Management Report: VRIO Framework Analysis of Tesco's Business

This report provides a comprehensive internal analysis of Tesco, a prominent global retail company, utilizing the VRIO framework. The analysis begins with an overview of Tesco's history, operational structure, and global presence, highlighting its subsidiaries and substantial employee base. The core of the report applies the VRIO framework to evaluate Tesco's key resources and capabilities. The report examines Tesco's product offerings, emphasizing its diverse product portfolio and ability to cater to various customer segments. It also evaluates Tesco's extensive store presence and its contribution to customer reach and marketing effectiveness. Furthermore, the report assesses the significance of Tesco's skilled workforce, focusing on training and development programs, employee engagement, and competitive pricing strategies. By analyzing these factors through the VRIO framework, the report identifies the resources that contribute to Tesco's competitive advantage, highlighting their value, rareness, imitability, and organizational capabilities. The report concludes with a summary of findings and implications for Tesco's strategic management.

Running head: MANAGEMENT
Management
Name of the Student
Name of the University
Author Note

1MANAGEMENT
Table of Contents
Introduction:...............................................................................................................................3
Organizational Overview:..........................................................................................................4
VRIO Framework:.....................................................................................................................4
Conclusion:................................................................................................................................9
References:...............................................................................................................................10

2MANAGEMENT
Introduction:
The significance of the internal analysis is observed to be associated with a notable
increment in the modern world of business. Rothaermel (2013), claimed that the companies
are facing the effect of the globalization through the reduction in the market monopoly. As
the globalization is able to reduce the barriers of interaction between the people across the
globe and enabled the business houses to conduct their business operations with reduced
challenges, the business expansion from various companies is seen to be significantly
prominent. As a result, the competitiveness amongst the organizations in various business
industries is observed to reach its peak in the current century. Under such situation, it
becomes difficult for the established organizations to maintain the sustainability of their
business. With a precise focus on the increasing entry of the new organizations in various
business industries, it is pretty evident that the growth and survival of considerable number of
established organizations are at threat. Under such situation, the managers of the company
have the responsibility of evaluating the capability of their companies for managing the
business competition. The evaluation from the part of the companies for identifying their
capability of the companies is recognized as the internal analysis. The companies operating in
the modern world of business, are observed to be more inclined towards the usage of the
SWOT analysis, VRIO analysis along with the Resource Based Review for evaluating their
capability in managing the significant increment of the business competition (Hill, Jones &
Schilling, 2014). The paper is focused in analysing the business operations of one such
organization named as Tesco, operating in the global retail industry. The paper discusses
regarding the resources and capabilities of the company with precise application of the VRIO
framework. Along with that, the paper provides an overview of the organization for
elaborating the history of its business operations.

3MANAGEMENT
Organizational Overview:
Considering the business operations of the company, it is visible that the selected
organization is one of the leading organizations operating in the global retail industry. The
organization is operating as a public limited company and was established in the year 1919
by an English grocer named as Jack Cohen (Tescoplc.com, 2019). The company is currently
headquartered in Tesco House, Welwyn Garden City, England (Tescoplc.com, 2019). The
company has the capability to serve the customers across different nations such as Hungary,
Ireland, United Kingdom, Malaysia, Thailand, Poland along with Czech Republic. The
company operates in various forms such as the supermarket, superstore, convenience shop
and hypermarket. Along with this, the diversification of the business operations of the
company is seen to be well distributed and that is petty evident with the formation of the
subsidiaries such as the Tesco Stores Limited, Tesco Mobile, Tesco Bank, Dunnhumby,
Spenhill along with the Booker Group. The company is observed to employ 450000 numbers
of skilled employees and that is considered to be one of the important factors contributed in
the success of the company over the years (Tescoplc.com, 2019). Apart from this, the
visionary leadership from the part of the management team of the company which includes
the John Allan, the non- executive chairman of the company and the chief executive officer
of the group, Dave Lewis, is observed to be crucial for the company in generating a revenue
of £63,911 million in the year 2019 along with an operating income of £2,206 million in the
same year (Tescoplc.com, 2019). The company is registered on the London Stock Exchange
and is an integral part of the FTSE 100 Index (Ftserussell.com, 2019).
VRIO Framework:
As mentioned earlier, the internal investigation of the companies for the identification
of the excellence of their resources can be achieved with the application of the tools such as
SWOT, RBV and VRIO. The VRIO framework has greater significance for the companies in

