Strategic Analysis of Tesco: Macro, Internal, and Competitive Forces

This report provides a comprehensive analysis of Tesco's business strategy and management. It begins with an introduction to business strategy and its importance in a competitive market. The report then delves into PESTLE analysis to examine the impact of the macro environment on Tesco, followed by an analysis of the internal environment using SWOT analysis. Porter's Five Forces model is applied to evaluate the competitive forces within Tesco's market sector. The report also explores strategic planning, incorporating various theories, concepts, and models to devise strategic plans for Tesco. Furthermore, it examines the development of a strategic management plan with tangible objectives and tactical priorities. The report concludes with a critique and interpretation of information and data, applying environmental and competitive analysis to produce a set of valid strategic directions, objectives, and tactical actions. Throughout the analysis, the report uses relevant frameworks and models to provide a detailed understanding of Tesco's strategic position and potential for growth.

Business strategy and
management

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................4
P1: Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies..............................................................4
PESTLE analysis of Tesco:.........................................................................................................4
M1: Critically analyse the macro environment to determine and inform strategic management
decisions......................................................................................................................................5
M2: Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set..........................................................6
P2: Analyse the internal environment and capabilities of a given organisation using
appropriate frameworks. ............................................................................................................7
P3: Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation............................................................................................................9
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes.............................................................................................................................11
P4: Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation.............................................................................................................12
M4: Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives..................................................................................................................................14
D1: Critique and interpret information and data applying environmental and competitive
analysis to produce a set of valid strategic directions, objectives and tactical actions.............17
CONCLUSION .............................................................................................................................19
REFERENCES..............................................................................................................................21

INTRODUCTION
Business strategy is a major planning and policy formulation based framework which
helps a company to deliver best and focused business practices. In the era of stiff competition
between companies, it is essential for international and national companies to develop focused
decision making based approach. In the recent times, it is one of the crucial roles of a business to
support business strategy development in order to gain desired success at the marketplace. In this
project example of Tesco is taken into consideration for better understanding business strategy
development and its dimensions. The Tesco company is currently performing business
operations in the international and national marketplace. Tesco company was established in the
year 1919 and is performing worldwide operations in the international marketplace by providing
retail products and major services.

TASK
P1: Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies
PESTLE analysis of Tesco:
PESTLE analysis is a major framework which helps a company to briefly analyse the
external environment of company(Magerakis, and Habib, 2021). It is most important factor
which helps a business to move ahead of competitors and analyse the external environment in a
precise manner. The PESTLE analysis is performed by all major companies in the recent times to
evaluate development of external environment. PESTLE analysis of Tesco company is
mentioned below:
 Political factors- Political factors are most important factors that are should be evaluated
and assessed by a business entity. It is key role of a business to take help and support of
political factors in order to conduct ethical business. They are related to corporate laws
and policies framed by government. This is one of the key roles of government of United
Kingdom to provide relaxation to UK based national and international companies. The
business should formulate its key strategies according to contemporary environment and
functioning of government in order to develop focused business practices.
 Economic factors- Economic factors are related to recession, inflation and depression
rates which are prevailing in the economy(Martinez Hernandez, Sánchez‐Medina, and
Díaz‐Pichardo, 2021). The main approach related to a business also supports economic
functioning of business to develop market growth. Economic factors also helps a business
to increase the Gross Domestic Product and national income of country. To develop key
functions of a business, it is necessary role of the research and development and financial
management to increase focus on analysing economic conditions of the country. Demand
and supply of key products is also necessary to be analysed by a business entity in order
to develop focused goals and objectives. In the business, economic factors also helps in
understanding key aspects of business development opportunities.
 Social factors- In order to meet the demand and supply of customers, it is necessary for a
business organisation to take support of economic factors. Main role of a business
organisation like Tesco is to evaluate key perspectives associated with social factors in

