Strategic Management Report: Tesco's Business Strategies Analysis

This report provides a comprehensive strategic analysis of Tesco, a multinational grocery and general merchandise retailer. It begins with an introduction to strategic management and its importance, followed by an examination of Tesco's strategic direction, including its differentiated brand, cost reduction strategies, and value maximization from its property portfolio. The report then delves into an analysis of the external environment using the PESTEL model, considering political, economic, social, technological, environmental, and legal factors. It also explores Tesco's competitive advantages, such as brand selling, monetary value, services. Furthermore, the report investigates the industry scenarios faced by Tesco, particularly the impact of Brexit. It addresses the extent of strategic drift within the company, assessing the alignment of its mission and vision statements with market demands. The report also examines Tesco's strategic capabilities and the benefits of the Business Canvas Model. Finally, it offers recommendations for the company, including strategies to defend its core business and suggestions for future strategic improvements.

Strategic
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Strategic direction that has followed by the company regarding strategic thinking...................3
TASK 2............................................................................................................................................4
Appropriate model to review the external environment of the company....................................4
Company's competitive advantage among its direct competitors...............................................5
Industry scenarios facing the company within its existing market domain................................6
TASK 3............................................................................................................................................7
Extent to which company is facing strategic drift.......................................................................7
Mission and vision statement are aligned to the demand of the marketplace.............................7
Strategic capabilities of company Tesco....................................................................................8
Business Canvass Model to portray describe company within market to its clients ................9
TASK4...........................................................................................................................................11
Strategies that the company could follow to defend its core business......................................11
TASK 5..........................................................................................................................................12
Recommendation for the company ..........................................................................................12
CONCLUSION.............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Strategic Management is an important tool which is used by the organisations for the
effective planning and control. It is essential for the company to frame appropriate policies and
rules so that management can be improve(Ansoff, 1980). In this report chosen organisation is
Tesco which is established in United Kingdom. It is a multinational groceries and general
merchandise retailer. The aim of the company is to develop better strategies so that it can
achieve sustainable success. It covers the following topics like: strategic directions which are
used it, analysis of external environment and competitive advantages, strategic drift, strategic
capabilities of organisation, benefits of Business Canvas Model, possible strategies that it can
follow to defend its business. Apart from this future recommendations are also discussed so that
it can address the problems which can influence the business of it.
TASK 1
Strategic direction that has followed by the company regarding strategic thinking
Strategic direction is important for the organisation so that it can enhance the
performance of its business. It provides the instructions to the management regarding strategics
which is needed to be implement in the business so that management can be improve. Tesco can
follow its policies, rules and regulations so that it can take better decisions which can enhanced

the performance of the company. There are various strategic direction which has followed by the
organisation which develops the strategic thinking and these are as follows:
A differentiated brand
A differentiate brand can able to develops the better image of the organisation in the
market. The brand of Tesco is able to creates the long term value for their customers and it
improves the goodwill of the company. It always find out the effective ways so that it can
separate its brand from others.
Reducing operating cost:
It is essential for the organisation to earn more margin of profit and it is possible through
by minimisation of operating cost in the company(Bromwich, 1990). Tesco is able to reduce this
cost by £1.5bn and it always encourage the cost conscious culture so that it can increase the
profit margin and it maximize the profitability. It shows the effective strategic of the organisation
which develops insights in the board of directors so they are able think this and minimise the
operating cost.
Maximise the value from value:
The property portfolio of the company is momentous and it always out the effective
opportunities so that it can provide enough space to their consumers(Chakravarthy, 1982). Tesco
has released accumulated value of £1.4bn through its property. It is earning return of investment
from 41 percentage to 52 percentage from its assets. It shows the good strategic which is used by
the organisation which is the result of effective thinking and it creates the value for the
customers.
These are the various strategics which are used by the organisation in last 5 years which
shows the effective strategic thinking of the company.
TASK 2.
Appropriate model to review the external environment of the company
PESTEL model can be followed by the Tesco so that it can analyse the influence from
external environment. It is essential for the organisation to evaluate properly these environmental
factors so that it can defend itself from the negative impact of these factors. This model has
focused on mainly six things which are as follows:
Political factors:

