Detailed Analysis of Tesco's Business Strategy: A Comprehensive Report

This report provides a detailed analysis of Tesco's business strategy, examining both its internal and external environments. It begins with an introduction to business strategy and its significance, followed by a PESTEL analysis that assesses the political, economic, social, technological, environmental, and legal factors impacting Tesco's decision-making. The report then evaluates Tesco's strengths and weaknesses, followed by an application of Porter's Five Forces model to assess the competitive landscape, including threats from substitutes, competitors, buyers, suppliers, and new entrants. Part B of the report focuses on strategic planning, exploring strategic directions available to Tesco, such as international expansion and retailing services, with an evaluation of the strategic direction and a recommendation for the best growth strategy. A strategic management plan is outlined, including strategies, objectives, and tactics, culminating in a conclusion that emphasizes the importance of business strategy for achieving organizational goals. The report references various sources and provides a comprehensive overview of Tesco's business approach.

RUNNING HEAD: Tesco Business Strategy
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Business Strategy

Tesco Business Strategy 2
Table of Contents
Introduction.................................................................................................................................................3
Part: A..........................................................................................................................................................3
Analysis of internal and external environment of Tesco.............................................................................3
Introduction and significance of strategy in Tesco..................................................................................3
PESTEL analysis on Tesco and assess the impacts on decision making....................................................4
Political................................................................................................................................................4
Economic.............................................................................................................................................4
Social...................................................................................................................................................4
Technological.......................................................................................................................................4
Environmental.....................................................................................................................................4
Legal........................................................................................................................................................4
Analyze strength and weakness of organization......................................................................................5
Analysis Porter’s Five Forces model.........................................................................................................5
Threat of substitute.............................................................................................................................5
Threat of competitors..........................................................................................................................5
Bargaining power of buyers.................................................................................................................5
Bargaining power of suppliers.............................................................................................................5
Threat of new entrants........................................................................................................................6
Part: B..........................................................................................................................................................6
Strategic plan based on internal and external analysis of organization.......................................................6
Strategic directions available to Tesco....................................................................................................6
Evaluate strategic direction.....................................................................................................................6
International Expansion.......................................................................................................................6
Retailing services.................................................................................................................................6
Recommendation for strategy.................................................................................................................7
Strategic management plan.....................................................................................................................7
Strategies.............................................................................................................................................7
Objectives............................................................................................................................................7
Tactics..................................................................................................................................................7

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Conclusion...................................................................................................................................................7
References...................................................................................................................................................7
Introduction
Business strategy may be defined as a long-term plan of activities created to accomplish a
specific objective or set of goals or mission (Campbell et al., 2011). This report explains the
business strategy of Tesco and examines the influences of macro environment on the
organization and its business techniques. The report evaluates the organization's internal
environment and the key components abilities. The report also assesses and apply Porter's Five
Forces model to given market condition.
Part: A
Analysis of internal and external environment of Tesco
Introduction and significance of strategy in Tesco:
According to Samy et al. (2014), Tesco Company is a British multinational grocery and general
stock retailer and was built up by Jack Cohen in 1919. Tesco has stores in 12 countries over Asia
and Europe, it is the grocery market pioneer in the UK. Tesco has the widest range of food for
any retailer in the UK. It has two basic principal support brands that is Finest and Everyday
Value goes, each offer over £1 billion reliably. The business strategy of Tesco is good, and well-
known as the organization is the third largest retailer in the United Kingdom and also better for
customers. Tesco has a portion of the standards and theories that the association is functioning
better than their rivals. The fundamental business strategy of Tesco is the focus to enhance its
business procedures to consumer loyalty, ease of access of personnel, investment in cheaper for
Tesco (Meskendahl, 2010).
PESTEL analysis on Tesco and assess the impacts on decision making:
Political: Tesco has its impacts in developing business chances, and it also, become establish the
requirements for its item and increase the labor force (Metzger, 2014).

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Economic: The economic factors are the basic reason of worry for Tesco, as they are considered
the most likely to use prices, requirements, and advantages. Hence, the company must aware
about adaption in approaches, such as, modification in tax rates or other element that could
impact the availability of finance.
Social: Due to variety of social changes, patterns show that consumers in the UK have
encouraged towards mass shopping and one-stop shopping. Thus, Tesco has the widest range of
non-food offered for sale.
Technological: The advancement in technology has comes out with new opportunities for Tesco.
Recently, the UK's biggest retailer is concentrated on changing its local business through a
capital-intensive program of store repairs and a potentially margin dilutive drive on the web.
Environmental: Tesco is commit to reduce its carbon impression 50 percent by 2020. Also,
Tesco is diminishing the waste disposal in the stores by enhancing social conscience in
consumers.
Legal: Legitimate rules and regulations also influence the execution of Tesco. To promote
current practices, company gives its consumers cost decreases on the fuel they buy, in
accordance to the amount spent on their supermarkets.
On the other hand, PESTEL analysis is a review of a company's ecological impacts with the
reason for utilizing this data to guide decision-making process. The PEST analysis is broadly
utilized among firms and concentrates on the outside variables rather than inside elements. The
impacts of PESTEL enable Tesco to facilitate the following strategies:
 A comprehending of the broader business environment.
 It can empower the organization to predict future business dangers and take appropriate
action to overcome or diminish their influences.
For example, Tesco is attempting to enhance their communication procedures to arrange their
worldwide operations, to improve utilization of their correspondence and data frameworks in
order to exploit the present information-based economy.

