Strategic Management Plan: Analysis of Tesco's Business Strategies

This report provides a comprehensive strategic management plan analysis of Tesco, a leading UK supermarket chain. It begins with an introduction to business strategy and its importance for organizational success, followed by a company overview and an examination of Tesco's mission, vision, and goals. The report then delves into the macro environment using PESTEL analysis, assessing political, economic, social, technological, environmental, and legal factors. A SWOT analysis evaluates Tesco's strengths, weaknesses, opportunities, and threats. The report also explores Tesco's internal environment and resource capabilities, including physical, financial, human, and intellectual resources, and applies the VRIN model to assess its competitive advantages. Porter's five forces model is utilized to critically evaluate the competitive environment. The report further analyzes Tesco's existing and potential competitive advantages, examines Porter's generic strategies, and assesses strategies and tactical objectives using Bowman's Strategic clock. Part 2 includes a critical evaluation of Porter's generic strategy in Tesco's strategic management plan, recommends growth strategies, and evaluates methods for monitoring strategy success. The report concludes with a summary of findings and provides references.

Strategic Management
Plan

Table of Contents
INTRODUCTION...........................................................................................................................1
MAINBODY....................................................................................................................................1
PART 1............................................................................................................................................1
The impact and influence which the macro environment has on an organisation and its business
strategies..........................................................................................................................................1
Company Overview....................................................................................................................1
PESTEL Analysis.......................................................................................................................2
SWOT analysis of Tesco.............................................................................................................3
Tesco’s internal environment and resource capability.....................................................................4
Foundation of the strategic capability of Tesco..........................................................................4
VRIN Model...............................................................................................................................5
Internal capabilities.....................................................................................................................6
Critical evaluation of the competitive environment.........................................................................6
Porter’s five forces model...........................................................................................................6
Organisation’s existing and/or potential competitive advantage.....................................................8
Porter’s Generic Strategy............................................................................................................8
Strategies and tactical objectives to achieve overall strategic objectives........................................8
Bowman’s Strategic clock..........................................................................................................9
PART 2..........................................................................................................................................10
Critical evaluation of the Porters generic stray in strategic management plan of Tesco..........10
Recommended growth strategy for Tesco.................................................................................12
Evaluate ways and means by which the chosen strategy/is can be monitored in order to ensure
success.......................................................................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business strategy are important for an organisation as it defines the plan and the policies that
help the employer to achieve the goals and objectives. Business strategy are developed not only
the vision but also a direction to the whole organisation and their contemporary to the all people
within the organisation with their clear goals and direction and more it cater the vision and stop
them from losing employer objectives. Following report are focusing on the UK retail market
and Tesco is consider which the largest supermarket chain in the UK (Williams and You, 2021).
Moreover, following report illustrates the structural concept which illuminates the stability and
core competence in the Tesco business market. SWOT and Porters five forces are also used
along with relevant models. So this pursuing report throw light on the Tesco’s strategic
development.
MAINBODY
PART 1
The impact and influence which the macro environment has on an
organisation and its business strategies.
Company Overview
Tesco is one of the leading and largest retail distributor after the Walmart and Carrefour based on
the revenue. Tesco represent about the 500,000 employee in the 14 nations by introducing the
Tesco Express, Tesco Home-plus, Tesco superstore and the Tesco metro and the online site of
the Tesco.
Mission
The mission strategy of the company is to establish a positive business growth in order to
enhance and increase the awareness that they are one of leading cost effective retailer which is
dedicated to satisfying the customer need and ensure the productive usage (Mc Loughlin and et.
al., 2021).
Vision
Tesco has the dream and long term vision is the become the largest growing retail and
food shopping organisation globally, Tesco have the vision and efforts to create a modern
community in that way.
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Goals and objectives
 To encourage the reorganisation of the company and to profit competitively.
 To recall and preserve the service level and the price.
 Enhancing and increasing the income.
 To fulfil the customer and employee satisfaction at the same time.
PESTEL Analysis
 Political
Since, Tesco are operating in the global level the success and the performance of the
company widely impact by the global political aspects. The execution of the Brexit had dramatic
impact on the business performance of Tesco as they have to make the other government policies
and abide the laws in order to operate in the EU nation. Moreover, this constant global financial
uncertainty and the various policymaker has promoted the production of employment for the
retailers (Brannen, Mughan and Moore, 2020). Since, Tesco is taking the active part in the
societal welfare they have government support much but the new supermarket law can have
adverse impact on the company profitability and operations.
 Economy
Since, the novel COVID-19 had impacted the business of the many sector as there is less
demands in compare to earlier and the spending level of the people are also reduced. Other than
this, currency fluctuation is other issue which company are facing after the Brexit as Euro is
higher in terms of the Pounds. Globalisation and the diversification is the aimed strategies that
Tesco had pursued over the years and present a vital explanation for their achievement (Trewern
and et. al., 2021). After this approach Tesco has emphases on selling the affordable goods in
compare to the luxury items that leading to a reduced in the number of the throwaway jobs and
household income.
Social Factors
The shopping pattern and the buying habit of the consumer are changes because of the
various improvement and growth in the culture, pattern which acclaimed that the UK consumer
are shifting to the reliable and convenient shopping so they are preferring buying in bulk and one
stop shopping trend. Tesco is meeting these needs by emphasising on the socially formed
attitudes and now they are also shifting to the e-commerce platform in order to adopt this change
shift in its business strategy.
2