Political factors can affects the business environment of the company and it involves tax
policy, foreign trade policy, government policy, labour laws etc. It is important for Tesco to
effectively analyse these factors because its operates its business in various countries and it have
to follow all political factors of the counties.
Economical factor:
Economic factor can affects the business environment of the company and its includes
unemployment rates, interest rate, inflation rates, disposal income etc. (Choo, and Bontis, 2002.).
It is important for the Tesco to effectively analyse these factors so that its product demand does
not affected from it because high inflation rate can influences the prices.
Social factor:
Social factors includes age & income distribution,growth rate, health and safety emphasis
etc. Tesco develops it products on the basis of these factors so that it has accepted by the society
and than organisation does not affected from social factor. This suggestion should be given by
the strategy consultant to the board of director of the company so that it can made strategy on the
basis of it.
Technological factors:
Technological factor can affected the business because it is continuously changing or
updating and if company does not adapt these changes than it cannot do its work effectively.
Strategy consultant should give suggestion to the board of directors of Tesco that they can new
and better technology so that product quality can be enhanced and cost can be minimise.
Environmental factors:
Environmental factors should be analysed properly by the company so that it does not get
influenced from it. It includes environmental conditions like: climate and weather. Strategy
consultant can give suggestion to the board of directors of Tesco that they should properly
evaluate these factors to develops the product(Cravens and Piercy, 2006). Climate of a country
can affect the durability of a product so it is essential to take care about this thing. It helps the
organisation to develop the products as per the environmental condition.
Legal condition:
Legal factors are associated with the laws of a country. It has includes employment law,
patent and copyright law, and health & safety laws. Strategy consultant can give suggestion to
the board of directors of Tesco that they should the follow the legal factors and develop the

products which does not affect the health of consumers. It is the strategy which can use by the
company so that external environmental does not the organisation.
Company's competitive advantage among its direct competitors
Competitive advantage helps the company to create a better market place for the business
so that organisation can achieve sustainable success. It makes an organisation goods or services
superior to all of a consumer's other choice. Tesco can gain this advantage so that it can create
monopoly in the market and company can defeat the competitors(Finkelstein, Hambrick and
Cannella, 2009). There are following ways through which it can create competitive advantage
and these steps are as follows:
Brand selling:
It can be the way to achieve competitive advantage among the competitors. Tesco has a
effective brand image with good quality, faith worthy goods and better service quality can help
the organisation in its brand selling. Consumers have faith on the brand name of the company. So
Strategy consultant can give suggestion to the board of directors of Tesco that they can gain this
benefit from its effective selling.
Monetary value and publicities:
Monetary value and effective publicity can help the organisation to create competitive
advantage in the market(Freeman and McVea, 2001). Tesco provides the values to the money of
consumers by providing qualitative products and services and it helps the company in the
publicity because it is able to satisfy the demands of customers. It can help the organisation to
gain competitive advantage and achieve sustainable success.
Services:
Effective services can help the organisation to gain competitive advantage. Tesco can
makes delivery system fast so that it can provides their products as per its demand. Strategy
consultant can give suggestion to the board of directors of Tesco that they can use an application
or software. By using it consumers can place order online and company provides the goods at the
doorstep of customers. It makes the delivery of service fast so that people does not make rows to
get the food. By using this tool it can achieve completive advantage.
Industry scenarios facing the company within its existing market domain
Tesco starts its business in 1919 and that time a person can travel in whole Europe
without visa or passport. That time, if it buy raw material from other counties than it does not

need to pay the toll taxes or any other local taxes. So organisation can save the transportation
cost and taxes and it helps the company to minimise the cost of production and through it Tesco
was able to generate more revenue. So that it can maximize the profits but now government
impose the restriction which called Brexit. It is used as a shorthand way of saying the UK
leaving the EU. In that case if a persons wants to visit the other countries in Europe than visa and
passport is required(Hesterly and Barney, 2008). As a result Tesco have to pay toll taxes and
local taxes if it purchase the raw material from other countries. Through it prices has increased
of unfinished goods and affects the cost of production and becomes high. If cost is more than
prices of products can increase and consumers does not want to buy the goods of company.
Customers are the price conscious and they want quality product at reasonable price. This is the
main problem which is facing by the organisation within its existing market domain.
TASK 3
Extent to which company is facing strategic drift
Strategic Drift: it is defined as a competitive action which resulting to a failure of an organisation
in responding to the changes occur in environment. Drift describe a sloth that meet an objectives
of an organisation(Hoskisson, 1999). This is setted in board levels and make lack of their focus
in external environment. The strategies are develop is an manner by making assumptions from
intuitive thinking. In this, decisions made by framing culture in an order to develop internal
controls, symbols, organisational structure. As a strategic consultant, suggested for company
Tesco to make strong influences regarding decisions on making managerial. From this they can
avoid drift by developing use of warning system, strategic resilience and flexibility of an
organisation. As per advice to board of director to look after on certain conditions such as.
1. Falling of business by having changes occur in external management.
2. In competitive market the whom who has worked may not work any more.
3. Company senior employees used to ignore problems, till it came with an evidence.
4. Management use to lead with success in form of building satisfaction.
Their are many of the phases that drift faced. As proposal to Tesco they has to face incremental
change, flux, transformational or death. By having incremental alteration, it work significantly in
external environment. This kind of dynamic environment trade with having touch with business