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Analyze strength and weakness of organization: According to Helms and Nixon
(2010), the analysis of strength and weakness of organization is explained below:
Strength:
 Leadership superiority in the United
Kingdom
 Efficient web-based operations
 Powerful property portfolio
Weakness:
 Weak financial execution
 Dependence on the UK market
 Reduced representative assurance
Analysis Porter’s Five Forces model:
Threat of substitute: Small sector stores or profitable stores can make bother for the
organization as they may satisfy the requirements of consumers. Moreover, the possibility of
threat for company is less because Tesco has created their brand image personality. (E. Dobbs,
2014).
The threat of competitors: This factor is considered as the important element for the
organization. Other retail giants like Sainsbury, Wal-Mart, and ASDA has create the big level of
competition for the cited organization.
Bargaining power of buyers: Because of availability of substitutes and other retail places,
bargaining power of customer is high. The company is needed to keep the price low and
reasonable for capture the real part of the market.
Bargaining power of suppliers: Tesco is struggling as due of high competition, the suppliers
may get an edge on the company. The retail giant has to establish a powerful connection with
them with respect to get products at competitive price.
Threat of new entrants: The entry barriers are very small in the retail industry, but Tesco
require not to concern as to reach up to their market share or brad valve another start up
association needs to put additional endeavors.

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Tesco business strategy 'Every Little Helps' directs its business techniques to an impressive
degree. Tesco business strategy has generally included experimentation with different parts of
the business and this technique changed the general retail industry in the UK to a specific degree.
For instance, Tesco was the principal retailer to present 24-hour shopping knowledge and today
it has a huge number of Clicks and Collects focuses the nation over.
Part: B
Strategic plan based on internal and external analysis of organization
Strategic directions available to Tesco:
 International expansion, for example, in the USA with 'Fresh and Easy' great nourishment
comfort stores.
 Retailing services: for example, online shopping, and financial services.
Evaluate strategic direction:
International Expansion: This strategic direction enables the organization to expand its business
activities across the world (Pinkse and Busch, 2013).
Advantages: Provides a framework for worldwide development
Disadvantages: High risk involved
Retailing services: This strategic direction provides Tesco to offer various services like online
shopping, providing banking facility to their customers for the convenient of products.
Advantages: In-store merchandising
Disadvantages: Rise in price of products
Therefore, International expansion is the best growth strategy for the organization.

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Recommendation for strategy: The reason for recommending internal expansion strategy
is because of this strategic direction generates new revenue potential by assessing large customer
base and also access to a new pool of capable representatives with special skills and capabilities.
Strategic management plan: According to Hill et al. (2014), the strategic management plan
for Tesco includes different factors such as:
Strategies: Tesco has set various strategies in order to accomplish its objectives of being highly
valued by customers, be a great worldwide retailer in stores and online, and to establish its
management with the aim to create more value.
Objectives: The organization should give its consumers by providing the goods they need and
the service they expect.
Tactics: Tesco utilizes mafia-style tactics to compress providers, driving some of the brinks of
bankruptcy.
Conclusion
Form the following report, it has been concluded that business strategy assumes a significant part
in the organization in order to achieve its objectives and goals. This report explains the business
strategy of Tesco which enable the organization to achieve its goals in a desirable manner. The
analysis of different factors such as PESTEL, Porter's five forces model enables the organization
to focus on overall aspect of the business.

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References
Campbell, D., Edgar, D. and Stonehouse, G., Business strategy: an introduction, Palgrave
Macmillan, 2011.
E. Dobbs, M., ‘Guidelines for applying Porter's five forces framework: a set of industry analysis
templates’, Competitiveness Review, 24(1), 2014, pp.32-45.
Helms, M.M. and Nixon, J., ‘Exploring SWOT analysis–where are we now? A review of
academic research from the last decade’, Journal of strategy and management, 3(3), 2010,
pp.215-251.
Hill, C.W., Jones, G.R. and Schilling, M.A., Strategic management: theory: an integrated
approach, Cengage Learning, 2014.
Meskendahl, S., ‘The influence of business strategy on project portfolio management and its
success—a conceptual framework’, International Journal of Project Management, 28(8), 2010,
pp.807-817.
Metzger, K., Business analysis of UK supermarket industry, 2014.
Pinkse, J. and Busch, T., ‘The emergence of corporate carbon norms: Strategic directions and
managerial implications’, Thunderbird International Business Review, 55(6), 2013, pp.633-645.
Samy, M., Odemilin, G. and Bampton, R., ‘Corporate social responsibility: a strategy for
sustainable business success. An analysis of 20 selected British companies’, Corporate
Governance: The international journal of business in society, 10(2), 2010, pp.203-217.

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