Tesco Strategy Evaluation Report: PESTLE, VRIO, and 5 Forces Analysis

This report provides a strategic evaluation of Tesco, a leading multinational retailing company. It begins by assessing the value of clear purpose, mission, vision, and objectives in setting the organization's strategic direction. The report then delves into Tesco's internal resources using the VRIO framework to analyze its competitive advantages. Furthermore, it utilizes the PESTLE framework to examine the external environment, including political, economic, social, technological, legal, and environmental factors influencing Tesco's operations. The report also applies Porter's Five Forces model to assess the competitive dynamics within the retail industry. Finally, it reviews Tesco's overall strategy based on the preceding analyses, offering insights into its strengths, weaknesses, opportunities, and threats. The report concludes with a summary of the key findings and recommendations.

Strategy Evaluation
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Table of Contents
INTRODUCTION...........................................................................................................................3
1. Evaluate the value of clear purpose, mission, vision and objectives in setting the strategic
direction of organisation. ...........................................................................................................3
Value of Objective......................................................................................................................5
2. VRIO framework of Tesco......................................................................................................5
3. Use PESTLE framework to analyse the external environment of the business. ....................6
5. The Porter’s Five Forces of Tesco..........................................................................................8
4. Based on the above analysis, review the organisation's strategy............................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Strategic evaluation is the process of analysing the strategic plan how well company has
achieved its goal in the strategy. It is considered as analysis tool which is the part of strategic
analysis tool for the organisation. It consist f two segments that is 'Track and Plan' (Alharbi,
Atkins and Stanier, 2017). Tesco is the British multinational retailing company of UK. It was
founded in 1919 by Jack Cohen. Tesco is now operating in more than 11 countries in all over the
world. There are about 4,50,000 number of employees who are working in the company. This
report covers value of clear purpose, vision, mission and objectives of the company. Then it
access the competitive advantage by using VRIO framework. It covers PESTLE analysis of the
company. Also , there is porter's five forces model and one organisational strategy reviews is
used based on the analysis.
1. Evaluate the value of clear purpose, mission, vision and objectives in setting the strategic
direction of organisation.
Tesco is the largest retailing supermarket in the market of UK. It was founded in 1919 by
Jack Cohen. Vision statement is the statement which is set by the organisation of what is to
become and achieve in future. Tesco company enjoys long term success and they are focused
business. So there vision is constant but its business practises and strategies are are changing
according to the dynamic environment. Tesco vision is to be most highly valued among its
customers, suppliers, shareholders, colleagues and the market in which it operates. Mission
outlines company's goals, strategy for reach on those goals. The mission and purpose of the
Tesco company is “ Company make what is better , together” Like mission, value is also
important for the every company because without values business cannot achieve competitive
advantage in the market (Alnazer, Alnuaimi and Alzoubi, 2017). The values of Tesco company
are company treat the customers as they want to be treated. They use their scale of goods and
services, no on tries harder for customers, company would lead in reducing food waste globally,
company support local communities. There is the importance of purpose, mission, vision and
objectives of the company. These are discussed below:
Value of Mission statement
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As mission of the company is “ Company makes what matters better , together”. So to
work on this mission leaders of the company should tells the current mission to the employees
working in his team. Mission statement is made for the employees and managers of the
organisation. So that they work according the standards maintained. Strategic planning involves
changing of mission statements according to the changing direction of the organisation (French
and Gordon, 2019). Mission highlights the benefits of the change and minimise the defeciences
helps the employees or workers. Another importance of the mission statement is that it describes
the company's mission for the present and for the future both. So, if company wants to do change
in the organisation then it may revise the mission statement.
Value of vision statement
Vision is like mission statement, they helps the company to identify organisational
purpose. The vision of Tesco is that it needs to be most high valued in the market and serve its
customers with high quality. Tesco visions consist of five elements that is a growing business
full of opportunities, use of modern, innovative and ideas. Aspiring and earning trust of the
customers and communities. Vision statement is important because it gives directions to the
employees and provide them inspiration. Strategic plans require marketing strategy which
includes vision of the company and helps the customers to work with the organisation. It is the
view of future with hope and positive outlook (Greitemann and et.al., 2015). For example- vision
helps the Tesco company to describe its inspirational and long term plans which they need to
accomplish, how and who they can help and how this can be achieved. Visions helps the
company in giving description of what they are working towards.
Value of purpose
The main purpose of the Tesco company is “Serving shoppers a little better every day”.
Then company focuses on the serving customers better. The importance of purpose in any
organisation is that it understand customers, acting responsibly with communities and suppliers.
The purpose is most important for any company because it is the goal which need to be achieved
by the company. This helps the company in engaging the employees in the activities performed
in their (Walter and et.al., 2018). Then it automatically results in increasing employees
productivity and potential, at last it leads to increase in profitability of the company.