order to develop culture and traditions. Company also analyse the role played by social
factors in order to understand customs and rituals of society.
 Technological factors- All main global and domestic companies should analyse the
importance of technological factors. These factors support a business to perform quick
and accurate functions and tasks. The technological factors are considered as key factors
that impact majorly on business development(Leischnig, Wölfl, and Hein, 2017). Tesco
is using advanced computer systems and software to perform quick and effective
functions. The technological factors are also helpful in making a business more dynamic
and competitive. The application of major and technology based approaches should be
formulated by IT department of Tesco. The efficiency of company will be increased with
the help of technological tools and techniques. The development of customer relationship
management software will also support companies to increase chances of systematic
progress. If the company will practice on developing management information system, it
will benefit the whole business. Also the Tesco company can take help of decision
support system in order to take key decision with artificial intelligence.
 Legal factors- In the corporate world, many business entities analyse legal factors to
develop and formulate key and major practices. This is key role of a business to support
development of legal factors in order to perform legal business functions. The rules and
regulations formulated by local authorities are also necessary for a business to be
considered by Tesco in different countries. The legal factors are associated with key law
based frameworks that are essential for making a business legal and effective. It is one of
the major roles and responsibilities of business to focus on implementation of legal
factors to increase effective approach.
M1: Critically analyse the macro environment to determine and inform strategic management
decisions
Analysis of macro environment for a business is very much essential in order to increase
chances of competitive growth. The macro environment of a business also includes specific
patterns that are analysed by a company to lead the competition. Tesco company is involved in
investigating external environment to take strategic actions. Decision-making of company is also
done according to contemporary business environment. Analysis of all major factors which are
related to macro environment should be analysed by a business to develop best business

practices. The analysis of macro environment is helpful in increasing chances of competitive
growth and expansion of company. External environment of Tesco also involves development of
major operations like key focus on business like operations management and control main
functions. The strategic management of a business is mainly responsible and liable for
performing key operations like taking decision, guiding employees business planning and
development. Macro environment is considered by Tesco to develop majority of decisions in a
well defined manner. The decisions of an organisation must be taken according to role of main
employees and their perception. All 11 countries in which Tesco is currently operating, should
mainly follow particular approach to deal with effective decision making. Assessment and
evaluation of external environment is the most appropriate approach which could impact on
planning. The plans and policies of a company are totally based on analysis of external and
internal environment(Khalifa, 2020). Key function of a business entity is to implement major
factors and approaches which are essential to be determined to develop policies and set of
regulations. The macro environment related development analysis should be performed by a
business to develop effective and major operations. Strategic management based planning is
most crucial aspect and result of analysing the external environment. Main focus of a business
entity should be on increasing chances of growth and development on the basis of internal
factors and their analysis. The companies are also playing a major role in increasing the growth
based opportunities by evaluating internal environment.
M2: Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set.
The analysis of external environment of a business is helpful for a business in order to
develop competitive approach. In order to analyse internal environment, it is main task of a
business to develop professional approach in evaluating internal environment(Munandar, 2017).
Main strengths and weaknesses of Tesco and their analysis is important for Tesco to include
marketing and other business operations. Most of the times, key external factors which are
associated with business impact on its functioning to increase chances of competitive
development. The main strengths and weaknesses and their assessment are also helpful in
expansion and opportunities development. Key role of management of a business is to focus on
SWOT analysis framework to determine major strengths and weaknesses. The application of
SWOT analysis makes a company more dynamic and well performing at the marketplace. All the

successful companies at the marketplace develops SWOT analysis to in order to analyse key
factors. The SWOT analysis of Tesco company is helpful in analysing key situation of
marketplace by development of major factors that are included in strengths and weaknesses.
Main role of a business is to focus on weaknesses in order to overcome them in a specified
period of time. Weaknesses of Tesco are most essential to be decreased in order to perform the
performance driven approaches. Main role of a business is to support the strengths and
weaknesses in order to increase chances of competitive growth. The focused business operations
are the key to success and overcome the weaknesses in a set period of time. As of now, Tesco
needs to analyse the internal capabilities for increasing growth and development based chances.
P2: Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks.
It is essential for a business entity like Tesco to perform key operations according to the
nature and analysis of internal environment(Latifah, Setiawan, and Rahmawati, 2020). Most of
the successful companies at the marketplace focus on development of internal environment based
approach which is helpful in further development of strategies. Most of the successful business
organisations in the global and domestic marketplace focus on analysing internal environment in
order to develop successful business. The analysis of internal environment of Tesco is performed
with the help and support of SWOT analysis:
 Strengths- The strengths are internal capabilities of a business firm which makes it
unique at the marketplace. In order to analyse strengths, Tesco company is taking support
of skill development in its employees to increase its strengths. Marketing management
and human resource management are two major strengths of Tesco which are helpful in
increasing business development(Navissi, Sridharan, and Evdokimov, 2017). Marketing
management is also one of the major strengths of company which increases chances of
competitive growth.
 Weaknesses- Key weaknesses of a company makes it less competitive at the marketplace
in order to increase chances of stability of growth. The main weaknesses which are faced
by a business includes, operational management and supply chain management. After
Brexit the financial initiatives which are taken by Tesco are amongst the major
weaknesses that company has faced. Key role of a business is to analyse the employee
participation and engagement in order to develop chances of growth and success. The