Technological factors
The advancement in the Information Technology had offered numerous new opportunity
to Tesco. The online shopping trend in the retail sector are growing and company is heavenly
invested into these technology (Kirby, and Keay, 2021). Moreover, one of technological up-
gradation that every supermarket chain wants is the self-service check out point which made the
consumer happy and reliable and the company have reduced labour cost in effect.
Environmental factors
Tesco has the frim determination to reduce by emission of carbon by the 50% in the
2022. Other than this, Tesco has the long term investment in the energy conservation act for
meeting the long range carbon footprint easing aims. Even so Tesco is promoting the waste
minimisation programme within the sore by cumulative the shopper social consciousness.
 Legal factors-
The business performance and the business strategy of Tesco has a frim effect on the
government policy and regulation (Cao, 2021). There are many laws related to the health and
safety norms, employment regulation and the Food retail commission regulation that has
prohibited many practices and this has impact on the business strategy and the performance of
Tesco. In 2004, the Food Retailing Commission (FRC) proposed a Code of Practice that would
prohibit several present activities, such as adjusting prices without notice or requiring payment
from suppliers. Tesco offers its customers price concessions on fuel purchases based on the
amount spent on their grocery stores to help them comply with these standards.
SWOT analysis of Tesco
Strength
Strong global market presence and brand
credibility.
Diverse range of the product selection
offered under one roof and the product
are of high quality within the affordable
pricing strategy
Tesco online is one of the Tesco
strategically market expansion tool that
assist the both company and customers.
Weaknesses
It has found that Tesco is heavily
depend on its UK market where about
60% of sales comes.
Several lawsuit they are faced because
of the unfair and lower wages to
customers
The retail industry is heavily
competitive.
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The debit liabilities of the Tesco are
decreased within the last 3 years (Alam,
Awawdeh and Muhamad, 2021).
Due to their large size store and wide
range of scope Tesco has the large scale
of economies.
Also, they have reserve itself away
from is fundamental customer base.
Opportunity
Utilisation of the advanced information
technology for boosting sales and
reduced the variable cost (Turk, 2021).
Adoption of the internationalisation to
expand growth in the other countries
other than the UK market.
Introduction of the online shopping
rather than of in-store amid COVID-19.
Can reduced the labour cost with the
installation of self-service check out.
Threats
The immobility in the future
development opportunity in the UK.
Low development and growth figures in
the UK retail sector.
The issue of European competition that
bound the Tesco development in the
past when they tried for the acquisition
the British retailer Safeway.
Tesco’s internal environment and resource capability
Foundation of the strategic capability of Tesco
Physical Resources
Tesco deeds to their property around the requirement of the customer through the aimed for
the creation of long term value for shareholders. Tesco essential physical resources are its
inventory as it had around £3bn worth of inventory at the end of 2014. So, because of the swift
inventory turnover Tesco need to carefully manage these resources to assure customer demand is
not saturated. Financial Resources
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Financial resources are crucial for the company as the finance consider to be as the lifeblood
cell of organisation. The liabilities of the Tesco was cut down by the 53% of assets which was
earlier 58% by the 2019 (Esteban-Bravo and Vidal-Sanz, 2021). So due to the current economic
environment amid the COVID-19 this is some good news to provide more room to plan for times
of the future unpredictable uncertainty.
Human Resources
After the COVID-19 the rate of unemployment has risen which sees as the great
opportunity for the Tesco to attract the competent candidate for the future recruitment. This
provide great help to Tesco in selecting the candidate which may enable Tesco to cut down the
long term staffing costs.
Intellectual Resources
Intellectual resources are the crucial for many large business organisation like Tesco this
is because they have the finest and valuable brand in the retail industry. Moreover, to safeguard
their property they are using the patent to safe their product or item from being copied by the
others.
VRIN Model
From the above evaluation it had found that resources of the store is comprised of the many
knowledge , organisation system, market histories and the skills or experience which separate the
Tesco from others. Moreover, it had found that not every resources are essential but assets that
help them to run business and offer the competitive edge to the company. For the strategic
capability four elements are found to achieve the strategic objectives which can be found as the
attributes of VRIN which is detailed explained below-
Valuable
These resources support the Tesco for
creating the value for the clients, this
consist the engineering strategy and the use
of the data or encouraging the growth
choice. Valuable resources help in the
improving the efficiency and the output of
Tesco supermarkets (Weston and Nnadi,
2021).
Resources
This are the reserve plan that are not being
open to rivals and rare for the company
like its products and services. In this stage
the quick decision making and the deficits
in the experiencing are the main benefits
of the company.
5