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Value of Objective
The main objective of the company is to maximise sales and profits. Tesco company aims
to make cheaper price for the middle class people. They can do this by cutting prices and
offering more in the stores. Company aims to provide online shopping facilities to customers.
They provide groceries, clothing and electronic products to the customers (Henríquez-Dole and
et.al., 2018). The importance of Objective is that it provides guidance to the organisation and
employees both. It measures and records the performance done by the organisation. For
example- company has make an objective that they have seen a increase of 3.7% in staff
accidents rate within distribution. So for this they take steps towards tackling this situation and
they are confident that they could meet that target.
2. VRIO framework of Tesco
VRIO framework is the tool that is used by the organisations to analyse the internal
resource of the organisation and they have to increase the competitive advantage (Harford and
et.al., 2016). The organisations are having different tool that will help them to analyse the
internal and external environment like PESTEL, Porters five forces, VRIO and they will help the
organisation in making the plans to improve the performance. VRIO is used to analyse the
internal factors of the organisation and it was founded by Barney J B in 1991 and it means the
the organisations should have resources for the competitive advantage. The organisation should
have resources that are valuable, rare, perfectly imitable and non substitutable. The full form of
VRIO is valuable, rare, costly to imitate and organised.
 Valuable- The organisations are having many resources and they are increasing the cost
so they should increase the performance. They should add value to the organisation an
helps in reducing the cost. If the resources are valuable they should give good products to
customers. They will increase the differentiation in the organisation or reducing the
prices of the products. It will help the organisation in competitive advantage. The
organisation should reduce the resource that are increasing the cost and they should be
help in increasing the performance. The organisation should analyse the internal and
external factors that will help the organisation to give products to customer.
Tesco is the large organisation and they are having many resources which will help them in
increasing the performance. The organization should have the resources that are helping them in
giving quality and they will have to attract customers.
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 Rare- The resources that can be sued by few organisations are rare and they will help in
increasing the performance. The organisations will have the competitive advantage
because they will have the resources that will help them in getting what they want. They
are the resource are increasing the cost of the organisation so they should be give the
profits. The organisations will achieve success when they have good products.
Tesco is having the skilled employees that are helping in attracting customers and they will give
good products. The organisation is having many department that are working together to achieve
success (Wang, Wang and Wang, 2017).
 Costly to imitate- The organisations are having resources that is costly to imitate and they
are increasing the performance. The resources are limited and the organisations will not
purchase because they are increasing the cost. The imitation of the organisation is in two
methods like duplicating and providing compatible products and services. The
organisations are having costly resources because they are having the resources that are
according to the culture and they are the most important factors for the needs of the
organisation.
Tesco is having resources that are costly by the organisations to imitate and they are
increasing the performance (Guo and et.al., 2018). The organisation have to give quality
products to customers and they will help them in analysing the performance of the organisation.
 Organised- The organisations should have the resources that are organised and they are
helping them in increasing the quality. They will have the competitive advantage when
the resources are helping the organisations in increasing the performance.
Tesco is the organisation that is having many employees that are helping in increasing the
performance. The organisation is having many resources and they should organised and it is
involving the cost. The employees should help the organisation in giving good products.
3. Use PESTLE framework to analyse the external environment of the business.
PESTLE analysis is the analysis of the brand to identify the external factors which can
affect the business environment. This analysis consist of various factors which are Political,
economical, social, technological, environmental and legal factors. These factors highlights the
different scenarios that can impact the business environment. This analysis helps the Tesco
company to understand market dynamic and improve any issues that is faced by the business. Let
discuss in detail about them:
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 Political factors: Tesco is one of the largest company in UK markets. Now it is operating
various countries offering its products and services. Company follows various rules and
regulations made by the government of every country to ensure safety of its products and
services. As company is operating in across all over the world, it needs to keep in mind
the changing policies of the local government to maintain its political stability (Lee,
2015). For this Brexit is the best example as due to this new regulations came of so there
will be decrease or increase in sales of the company. Another example is change in tax
policy can affect the profitability of the company.
 Economical factors: The another factor is Economic factor which plays a major role in
affecting the consumption of wide range of products. Tesco keeps a eye on the economic
changes that is occurring in the different countries because these factors can seriously
affects the company's revenue, sales and profits. Company should be aware of the various
taxation policies that are coming in the country. In addition, companies market is
expanding all over the world but its major share is coming from UK only. Tesco needs to
considered the major factors like inflation rate, under pressure, product for daily use,
prices of products should be set accordingly. Then only it can attract more customers and
its sales.
 Social factors: This is considered as the another factor which consist of customer taste
and preferences. Due to busy life schedule, there is the trend of bulk buying, people
prefers to buy a products for about 1 months or week. Tesco is working on these needs of
the customers. It has shifted from food products to the non- food products. It is offering
clothing brand and electronic products also to the customers (Moutinho and Vargas-
Sanchez, 2018). With the change of customer towards organic products, Tesco also focus
on producing organic products to the customer so that it can increase customer
satisfaction.