4MANAGEMENT
evaluating the significance of their resources. Knott (2015), claimed that the resources of the
companies are expected to be recognized as capable of providing the desired competitive
advantage if that particular resource is valuable for the company, rare in the modern business
world, costly to imitate by the other competitor organizations and is well organized for the
generation of the value for their customers.
With a precise focus on the concept of the VRIO framework, it is evident that the
product offerings of the selected organization can be recognized as capable of producing the
competitive advantage to the company. The company is observed to have a strong product
portfolio, specifically in the top drive segment where the company sells the equipment. The
company has the expertise of providing six model systems of top drive system and has the
required efficiency in conducting changes on the basis of the customer inputs. Other than this,
the company is observed to gain considerable amount of reputation in serving the fast moving
consumable goods to their customers (Tescoplc.com, 2019). Other than this, the variety of the
products on the basis of the prices and the flavours is seen to be one of the crucial factors for
the success of the company in delivering the products on the basis of the preferences of the
customers. The ability of the company in delivering such diversified products reflects the
strong financial support from the part of the shareholders of the company.
Hence, the capability of the company in delivering such versatile product chain is rare
in the global retail industry. Apart from this, the capability of the company in providing
different products on the basis of the prices and flavours enables the company in serving
various customer groups irrespective of their income levels. Hence the ability of the company
in targeting a larger customer base with the variety of the product offerings is valuable for the
company. As the company has the necessity to invest considerable amount of funds for
developing such diversified product chain, it is significantly costly for others to imitate the
mentioned resource. With the formation of the divisions, the company is able to make sure

5MANAGEMENT
that they efficiently utilize their resource of strong product chain and the well organization of
the resource is visible with the improved operating income and revenue of the company.
Apart from this, one of the significant resources of the company is seen to be the store
presences. The company currently has 6800 number of shops across the globe and that
increases the ease of the company in conducting their business operations (Tescoplc.com,
2019). The strong store presence of the company enabled the company in reaching out to
their customers with the services and the strong product chain. Hence, the particular resource
is seen to be crucial in increasing the ease of the company in serving their customers. Other
than this, the store presence is crucial for the company in conducting the marketing and
promotional activities in an efficient manner. The company has the required infrastructure in
place in the form of the stores for effectively communicating to the customers regarding their
products and services. Hence the availability of such strong store presence is observed to be
significantly valuable for the company in conducting their operational activities and in
conducting the marketing and the promotional activities. Other than this, the development of
the resource is considered to be possible only with the bulk monetary investment from the
part of the shareholders of the company. Thus it becomes costly to imitate for the competitor
organizations and at the same time, the significant cost of the resource makes it rare in the
modern world of business. The divisions and subsidiaries of the company plays a crucial role
in utilizing the resource in the most effective manner and that certainly portrays the well
organization of the company in creating value for the customers with the mentioned resource.
Apart from this, the skill of the employees is considered to be significantly crucial for
the success that the company is able to achieve over the years. The company currently
experiences the service brilliance of 450000 numbers of employees (Tescoplc.com, 2019).
Considering the dynamics of the modern business market, it is evident that the companies are
facing tough competition from their competitor organizations in retaining the customers

6MANAGEMENT
(Hennig-Thurau & Hansen, 2013). Ford & Håkansson (2013), claimed that there are various
new organizations, entering the business industry, with the application of the low prices and
under such situation, it becomes difficult for the established organizations in matching the
pricing. Hence the majority of the established organizations are observed to put strong
emphasis on improving the quality of the operations and creating an improved value for the
customers. Under such situation, the company is observed to be placed in perfect position for
providing quality service to their employees which is prominent with the development of the
diversified training facilities. The company has the expertise of providing the much required
training for three different groups of employees such as the apprentices, graduates and
interns. Having said that, the training for the groups differ on the basis of technique of
training, difficulty and the learning provided to the employees. However, the main objective
of the training facilities of the company is seen to be development of the retail skills of the
employees (Tesco-programmes.com, 2019).
The technical skills of the employees add value to the services offered to their
customers and also play a crucial role in persuading the customers regarding the suitability
and excellence of the products. With the help of the training facilities of the company, the
employees also have the opportunity to improve their soft skills such as the incorporation of
the business ethics, leadership and effective interpersonal communication (Tesco-
programmes.com, 2019). The improvement in the skills of employees has great significant
for the company in improving their efficiency and in improving their capability in serving the
employees in a better manner. Apart from this, the human resource management inside the
organization is considered to be important for the success of the organizations in recent years.
The employees are provided with industry standards wage and the company follows an
appropriate work time characteristics for their employees. Other than this, the company has
the capability to conduct employee engagement sessions which enable the employees to

