Strategic Management Report: Tesco's Internal and External Analysis

This report provides a comprehensive strategic management analysis of Tesco, a prominent retail company. It begins with an introduction to strategic management and its application to Tesco, outlining the company's overview, products, services, size, goals, vision, mission, and SMART objectives. The report then delves into internal and external analyses, including a detailed SWOT analysis identifying strengths, weaknesses, opportunities, and threats. PESTLE analysis examines political, economic, social, technological, legal, and environmental factors affecting Tesco. Porter's five forces model assesses the competitive landscape, including the bargaining power of buyers and suppliers, threat of substitutes and new entrants, and competitive rivalry. The report also reviews Tesco's strategic approach, including cost leadership, differentiation, and focus strategies. The analysis highlights key insights into Tesco's market position, competitive advantages, and strategic recommendations, offering a thorough understanding of the company's strategic management practices and challenges.

Strategic Management

Table of Contents
Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
Strategic Management plan.........................................................................................................1
SWOT analysis............................................................................................................................2
PESTLE analysis.........................................................................................................................3
Porter’s five force model.............................................................................................................4
A review on organisation’s strategy............................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
A strategic management would involve preparation of planning and strategy which assist the
firm in achievement of business objectives in a respective time period (Ansoff and et.al., 2018).
In other words, it hep in planning, organising and directing the activities and also help in proper
allocation of resources to achieve sustainability in a long term. This report is based on Tesco
which is most popular retailing company and it renders several types of offerings such as
groceries and other home essentials. This report covers the internal and external analysis which
aids in facilitating best decisions and assess the availability of resources. This report also
comprises of significance of planning and change management on the basis of cost, sustainability
and risk.
Strategic Management plan
A strategic management plan involves preparation of an appropriate strategy that assist the
firm in attainment of goal in a respective time period (Dawson, 2019). In other words, it is a
continuous process of planning and monitoring the activities in which employees work together
for common purpose. The manager of Tesco implements a proper planning so that the best
decision can be taken that renders future growth in a workplace. In the context of Tesco, the
same is showcased below:
Overview of a company: Tesco is most popular retailing company that is headquartered in
United Kingdom. The company is founded by Jack Cohen in 1919 and it deals with different
categories such as supermarket, hypermarket and convenience shop (Gause, 2016).
Product and services offered: it provides wide range of merchandise such as food products,
groceries and other household appliances and financial services like Tesco Bank, Tesco stores,
Tesco mobiles as well as Tesco Ireland.
Size: It is one of the giant stores that has 4,50,000 employees working at a global level. The
net income of respective firm is approximately £1.320 billion. Also, the concerned firm is
operating in several countries such as Japan, Europe and is planning to introduce its subsidiaries
in USA so as to get maximum exposure around the globe.
Goal: The goal of Tesco is to ensure quality specifications and renders fast services among
their clients so as to make them satisfied and delighted.
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Vision: The vision is to be the most valuable and profitable business across the globe and to
serve the client and employees in a best possible manner which facilitate proper coordination.
Mission: The mission of Tesco is to provide new and creative product amongst the buyers in
a changing environment which ensure satisfaction and generates brand loyalty among them
(Harmon, 2019).
SMART objectives
 To accelerates the sales by 10% within eight months in order to maximise the
revenue in a marketplace.
 To render an effective training among their staff for two months to maximise their
skills and knowledge base and make them capable of handling challenging task and
additional responsibilities.
SWOT analysis
This internal analysis determines the positive and negatives aspects of business and
emphasise on making best use of opportunities by eliminating threats over a marketplace (Hayes,
2018). The manager of Tesco uses this analysis so as to identify the strength and weaknesses and
prepare a best strategy so as to gain rivalry edge within a market. The same is given below:
Strength
 Giant market share: Tesco is well known retailing store in Ireland which has around
27% of share of market in Britain and thus has strong brand image in a marketplace.
 Great diversification: The concerned firm has diversified into various operations in
approximately 14 countries with an around operating its 6800 stores around the world.
 Strong distribution of network: The respective firm has created a mutual relation with
supplier that provide raw materials at a reasonable cost in accordance to the demand
prevailing in the market.
Weakness
 Accounting fraud: The manager of Tesco use window dressing and depict misleading
details regarding the financial statements and thus affect the operational performance of
the company.
 Poor performance in some places: Tesco has not performed efficiently in America
which is regarded as one of the most significant weaknesses within retailing sector.
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 Minimisation of profits: The respect firm follow a low-priced strategy which in turn
decreases the profitability and productivity in case of retailing industry.