 Technological factors: Due to the dynamic environment, company also changes itself by
using modern technologies. Tesco has experiments various techniques and is able to
achieve success in the technological field. By providing online shopping facilities, social
media promotions and taking feedbacks etc. helps the company in improving their issues
and providing them offers and discounts.
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 Legal factors: Due to change in government policies, company needs to focus on both
local and international laws across the country. For example- Food retailing commission
has made certain rules and regulations that is to be followed by the members of company.
The recent update is record for the company is that it is sued for unequal pay between
men and women working in the company (Shilbury and et.al., 2020.). Then these news be
considered by the company to maintain its reputation.
 Environmental factors: In the present time there is a pressure on companies to address
environmental issues, to decrease this pressure Tesco adopt many policies which would
be beneficiary in future for the society. Tesco is clearly committed to reducing its carbon
footprints by 50% by 2020. Also Tesco is minimize the waste produced in their stores by
increasing social conscience in customer. Over the past year the company has changed
800 product and helped in reducing the waste of 4000 tons of plastic waste, that is hard to
recycle. This step helps to the society to reduce the environmental pressure.
4. The Porter’s Five Forces of Tesco
The organisations are having many factors that will affect the performance. The porters
five force is used for analysing the external factors that will help in improving the performance
of the organisation. There are five factors of the porters five force and they are bargaining power
of buyer, bargaining power of supplier, threat of substitutes, availability of alternatives and
barriers to entry. The organisations will have to analyse the performance that will affect the
competitive advantage and helps in giving good products.
 Bargaining power of buyers- Tesco is the large organisation and they are having many
customers in different countries. The bargaining power of customers is low because they
are giving products at the lower prices and they are one of the largest retail outlet in UK.
Tesco is the organisation and they are having B2B and B2C customers because they are
giving good products. The organisations are having different products that are attracting
the needs of customers. The bargaining power of customers is low when the suppliers are
less and they will have to purchase the products. The organisation should help the
customers in getting good products that will in improving the performance (Morejón and
et.al., 2017).
 Bargaining power of suppliers- Tesco is having many suppliers in different countries and
they are having the bargaining power low and it will not affect the performance of the
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organisation (de Souza and et.al., 2019). The organisation is reducing the cost and they
are giving profits to customers that will help them in giving quality products. The
bargaining power of suppliers is low when the organisation is improving the
performance.
 Threat of Substitutes- The organisations are having many products and they have
substitute that will attract customers. The substitutes are increasing the needs of
customers and they will purchase the products of the organisations (Gipson and Baver,
2016). The organisations will have to give good products. Tesco is having many products
and they have substitutes that are helping them in increasing the performance. The
organisation is not having threat of substitutes because the products are at the lowest
price and they are attracting customers.
 Threat of competitors- The organisations have many customers that will affect the
performance. They have to analyse the performance and give good products. Tesco is the
large organisation and they are having products that are increasing the performance. The
competitors are attracting customers by promotions and they are giving products to
customers.
 Threat of new entrants- The organisation is in the industry which is making it attractive
for the businesses to enter. There are many methods used by the organisation to enter to
the new industry and they are increasing the cost of the organisation. The employees have
different factors like the political conditions, the economical factors and the price of the
products. The threat of new entrants for Tesco is low because it is costly for the
organisations to enter the industry. The organisation is having products at the prices
which is lower in the industry and they are having many employees which is helping in
increasing the performance (Kwon, Onoda and Oh, 2019).
5. Based on the above analysis, review the organisation's strategy.
Based on above analysis, company is using PESTLE analysis strategy to operate its
management. As PESTLE analysis helps the company in identifying external factors which can
helps the business in cresting opportunities and threats. It is very useful for every organisation to
conduct PESTLE analysis prior when it has to start its business company needs to expand in any
different country. It is important for the company to know what are the political, legal,
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economical, technological and environmental factors which needs to be considered in mind
while running a business or for the sustainability of the company. By identifying external factors
company can able to identify customer's needs and demands (Uygun, Kaçamak and Kahraman,
2015). Also, company can work on the improvements for the products and sustain in the market
for long period. By this customer satisfaction increases and this results in increasing company's
profitability and revenues.
CONCLUSION
From the above report it is concluded that the organisation are having many employees
that will help them in increasing the performance. The organisation is having many factors that
are in the internal and external environment and they will help the organisation in increasing the
needs of customers. The organisation is having different products that will help them in
attracting customers. The employees of the organisation will help them in giving good products.
The organisation should analyse the performance of the employees that will help in increasing
the needs of customers. They will help the organisation in giving good products. The
organisation will have to increase the performance.
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