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Managing Business Strategy Assignment Sample

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As per Suoniemi et al. (2020), the overall development of the business organisation is popularly accepted as well as regarded as a means of attaining a competitive advantage. Managing the business strategy is one of the necessary procedures to accomplish the different goals and objectives of the business organisational in the competitive business environment (Ali and Anwar, 2021). According to Ali & Anwar (2021), effective management can effectively aid in protecting a wide range of innovations taking pace by deciding whether to encourage or promote the workers’ expertise via encouraging the inventions of the human workforce or innovative thinking. As per Vasileva (2018); Matovi? (2020), the business environment can be effectively analysed by using the PESTLE analysis tools that aid in the creation of a framework for the creation of various business strategies for carrying the business operations effectively. Other tools like Porter’s 5 forces, SWOT Analysis, Porter’s Generic Strategy Model, and Ansoff Matrix are among the tools that are accountable for effectively managing the strategy.

Background of the Company

Tesco is a public limited company and all the business operations of the company take place in the retail industry. The company was founded in the year of 1919, in Hackney, London, England, the United Kingdom by Jack Cohen (Taqatqa, 2021). Tesco as a brand initially appeared in the year 1924, Jack Cohen bought a whole shipment of tea from Thomas Edward Stockwell and altogether, he also engaged in labelling and using the beginning letter of Thomas Edward Stockwell and combining with the first 2 letters of the founder's surname that is CO from Cohen. This led to the formation of the word, TESCO (Ryle, 2013). The headquarters of the company is located at Welwyn Garden City, Hertfordshire, England, United Kingdom. The total number of locations is 4,673 where the business is actively serving the consumers. In addition, the total number of employees or the human workforce was 367,321 as of 2021.

Mission and Vision Statement

The mission of Tesco is “We make what matters better, together”. This statement makes it precisely clear that each and every one is among the integral component behind the company’s success (Evans and Mason, 2018). It immensely contributes to the creation of an environment that enables the individual or the human workforce to work at their best ability and actively contribute to the growth and improvement of the business organisation. In addition, the vision statement of the company is to be the most valued business by the consumers that the company is actively serving, communities as well as the committed and loyal colleagues and also including the shareholders (Vu, 2016). The company consider its stakeholders to be a critical component for measuring the vision for progression. The core values of the company put heavy emphasis on focusing on the consumers, caring for all individuals and any type of help that can aid in creating a difference.

Environmental Analysis of Tesco Using PESTLE Analysis Tool

Political Factors : Tesco is among the globe’s largest retailers and there is an immense requirement from the company to follow many rules and regulations which aid in ensuring the safety and compliances of its various commodities as well as services offerings (Foabeh and Achaleke, 2020). Being a multinational company, it has to make sure that the company is actively keeping a tab on the various political environment that is consistently changing some nations are having political stability and some are not having the desired stability. For instance; BREXIT is one of the impactful examples that demonstrate how it affected so many companies in generating a profit and offering suitable business services to the customers (Farrell 2019).

Economic Factors : With the ongoing pandemic, inflation is among the top risks that have the potential of impacting the economic situation of Australia vastly (Argus 2022). It can be observed that the company must be well aware of all the policies related to taxation in different nations around the world. The markets on a global scale are actively expanding and its major revenue share is actively generated from the UK. Any type of changes in terms of economic policies in the United Kingdom can be a major blow and the company will have to rethink its strategies. Currently, due to higher inflation in various nations around the world, the company is engaging in pricing its commodities and services accordingly for sustaining its business effectively and efficiently (Rosnizam et al., 2020). But this is not going very well due to the decrement in the disposable income of the consumer.

Societal Factors : The tastes and preferences of the consumer are something that actively change and businesses have to anticipate any type of changes that can either affect or favour the company in the long run (Otterbring and Bhatnagar, 2022). Tesco can be observed actively being engaged in planning its stores for facilitating the changing needs in this marketing environment. Currently, the company has switched from the major products of the food and focusing on the formation of the model that is food cum non-food. Social influence, as well as societal influence, plays an immense role in consumer purchasing behaviour. With the ongoing pandemic, the consumers are preferring a healthier lifestyle and to address and solution to this change, Tesco can be observed effectively making effort in capturing the customer by promoting commodities that are more organic (Smithers., 2020).