business organisation should also increase key approach related to competitors and their
strategy for evaluating the strategies which are helpful in dealing with major hurdles and
obstacles.
 Opportunities- In the functioning of a business, opportunities are major golden chances
which helps in expansion and growth. Increasing scope of business in different countries
all across the globe is one of the major opportunities which is available to
Tesco(Iruthayasamy, 2021). The company is ready to face its competitors also with major
effectiveness to deal with key competitors. In order to take advantage of opportunities, it
is key role of management of Tesco to put emphasis on its functions and make them its
major strengths. The different business organisations which are competing with Tesco
should also eliminate chances of growth and development for increasing a major focus on
analytical frameworks. The planning and strategies which are related to competition are
also helpful in increasing the chances of competition.
 Threats- Threats are key obstacles and hurdles which are faced by a business entity
which negatively impacts on company. In order to deal with the threats, Tesco is taking
assistance of Strategic management. Risk management strategy is also developed by
Tesco to increase chances of eliminating risk associated with operations. Competitors are
major threats for Tesco which are mainly Walmart and Marks and Spencer. The strategic
approach of Tesco is also main reason the way in which company deals with issues. In
order to gain competency edge, it is key role of management of Tesco to take support of
dynamic functions. All major companies which are more competitive should essentially
develop major policies which are beneficial for whole organisation. Key parameters of
business development are to be measure by Tesco to be more successful in key operations
that are futuristic and reliable. In order to handle all major threats, the top level
management of Tesco along with the higher level authorities to develop strategic actions.
The threats should be also faced by a business entity by increasing chances of
competitive growth. It is major role of concerned authorities of Tesco to enhance capacity
of employees by providing them effective training and development so that they can deal
with available consequences.

P3: Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation.
The application of Porter's Five Forces model is one of the major concepts which helps a
business entity to increase chances of growth and stability(Hristov, and Appolloni, 2022). This
approach is helpful in providing competency edge to the company and also supportive in making
it more flexible. Porter's five forces model is a crucial approach which contains key and effective
elements that are appropriate for overall development of a business. In the recent times, many
companies at the marketplace use this model to understand key aspects of business functions. In
order to increase efficiency and effectiveness of a business entity, it is necessary to take
advantage from this model. In the era of stiff competition between various companies, Porter's
Five forces analysis is the crucial frameworks which provides data related to competition based
factors. The companies should implement this model in order to increase more competitive
approach in managing business tasks in a precise manner. The application of Porter's five forces
model for Tesco company is mentioned below:
 Bargaining power of buyers- The bargaining power of buyers is considered as key
approach which states the capacity of buyers to negotiate. It is essential for a business
entity to take support from buyers in every case to increase sales. In the case of Tesco,
bargaining power of buyers is high as there are many companies present in the retail
sector. The supermarkets are dominated by many companies in United Kingdom and
customers are having more choices(Oldman, and Tomkins, 2018). The main role of a
business is to provide quality based products and services to lead the competition. Main
role of various organisations is to analyse the bargaining power of buyers to lead the
competition. Tesco company should also provide attractive offers and discounts on major
products and services in order to increase chances of success. Analysis of bargaining
power of buyers is most necessary to be analysed by companies in order to increase
overall product development approach.
 Bargaining power of suppliers- The bargaining power of suppliers is essential to be
analysed by a company in order to effectively develop supply based approach. Main
function of management of Tesco company is to focus on evaluation of bargaining power
of suppliers in order to lead and dominate the competition. If the current data is taken into
consideration then the bargaining power of suppliers has become high. When there was