Imitable
These are the methods which are not
special and are available emulated by the
many organisation. This includes the
developing and the exestuation of the
porter’s generic strategy.
Non substitute
It has found that there is no specific
alternate to the various goods. Alike these
reduces can deliver employer and the
employees with the role identification and
the workforce preparation
Internal capabilities
Tesco introduced the Club cared by the 2016 which they operated dispute than just as the
marketing bid which allowing them to get insight about the specific information on the desire of
the calumet and utilise this card to fulfil their need. Also, Tesco has focused on the integration of
the knowledge. SO in their strategic capacities Integration of the knowledge leads a crucial role.
Tesco also employee and extranet system end to sue the system for tracking of the stocks and
supply chain to examine the business transactions. These technology like RFID would enable
Tesco to gain its completive edge and to corroding with the development in the volume of goods
and secrecies at the time to decreased the any variable expanses. The Tesco. Com is the other
capability of Tesco which used to deliver pleasant user experience that user can utilise to get the
customise online shopping experience that too increases the customer satisfaction.
The following table below will help to better understand the overview of Tesco’s
competences
Competency Valuable Rare Difficult to
Imitate
Difficult to
substitute
Online
shopping
YES NO YES YES
Human
resources
YES YES YES YES
Price YES YES YES YES
24 hours store
service
YES YES YES YES
Intellectual
property
YES NO YES YES
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Critical evaluation of the competitive environment
Porter’s five forces model
Threats of new entrants
It has found that the UK retail industry is full of players controlling the business. The
British food industry has the largest market share among the five major competitors, including
Tesco, Asda, Sainsbury's, Iceland and Safeway. Tesco is on top, with its huge cost and powerful
manufacturing operations strategy making potential industry doors impossible to challenge the
Tesco business in any way.
Alternative threat
The risk of migration of food products is generally lower and non-food products are
considered higher than average. Small grocery stores and licensed stores are transforming the
food industry which is not a significant challenge for mega stores like Tesco. Food products
other than clothing are at greater risk.
Buyer bargaining power
Loyalty cards and club cards will not only help Tesco significantly, but will allow Tesco
to access all its customers in a single robust database. In fact, the program has gained a lot of
Tesco customers and is now being tested. “The more honest or unambiguous the products, the
lower the cost of switching, the stronger the supply to buyers.
Supplier Bargains power
Assuming the benefits of seller negotiations are too weak, Tesco will not give power to a
limited range of customers to control prices. The cost of raw materials and components can have
a significant impact on product productivity. Providers have more bargains, the quality of the
products is high. As a large retailer in the United Kingdom, Tesco's desire to import cheaper
goods abroad has allowed many smaller retailers to take advantage of unprofitable production
rates (Solomon and et. al., 2021). Tesco was deeply moved by the fear that many large
businesses would sacrifice their business for international suppliers.
Competitive rivalries
Retail sector was very competive, making Tesco more creative and competing with the UK,
leaving behind major competitors, including Asda, Sainsbury's, Iceland and Safeway. Tenants
have become the largest grocery business in the state. Millions, whether product or distribution,
have since been considered market leaders. There is much comeption in the retail market and
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every organisation are utilising its internal capabilities to gain the competive edge over their
rivals.
Organisation’s existing and/or potential competitive advantage.
Porter’s Generic Strategy
Porter's general strategy helps to analyse the competitive situation. There are three types of
strategies from cost management, specialization and productivity perspectives. Cost management
strategy drives a company by taking advantage of its sales and profits to differentiate itself from
competition. Through increased competition in the supermarket market, Tesco uses this approach
through lower costs that affect the quality of its services and goods. Market share can be
improved by paying lower prices. Competitive technology is another factor that makes goods and
services more attractive than competitors. By setting the strategy with new development
processes, Tesco will be able to differentiate its products. The third approach is planning with a
focus on specific target markets. To do this, Tesco must take into account the complexities of the
industry with the goal of further reducing cost productivity and helping to separate costs.
Looking at all three perspectives, it is clear that Tesco's core policy is cost reduction, which
reduces the cost of goods and services. In the light of all the environmental and competitive
analyses discussed in previous works, a strategic plan for management has been developed
Strategies and tactical objectives to achieve overall strategic objectives
Strategic Objective:
The main objective of a strategic management plan is to outline its objective. Tesco was
established with the strategic goal of promoting stability in the transportation industry and
providing high quality products at affordable prices to customers, attracting merchants and
achieving competitiveness in the market.
Strategic target:
Revenue to grow by 2.5% by 2021, Customer loyalty will increase and customer base
will increase by 2% in the first quarter of 2021.
Market Analysis:
The company has improved the appetite of the consumers towards its goods with high
quality goods at affordable prices. Traditionally, consumers have been cynical of Tesco goods,
but now Tesco has revised its price due to its low price (Sarıçam and Yilmaz, 2021). It can be
8