Technological Factors : Online shopping, social media marketing and digital marketing, in general, are among the most popular means of the consumer engaging with any business. The pandemic has fastened the whole procedure of technological advancements as well as adoption. Tesco has managed to keep the customer satisfied by introducing its online way of shopping (Alexander, 2020). Furthermore, the company also partnered with Amazon Go for the creation of technology for cashless billing which can be identified as revolutionising the overall scenario of retail shopping. This can aid the customers in evading the long queues.

Legal Factors : Any change in the policies of the government has the ability to directly affect the overall business operations. There is a requirement for following the international as well as the local market laws for ensuring that the business operation stays efficient (Adamyk, 2019). In the year 2016, there were some allegations on Tesco related to discrimination on the basis of gender and age in the workplace culture.

Environmental Factors : Nowadays, every company is becoming responsible and engaging in undertaking various initiatives for improving the overall environment and contributing to the creation of a society that is more sustainable. Over the years, the business can be observed being actively engaged in changing 800 commodities and aiding in reducing the overall waste of 4000 tons of plastic wastages which is very difficult to recycle (Tesco 2019). The company is also actively engaging in recognising the various boats that involve carrying fish are checked to establish an effective zero-tolerance policy against any kind of illegal sourcing.

Environmental Analysis of Premier Inn Using Porter’s Five Forces Analysis

The threat of New Entrants : In the retail business, it can be observed that the threat of new entrants tends to be very high since the business of any scale can enter the market and participate in providing more specialities, accessibilities, convenience, and many more (Sigarev et al., 2018). The business capital to enter the business is not the issue since the business in the retail industry can be modified and set up as per the owners’ requirements. But the space in the floor requirement can be among the major entry barriers for new businesses. On the bright side, it can be identified that having effective and quality competition, the market will be full of options and healthy competition and the new entrants are more likely to survive and grow in this market.

Bargaining Power of Suppliers : There are over 2,500 suppliers that TESCO worked with on the global level. But the bargaining power of the suppliers can be identified as being very limited since there are countless numbers of options in terms of getting commodities from the suppliers (Evans and Mason, 2018). The company is very harsh in terms of negotiating with the suppliers for increasing the overall margins of the profit. There have been many cases where the company was accused of bullying the suppliers by cutting down the prices. The increment in the capacity of the supply makes it very difficult as well as challenging for the suppliers to have any type of major impact on the growth and success of the company.

Threat of Substitutes : There is no denying the fact that the company offers a wide range of commodities and services to its consumers and the company also engages in selling various substitutes for the majority of the commodities. For instance; the company engages in selling butter as well as margarine to its customers. Similarly, the company also engages in selling powder milk, fresh milk as well as condensed milk. The differentiating factor for various limited substitute selections makes the situation very tough for the consumers to switch away from the branded products from the supermarket chain like Tesco (Monte, 2021). In addition to that, the utilisation of advanced technology, as well as the growing influence of online shopping as well as E-commerce, have completely changed the ways of business.

Bargaining Power of Buyers : The bargaining power of buyers immensely depends on the popularity of the company in various nations around the world. As the popularity of the company in the United Kingdom is much higher than in any other nation, the bargaining power of the customers in the United Kingdom will remain somewhat low but the company has to make sure that the pricing of the commodities and quality is at par with other competitors (Gavieiro Besteiro, 2022). There are many competitors of Tesco in the world such as Aldi, Lidl, Asda and many more that can provide much more compelling offers than Tesco which can result in increasing the bargaining power of buyers.

Industry Rivalry : As discussed, there are many competitors in the industry such as Asda, Morrisons, Sainsbury's and many more. All the competitors of the company immensely spend on the various techniques of marketing as well as advertising. Even though Tesco is among the biggest retailer chain, the pressure from other competitors in the retail industry can immensely impact the other business operations of the company (Samdani, 2020). Similarly, the competitors' pricing of commodities can directly affect the pricing decisions of Tesco and it can be reflected in its profit margins of Tesco. The industrial rivalry in the retail industry tends to stay very high because of the increment in the community demand for the supply of commodities to meet the basic needs. Due to this increment, various groups, as well as businesses, are engaging in capturing the market to offer a wide variety of choices and accessibility to the consumer in the market for purchasing any commodities and services.