7MANAGEMENT
manage their work stress in an efficient manner. Apart from this, the reward plan of the
company includes intrinsic and extrinsic rewards for the employees and that certainly has the
capability to motivate the employees of the company. The ability of the company in
developing such efficient employment relations and training and development system
certainly plays a crucial role in improving the sales of the company and in increasing the
profit margin of the company Ford, D., & Håkansson, H. (2013. Hence the mentioned
resource is certainly valuable for the company. On the other hand, the development of the
resource can be achieved with the strong cash flow from the part of the shareholders of the
company. Hence it is pretty much understandable that the achievement of the resource will be
rare in the modern world of business and at the same time, it will be costly to imitate for the
other companies operating in the global retail industry.
Apart from this, the company is observed to prefer to serve their customers with the
low priced products and that is visible with the pricing of the products of the company. The
senior managers of the company are observed to be more inclined towards applying the
competitive pricing for their services and their product offerings. The senior management of
the company are considering the formation of price checker tem which will have the
responsibility of evaluating the prices of the products offered by their competitor
organizations. This will certainly provide an upper hand to the management of the company
when it comes to deciding the pricing of the products with a precise focus on their ability of
staying relevant to the market competition and managing the urge of the new entrants in
developing their cost leadership in an efficient manner. Other than this, the application of the
low pricing policy plays a crucial role for the company in developing the much required
competency for targeting a larger customer base. With the application of the low pricing, the
company gains the capability in designing their products with a precise focus on the
customers belonging to the low income groups.

8MANAGEMENT
However, the company has the capability to maintain their quality even with the
application of the low pricing. This has the possibility of decreasing the profit of the
company, however, the sales if the company is observed to gain a certain boost. The profit
and the operating income presented above clearly portray the success that the company
achieved with the brave decision of maintaining the high quality of the products along with
the application of the low prices for their products Ford, D., & Håkansson, H. (2013. Hence,
it is visible that the capability of the company in applying the low prices for their products
and services, certainly adds value to their business operations. At the same time, the
company’s investment in applying the low prices for their products while maintaining the
quality reflects the rarity of the resource in the global retail industry. Hence it is pretty
evident that the development of the resource is tough to imitate for the other companies.
Apart from this, the company’s marketing team along with the subsidiaries are observed to be
significantly well aligned for the achievement of the much required success in gaining larger
profit. Hence, it is evident that the company is able to organize the resource in an efficient
manner for achieving their objective.
Conclusion:
On a concluding note, it is evident that the company has the capability to become one
of the market leaders of the global retail industry and the improvement in their utilization of
their resources will be significant in increasing their capability for the increment of the
market share. The resources of the company such as the training and development,
employment relations, the capability of applying low pricing strategy, strong store presence,
diversified product offerings and the effective link between the divisions can be considered as
capable of providing the much required competitive advantage to the chosen organization.

9MANAGEMENT
References:
Tesco-programmes.com (2019). Home | Tesco Apprenticeships & Graduates. Retrieved 29
August 2019, from https://www.tesco-programmes.com/
Rothaermel, F. T. (2013). Strategic management: concepts. New York, NY: McGraw-Hill
Irwin.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. Cengage Learning.
Knott, P. J. (2015). Does VRIO help managers evaluate a firm’s resources?. Management
Decision, 53(8), 1806-1822.
Hennig-Thurau, T., & Hansen, U. (Eds.). (2013). Relationship marketing: Gaining
competitive advantage through customer satisfaction and customer retention.
Springer Science & Business Media.
Ford, D., & Håkansson, H. (2013). Competition in business networks. Industrial Marketing
Management, 42(7), 1017-1024.
Ftserussell.com (2019). Home. Retrieved 29 August 2019, from https://www.ftserussell.com/
Tescoplc.com (2019). Home.Retrieved 29 August 2019, from https://www.tescoplc.com/