by enabling strategy. Flux is a phase which is characterised by management. It making a gap in
marketing aspects and making business delivering.
Company Tesco has to make decisive improvement by recognising gap and alteration
strategy. The senior management team of Tesco is able to make an agreements relating to
strategic drift occurs. Transformational changes or death is their in recognising need of
management when business fails(Ireland, 2001). The recognition is made by external leaders
about implementing change. This phase comes too late in business operations.
Mission and vision statement are aligned to the demand of the marketplace
Vision statement is defined for the future aspects. Its main purpose is to focus on
tomorrow on making objective of an organisation wants to become. Mission motive is to deal
with today in assuming what an organisation has to do. Company mostly uses this two mission
and vision statement. Both are leading for a definite purpose and meaning.
As per strategic consultant, Tesco is directing with a competitive business driving
direction in today and tomorrow with the concepts of an organisation(Ketchen and Shook,
1996). Then they has to come in drive by using both in distinct ways. Company has came into
force by having breaking down statement by rounding better understanding and building
confidence.
Vision Statement: As per the demand of market place, company used to focus on customer needs
and wants by providing satisfaction. This statement is aspirational, used in business. As per
consultant, Tesco is facing face different question regarding with future prospects make by
vision are consider as under.
 Firstly company has to focus on company hopes and dreams that what to be fulfil.
 Secondly they has to resolve certain problems for greater achievements.
 Thirdly to make assumption in making change by inspiring others.
This questions are prepared by company Tesco for promoting growth in both forms internally
and externally. It makes team attentions on concerning with making what matters most for the
company. Board of directors of Tesco envisions by driving success for the company.
The questions are made in a manner of mission with the core of business by forming with
the objectives in shaping company's culture(Mahoney and Pandian, 1992). It is leading with the
present by examining business. It has to prepared by board of directors in this form which are
stated below.

 Firstly to know about what has to do in form of business for directing growth.
 Secondly for making what to serve, Tesco has to find out the demand of customers in
market place.
 Thirdly the way to serve customers, by making customer attraction towards a product.
In this, these three questions are to be fulfilled by managers of company by considering demand
aligned to that market place.
Strategic capabilities of company Tesco
Strategic capabilities that every business wants to achieve by having promotions and
attainment of incomes. This is positioned, by having organisation location and launching of
products according to capacity of company. It is administered with postulate and sustainability of
an individual with a source of declaration. By measuring capabilities of consumers, it lead
growth and improvement in corporate position of business. As per consultant the advice to
company for making pleasant appearance by assuming powers and weakness(Moore, 1995).
Tesco, the organisation gets a meaning by concerning with stakeholders by considering their
point of views in upcoming plans.
Tesco is competing with an insight supermarket company by emphasizing by analysis of
resources. By consulting board of director for improving capacity in grocery market by raising
share of nearest contender. Their are three basic forms that Tesco is using for strategic drivers
with capacity in creating long term value are consider as under.
Generating cash from operations: Company focus is maintained in generating cash
continuously from operations. They are improving profitability with strong working management
which are increased this year. For minimising impact on environment is consider by reducing
transport costs, this suggestion is provided by consulter. The products are supplied with the
means of rounding up of an order. Tesco has analysed forensically by eliminating unnecessary
stock.
Maximise mix to achieve margin: Tesco is leading achievements in this financial year, by
making sustainability in making profits across business. As per consultant, carefully with the
concern managing board of directors has to deal with volume, cost-effectiveness in business.
Company has to build focus by serving core of retail customer by improving accessibility.
Innovation: company lead with this, in day to day activities by responding and listening to needs
and wants in an order to innovate product with aspect to customers. From this, they are devising