measured in Porter's perspective that Tesco has good business status and leads maintaining its
strategic directions.
Strategic guidance:
Market Development: As Tesco is able to make more profits in Asia, it is free to adopt a
strategic approach to join the Asia region. This is a short-term strategy that can prove effective in
maximizing profits and long-term growth in new business if it creates productive competition in
the Asian region.
Business Strategy:
To achieve the above corporate goals, the following may be the company policy. Product
prices can be reduced by reducing the production cost of goods and services.
Bowman’s Strategic clock
To find the optimal string location, Bowman's tactical clock is used. At least eight different
positions can be obtained. These include position 1 means lower costs and weaker customer
interest will be paid. Lowest Price Position 2. Case 3 Low cost hybrid process and separation
from goods. The fourth position is the difference between things. The value is based on the fifth
position difference paid by interest. Sixth place for paying high premiums and not considering
customers are risky huge margins. Monopolies that have monopolies to corporations are in
seventh place. The loss of market share in the latter case suggests that considering the eight
corporate trends, Tesco adopts a holistic approach of providing value in terms of affordable
prices and the choice of goods that will effectively benefit retailers. Allows. Its global position.
9
Tesco
Value
Tesco
Tesco
Finest

When the difference between organic goods and convenience store items is recognized,
consumers are given extra value. Most of these items are available at affordable prices.
From the above evolution it has been determine that Tesco are using the lowest prices and low
added value strategy for the creation of the Tesco value that help to build good image in the
market. Moreover, Hybrid strategy used for the Tesco finest quality but it has been suggested
that Tesco is focusing on the Different ion strategy by combining the both price and quality
attributes to differentiate its product in the targeted market.
PART 2
Critical evaluation of the Porters generic stray in strategic management plan of Tesco
For Tesco it is necessary to evaluate various strategic option available to them by using the
suitable method that appropriate selected the best acceptable strategy. Moreover, the strategic
plan in concern with the Tesco for the effective implement strategic plan are as follows-
Step 1- Strategic Intent-
Having a vision, this is the beginning of a strategic intent for the development of the strategic
plan. The main goal of strategic planning is to bring it in line with the company's mission and
vision. Without the equipment and vision of the system, it is an empty space, as if the object is in
the first zone, the vision of the destination is in the destination, and the company's strategic plan
is a road along which you can move it from one side to the other. Effective strategic management
begins with strategic intent-which defines the organization's goals and objectives and uses them
as a guide for achieving results and development. Hence the mission and vision of Tesco in their
strategic plan are as follows-
Mission
The mission strategy of the company is to establish a positive business growth in order to
enhance and increase the awareness that they are one of leading cost effective retailer which is
dedicated to satisfying the customer need and ensure the productive usage (Mc Loughlin and et.
al., 2021).
Vision
Tesco has the dream and long term vision is the become the largest growing retail and
food shopping organisation globally, Tesco have the vision and efforts to create a modern
community in that way.
10