Opportunities
 Introduction of online platforms: The manager of Tesco uses social media websites like
Facebook, Instagram and Twitter and its other respective websites to provide an ease and
convenience amongst their client.
 Collaboration: The manager of Tesco is planning to collaborate with local companies
which renders an excellent knowledge and thus aids in improving the overall
performance in retailing sector.
 Partnerships: The concerned firm could form strategic alliances with reputed firm that
minimise the burden and provide a vast opportunity to Tesco deal with excellent
offerings with more varieties so as to grab the attention of more and more buyers.
Threats
 Emerging competitors: Tesco has various competitors such as Walmart, Sainsbury,
ALDI and many more that possess a big threat for the company.
 Impact of Brexit and Corona virus: These pandemics which are not controllable in the
hands of company would result in declining the sales and profit margins as well as
minimise the productivity within the confines of retailing industry.
PESTLE analysis
This provides the framework that assist the environmentalist to scan the external factors
and determine the availability of resources so as to contribute a significant position around the
globe (Helmold, 2019). In relation to this, the senior authority makes a proper planning and make
a significant transformation in a business which provide an enormous growth and vast
opportunities in a corporation. In the context of Tesco, six elements are given beneath:
Political factor: This includes various elements such as corruption, political stability, and
legislations that affect the operations of a company. UK is considered as political stability and
has constant ruling party since a long time. The vote for Brexit has created the negative outcome
especially in case of retailing sector due to this, the sales and productivity decline and thus affect
the overall performance.
Economic factor: This cover factors such as inflation, GDP, demand and supply,
monetary and fiscal policies and many more. Brexit has created an unimaginable chaos and
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adversities which negatively influence the company and the pandemic of Corona Virus has led to
closure of stores which affect the working procedure within the confines of retailing industry
(Hitt, M. and Duane Ireland, 2017). this results in minimising the sales and profit margin.
Social factor: The business environment is dynamic as there is modification in lifestyles
and preferences of customers. The population in UK are diverse in nature as they put more
preferences on quality rather than prices as they are more health conscious. The manager of
respective firm provides good quality of merchandise and make unique products that grab the
attention of user and fulfil their requirements as a result the revenue increases.
Technological factor: This is most significant factor as UK prefers advanced technology
which assist the manager of Tesco to simplify the overall working procedures and conduct fast
operations of a business. The manager of respective firm uses sophisticated machines and
creative technology which improves the overall efficiency and effectiveness in a corporation.
Legal factor: This comprises of factors such as antitrust laws, discrimination laws, health
and safety and employment laws and many more (Johnson and et.al., 2018). It is essential for the
business enterprises to use trademarks and patent so as to provide protection towards intellectual
property. Also, the manager of Tesco uses health and safety laws to promote the interest of
workers and thus facilitates smooth operations of a business and ensure fair and transparency
within retailing industry.
Environmental factor: There is concern towards the environmental aspect in a modern
era as the Government create awareness to provide protection and to maintain proper ecological
balance. The manager of Tesco uses renewable energy source as well as does not use plastic bags
and reuse and recycle the product in order to achieve sustainable advantage in a long run. This
promotes the positive image of a respective firm in different parts of the country.
Porter’s five force model
This model provides the framework that assist the firm in determining the competitive
advancement across the globe. In other words, it ascertains the level of attractiveness and
profitability in the industry (Lewis and et.al., 2016). In the context of Tesco, the five models of
Porter’s are presented below:
Bargaining power of buyers: The extent of this force is regarded to be more due to the
reason that there are various customers present in the market and seeks to demand a different
merchandise and also, they seek for increasing offers and discounts. Tesco would create as well
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as innovates new products in order to gain large access of clients which in turn boost the sales
and profitability within retailing industry.
Threat of substitutes: The magnitude of this element is acknowledged to be high due to
the reason that there are various alternatives available in the market which deal with same
offerings but of high cost. So, the manager of Tesco would emphasise on rendering unique and
differentiated goods or services that adds value proposition to the customers and thus improves
the overall productivity within the confines of retailing industry.
Bargaining power of suppliers: The power of this force is regarded to be low because
there are lot of suppliers that provide easy availability of raw materials among their customers in
a proper time period at an appropriate place (Lin and et.al., 2019). The manager of Tesco would
acquire raw materials in a bulk quantity to minimise the cost of production and maximise the
revenue within the confines of retailing industry.