new range of products by providing new ingredients by including demand(Papadakis, Lioukas
and Chambers, 1998). As per consultant, Tesco should make kitchen range on dishes by
consulting with the demand of vegetarian and vegan food.
Business Canvass Model to portray describe company within market to its clients
In this model, company describe about certain market clients dealing with strategic
management for developing of existing models. Their are many of elements which a firm assists
in aligning with activities by illustrating trades. The elements are key partners, key activities,
value propositions, customer relationships, customer segments, key resources, channels, cost
structure and revenue streams. Tesco company is using these elements by leading with canvas
model. The model is describe as under.
Key Partners
In this, it is
concern with
knowing who are
their partners and
suppliers, which
kind of resources
they are opting
and activities that
partners are
performing.
Tesco is using
this model in a
way to create
operation by
optimizing and
reducing risks in
delivering to
customers
Key Activities
In this, it refers to
find required
value of
propositions,
channels and
relations with
customers. It is
used by Tesco in
executing
amount. It is
helpful for
creating and
delivering by
dealing with
supply chain to
drive costs.
Value
propositions
It describes how
much value of
product to be
deliver to
customer. It is a
best element of
model to
determine
difficulty of
customer and
resolving it. They
are able to create
packet of
commodity and
services by
making substance
and to particular
customer.
Customer
relation
This element is
based on making
segment of
customer with an
anticipate to set
up and
established. They
create and deliver
their integrated
model costly.
Customer
Segments
they are creating
values in an order
by delivering
goods to various
market such as
mass, niche,
diversified, multi-
sided platform
and segmented
market.

Key Resources
It determines what kind of prepositions require
due to channel distribution and maintaining
relations with customers(Pavitt, 1990). The
resources they are dealing with are either
physical, intellectual ,human and financial.
Tesco creates its value and delivery by
considering with company assets. Their needed
a support for making strategic business.
Channels
this is based on segments to be reach or
integrated by making selection to know which
one is the best. Tesco has chosen channel with
the purpose to make effective cost by
integrating customer routines. They are raising
awareness, evaluation, purchasing power and
delivery items. An organisation reaches to
client through different channels by
distributing value propositions.
TASK4
Strategies that the company could follow to defend its core business
Business is compel with making use of strategies with a define purpose. The objective of
business is specified in leading with growth and improvement. Strategies are used for defending
high level of approaches through out a business(Pearce, Robinson, and Subramanian, 2000).
Tesco is preferring accurate instead of longer explanation in optimising financial performance. In
this, company is comparing with competitors with earning revenues and margins. For defending
core business company uses unique challenges with specific strategies like making identification
in strengthening of product. As per consultant, organisation is focusing on pricing, understanding
use of strategies formation. These all are concern with creating success in market trends. Their
are various strategy used by Tesco are considered as under.
Growth Strategy: This strategy is formulated by innovating products which creative features
with an existing ones. Small scale of company is forcing by making modification in increasing
its product line. Tesco is competing with by making involvement in new technologies. They are
constantly adding new improvement in features of a commodity. New creation in grocery
products of Tesco is devising achievements. Organisation discovers marketing research for liking

its product by customers. As per consultant, board of director is to make focus on customer
requirements which are to be fulfil.
Product Differentiation Strategy: This strategy is opt by making advantage in competitive
market. Product manufacturer is their to define themselves with making superior designs which
is opted by Tesco. Company is making different strategies in an order to build loyalty. It is made
in a form to distinguish product with competitive company product. This is made by company in
preferring superior quality and service of product(Teece, 1997). Company Tesco has to follow
this strategy in a manner to make best use of it by reducing overload of dealing with competitive
market. Due to this strategic support company can differentiate product.
Price-Skimming Strategy: It involves charging high rate of prices for a product introducing
phase. Tesco is working rapidly and recovering production and its advertising costs. Company
makes steep price of product by making something special in that. This skimming strategy is
made at higher prices by selling a single product with solar panels. Drawback is tends to which
company is fashioning wide contest with relating products. Tesco is generating profits by
enterprising individually in producing products. Production made by Tesco is a manner to reduce
costs. They are opting new technological use for gaining purpose. Nowadays customers wants to
opt use of solar panels. As per consultant, company Tesco has to introduce new type of solar
panels.
Acquisition Strategy: Company Tesco leading with extra amount of capital in gaining
competitive advantage. This is based on acquiring another company or its product lines. Tesco is
dealing with grocery items which they are comparing with chain to extend its business by using
Midwest operations. Tesco company is leading with this strategy by having defend by using in
its core business. This strategy is most vital for an organisation to follow with. For having large
amount of competitive market, Tesco should make its image in grocery product. Market is
making wide achievements by having use of acquiring strategy.
TASK 5
Recommendation for the company
As a strategy consultant of Tesco, there are various tools and techniques which should be
used by the board of directors for the better strategy and management(Pisano, 1997).
Organisation can improves its planning so that it can minimize its operational expenses which