Brexit, the bargaining power of suppliers became low. This led to inflation in the country
and also demand for purchasing power of customers increased. In that particular time,
companies should develop effective and appropriate approach in managing key functions
and tasks according to contemporary business environment. The key function of a
business is to analyse the factors that can impact on minimising bargaining power of
suppliers. The business entity must also take into account key considerations that are
effective in making business more authentic and customer oriented. The major companies
at the marketplace also analyse business strength of Tesco to deliver focused business
practices. In most of the cases related to Tesco, the company since a long time period has
delivered best business practices which are helpful in increasing competitive environment
based chances.
 Competitive rivalry- This is one of the most crucial points in the Porter's five forces
analysis which helps in development of planning. The competitive rivalry point includes
the companies and organisations which are having close competition with Tesco. The
main competitors of Tesco company are Walmart and Marks and Spencer. Key role of a
business entity is to also analyse the competition based approaches that essential for
development of competitive environment(Galletta, Mazzù, and Naciti, 2021). In the
recent times, all major companies focus on competition to enhance growth based
opportunities. The main role of a business is to set business standards after taking into
consideration role played by virtual business environment. The competitive rivalry is also
one of the key factors that also impacts on business development and demands for more
professional approach.
 Threat of new entry- The threat of new entry is major obstacle faced by different
business organisations at the marketplace. It is major role of a business to focus on
increasing competitive approach to develop majority of business operations. In the case
of Tesco company, the threat of new entry is high as there are many companies planning
to enter the retail sector. In order to eliminate threat of new entries, it is major role of a
business to develop focused strategies and planning. Key role of a business is to also
formulate major strategic actions that are appropriate in making it more effective and
developed.

 Threat of substitute- These are the products which are sold by another companies at the
marketplace and give stiff competition to different companies. Most of the companies at
the marketplace evaluate and analyse threat of substitutes for increasing business
development chances(Prashar, 2018). The threat of substitutes is also one of the key
approaches which needs to be considered by a company for making it more reliable. The
threat of substitutes in the case of Tesco company is very high as other retail sector
organisation are providing key services. The threat of substitutes is considered as key
approach in overcoming major weaknesses which helps in dealing with threats. The
companies are focused on development of strategic choices and actions according to
contemporary business environment.
M3 Devise appropriate strategies to improve competitive edge and market position based on the
outcomes.
Competitors analysis:
This analysis is an important perspective which is used in order to understand about
various kinds of perspectives which is used for developing understanding about aspects related to
competition helping in enhancing positive aspect which is related to competition existing in an
organization(Fraser, 2019). In order to develop more understanding about competitive elements
discussion has been made in relation to Tesco as follows:
Factors Range Explanation
Bargaining power of
suppliers
It is low. As there are huge no. of
providers already existed with
inside the marketplace at
Vatican town wherein they
could convey the uncooked
material.
Bargaining power of buyer It is high. In relation to Vatican town
inside which huge wide
variety of customers and
growing numerous alternatives

over shopping services and
products from numerous
organization.
Threat of substitute It is high in nature. This is primarily based totally
over huge wide variety of
competition gift inside
marketplace render
exceptionally equal
merchandise as TESCO
Partnership Plc gives to their
customers so that organization
can compete with them.
Threat of new entrants This is primarily based totally
over huge wide variety of
competition gift inside
marketplace render
exceptionally equal
merchandise as TESCO
Partnership Plc gives to their
customers so that organization
can compete with them.
(Salehi, and Arianpoor, 2021).
In respective marketplace the
access of corporations is
exceptionally clean so it
proved unsafe to function in
such type of environment.
P4: Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation.
A organization may also undertake one-of-a-kind theories, fashions and idea a good way
to develop strategic marketing plans in only manner consistent with the report. This is so due to
the fact by it control capable of making right evaluation of marketplace, apprehend clients want
and call for and lots of greater. TESCO undertake version that is Ansoff Matrix in addition to