Goals and objectives
 To encourage the reorganisation of the company and to profit competitively.
 To recall and preserve the service level and the price.
 Enhancing and increasing the income.
 To fulfil the customer and employee satisfaction at the same time.
Step-2 strategy formulation
The next step is to develop a strategy, and the Tesco needs it during a internal and external
examination to conduct a SWOT analysis. In the above part 1 there is a critical analysis of the
strengths, weaknesses, opportunities and threats associated with Tesco. Strategy development
refers to the process of choosing the most appropriate means to achieve the goals and objectives
of the organization, and, consequently, to realize the vision of the organization. Through this
process, Tesco is able to determine what it is doing better than its competitors should be, and
what are the advantages with which it will have to compete. It will also help them develop ideas
on how to beat the competition and how to respond to changing market conditions. Tesco's
operations are constantly updated to deal with environmental dynamics. Tesco's environmental
and market-based operations provide a platform for implementing cost leadership and product
development strategies.
Step 3- Strategy Implementation-
Strategic implementation is the process that transforms strategies and strategies to achieve
desired goals. A strategic plan is a written document that summarizes the actions and processes
necessary to achieve the goals and objectives set, as well as provides feedback and progress
reports on the implementation of the plan in order to ensure its implementation. The organization
has a plan, a good starting point for strategic management, but it must be implemented. In order
to ensure the survival, growth and expansion of the company, it is necessary to use strategies.
With a strong financial background and huge capital in technology, Tesco can focus more on
product development, cost leadership or simulation strategy options to keep Tesco global
(Alhammadi, 2021). But in order to implement such strategies, the company needs to focus on
its core capabilities by hiring more skilled professionals.
Step 4- Strategy Evaluation
At the final stage of strategic management, the results obtained through the strategic process are
analysed and evaluated. Strategic review, means gathering information about how the strategic
11

plan is being implemented. Strategic evaluation is defined as the process of determining the
effectiveness of this strategy in achieving the organization's goals and taking corrective actions if
necessary. Strategic evaluation is an important tool for evaluating a company's performance
against its goals and objectives. It is very important to be able to think about the achievements
and shortcomings, and it can help to re-evaluate the same goals that may be placed at a different
time and under different circumstances. Measuring the effectiveness of an organization's
strategy, firms can decide whether to stay with it or adjust appropriate steps to adapt to ever-
changing market conditions. Tesco does not take high brand recognition brands in UK markets it
takes a long time to successfully implement a strategy. In such a case product development and
cost lead will become a low cost company to implement along with low risk.
Recommended growth strategy for Tesco
Market Development:
Strategies for entering new markets with existing products. Although Tesco operates in
14 countries, its concentration is in the UK markets, which account for 71% of total revenue. The
strategy of internationalization allows Tesco to scale global resources and cash flows by entering
new markets, strategic alliances and joint ventures. This strategy will improve the company's
global market share and its brand recognition. This requires extensive research on various
markets and an understanding of the needs and preferences of local customers for Tesco's
success.
Product Development:
Product Development Strategy towards delivering new products in the existing market. It
refers to the diversity of the product range to attract new customers to the current area of
operation. Further diversification of Tesco's product mix is a profitable strategy for the company.
But to implement this strategic option, it is necessary to focus on developed R&D and invest in a
professional team of technologists and experts.
Evaluate ways and means by which the chosen strategy/is can be monitored in order to ensure
success
Benchmarking
12

Benchmarking is a tool of strategic management that allows an organization to set goals and
measure productivity based on best industry practices. It is used as a reference point to evaluate
things by comparing quality levels. From the above data, it can be seen that Tesco’s growth rate
has been higher than its competitors in recent years. This increase in customs is in line with the
customer's trust rate.
13

CONCLUSION
Therefore, from the above carried out study it has been summarised that the strategic
planning help business to creates a business vision to direct their efforts in the meaningful ways.
Moreover, it has been summarised that for creating business Strategy Company need to access
their micro and macro environmental factors to check the impact of these factor on the business
performance and strategies. Moreover, it has been found that it is also necessary to measure the
market competitiveness by using the Porters five forces model. At the end, it is also essential to
evaluate the formulated strategic plan.
14

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