Threat of new entrants: The extent of this force is regarded to be low as it requires huge
investment which does not allow the firm to enjoy greater economy of scale within a
marketplace. The manager of Tesco has strong financial position and cash flows as well as it
conducts research and development to determine the taste and preferences of customers and fulfil
their expectations. Also, the senior authority would adopt latest technology and provide the
facility of online platforms that provide an ease of convenience among them.
Competitive rivalries: The power of this force is usually low because there are giant
competitors such as ALDI, Sainsbury, Walmart and so on which possess a big threat for Tesco.
The manager of concerned firm would create product differentiation and ensure quality
specifications as well as provide offerings at a reasonable cost which generate maximum number
of buyers and increase the sales over a marketplace.
A review on organisation’s strategy
The senior manager of Tesco would apply Porter’s generic model so that it could gain
competitive advantage as it formulate an appropriate strategy and identifies the target market and
customers. Also, it assists the firm to select an appropriate market and determine the size and
scope within the marketplace (Moutinho and Vargas-Sanchez, 2018). With reference to Tesco,
the manager of Tesco would consider the following strategies which are prescribed below:
Cost leadership: This strategy encompasses the firm to minimise the cost of merchandise
in a competitive era. This strategy allows Tesco to maximise the share of market and thus
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become a significant player in a marketplace. This aids the firm to create a strong global
presence and thus increases the sales and profitability within the confines of retailing industry.
Differentiation: This strategy allows the firm to make unique offerings so as to grab
more buyers within a company. The manager of Tesco would create differentiation in their
merchandise and provide new and innovative offerings which generates maximum satisfaction of
clients across the globe. Also, the respective company would render unique offerings and
determine extensive research so as to create a distinct brand image across the globe.
Focus: It is a sum of differentiation and cost leadership that assist the company to attain a
rivalry position in a marketplace. The senior manager of Tesco would adopt this strategy so as to
determine the taste and preferences of clients which ensure greater expectations and fulfil their
demands. This accelerates the sales and improve the productivity within the confines of retailing
sector.
The top manager of Tesco would consider focus strategy as an appropriate method as it
helps in providing the offerings of excellent quality at an affordable price which provide
assistance to the firm to achieve a rivalry edge over a marketplace. The manager also emphasises
making unique and innovative goods and renders fast efficient services so as to gain maximum
exposure around the globe. Also, the concerned firm also ensure quality specifications that meet
the expectations of customers which in turn boost the sales and profitability within the confines
of retailing industry.
Importance of planning
The manager of Tesco would prepare an appropriate plan by deciding the course of action
among the various alternatives present in a marketplace which assist the firm to accomplish goals
in a respective time period (Uhl and Gollenia, 2016). The benefits and significance of planning
are as follows:
Reduce the overlapping of activities: the manager of Tesco assigns the work among the
subordinates in accordance to their specialisation so that they could work with greater efficiency
and zeal and produces a desired level of output. This help in accomplishment of task in a short
span of time and improve the effectiveness within a marketplace.
Promote creative ideas: One of the greatest advantages is that planning promotes new
and creative ideas and is regarded as an intellectual process. The senior authority of Tesco
considers the ideas and suggestions of employees so that they could make the best decision.
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Help in decision making: The manager of Tesco facilitates best decision and set the
targets in advance which help the firm to make best decisions and help in achievement of task in
a short span of time.
Minimise the risk of uncertainties: Planning assist the firm to make assumptions
regarding future and scan business environment by analysing various factors and unexpected risk
so as to gain competitive position across the globe. This provide an opportunity to Tesco to gain
maximum exposure and generate greater sales and productivity within retailing industry.
Change management
Cost: The manager of Tesco provides wide variety of offerings at a low-cost strategy so
as to gain competitive position across the globe. this maximise the revenue and increase the
profit margin and also it improves the overall productivity within the confines of retailing
industry.
Risk: Every business is associated with risk as it renders the growth in a marketplace.
The manager of Tesco would provide new products in a new segment of market which assist the
firm to achieve sustainable advantage within a marketplace.
Sustainability: The manager of respective firm would create product differentiation and
emphasise on new and innovative products so as to gain maximum exposure across the globe.
Also, the firm provides unique offerings to their clients and create environmental awareness so
as to achieve sustainable development in a long run.
CONCLUSION
It has been comprehended that the business environment in which company carry out its
operation is regarded as dynamic so the manager would adopt appropriate transformations which
provide a vast growth and opportunities within a marketplace. The manager would analyse both
internal and external factors which assist the firm in accomplishment of task within limited time
period. Also, it considers the necessity of planning and change management process which
provide assistance to make proper allocation of resources and thus avoids duplication of
activities.
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REFERENCES
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