a lot
of difference in a company for the products they are selling.
Place
The company must try this product in United Kingdom first so that they can find out the
actual want in the customers for the product which will make the company know the wants and
demands of the product. The product is successful in UK then they can supply in the other
countries in which the company has expanded itself.
Price
The price of the product can be kept to the lowest point of production so that the can find
out the demand for the product, and then they can slowly increase the price according to the
demand in the market.
Product
The product is unique in its own ways therefore the product will do very good in the
market. The innovation which has been added to the product will make the product get a lot of