Application of the SWOT Analysis Tool to Recognise the Strengths and Weakness of Tesco

Strengths : One of the biggest strengths of Tesco is the British market since the company knows all the ins and outs of the market and it also has a great amount of market share. In the year 2019, the total annual revenue was £63,911 million pounds in the United Kingdom and also including Ireland (Tesco., 2020). The total annual profit increased by 11 per cent in the year 2019 approximately. Furthermore, it can also be observed that the company have a strong network of suppliers that immensely aid in carrying out the business operations effectively and efficiently. There are numerous retail stores of Tesco that are very diverse which immensely aid in satisfying the customers’ needs and offering business commodities as per the demographics. The company also put immense emphasis on the technological aspect of the business and it can be identified that the technological advancements have improved customer accessibility and some of the advanced features like mobile applications for online consumers, the company also has an RFID barcode system that helps in counting the commodities of consumers automatically.

Weakness : Just like strengths, there are many weaknesses in the case of Tesco, it can be observed that in the year of 2012, the company expanded its business operations to Japan and the United States of America but later, Tesco has to close all the stores down because its ineffective and inefficient planning and also its inability to export the business operations (Son et al., 2018). In the year 2017, it can be observed that the company was guilty of showing less profit in the accounting ledger for avoiding taxation. This scandal effectively contributes to ruining the overall brand image. In addition to that, the company has very little and limited existence in the various nations that are emerging as compared to other competitors.

Opportunities : There are countless opportunities in the market that are needed to be identified by the company. As discussed, Tesco has a very limited existence in many emerging nations, the company has to make effort in capturing the emerging markets since there are many opportunities that are needed to be considered. Tesco can also engage in the formation of strategic alliances with various other brands that can allow the company to offer more commodities while also attracting more consumers in the process as well. Tesco has already partnered with Amazon and there is a requirement for the company to expand the process of opening more checkout-free convenience stores. Currently, it can be identified that Tesco is engaging in shutting down seven of Jack’s discount stores and the rest of the jack's tore will be converted into Tesco Superstores (BBC 2022). The company can engage in expanding Jack's discount store rather than closing it or changing the name. There is no denying the fact that jack's store can be an immense opportunity for growing the business exponentially.

Threats : The pandemic is itself a threat that has contributed immensely to affecting the business operations of the company. It can be observed that the company has already announced cutting more than 1400 job roles and the higher inflation rate is forcing the companies to increase the prices of the commodities and services (BBC 2022; Coniam and Linsell 2022). The food prices increased by 5 per cent in the market (Brignall 2022). Furthermore, the Brexit event that involve Britain exiting Europe affected the supply chain of the company since importing various commodities became very difficult. The pandemic has resulted in weighing down the profits by £892 million worth of pandemic-related costs also involving the requirement of hiring a human workforce for covering the human workforce that got affected by the pandemic (AP, 2021).

Utilisation of Porter’s Generic Strategy Model for Deriving Appropriate Strategy

Cost Leadership : The strategy of cost leadership includes attaining a competitive edge by decreasing the overall cost. Cost leadership is among the important generic strategy that the company utilises in the various markets the consumer. The primary goal and objective are to expand the overall share of the market by effectively targeting the middle-class portion of the market which is the largest percentage of the total customer marketing mix in most nations. The company has to always make sure that the pricing of the commodities is effectively maintained and set as per the disposable income and economic situation of the company in this competitive retail market (Um et al., 2018). In addition to that, the company also immensely concentrates on the ease of accessibility as well as affordability for its business offerings that are taking place in different parts of the nation (Pulker et al., 2018). Tesco can get effective brand recognition, increment in the customer base and also accomplish various sales targets by putting immense emphasis on making the commodities of the business affordable and accessible.

Differentiation : ifferentiation is another component of porter's generic strategy that is very critical for building a competitive advantage. The company utilises differentiation in relation to the strategy of cost leadership to accomplish growth objectives (Bozic, Siebert and Martin, 2019). This differentiation strategy can be used to differentiate the various business offerings by constant innovation as well as meeting the needs and wants of the consumers in this completive retail market. For instance; the company is actively engaged in extending the product line after studying the changing interest of the consumers to differentiate from the competitors and also expanding the opportunities scope in the retail industry. Tesco can position its various business offerings that can help the commodities or services to stand out from other already available commodities. The logo of the brand is one of the effective examples of the differentiation strategy since the company as a brand differentiate itself by having a unique and distinct logo.

Cost Focus : The cost focus is part of the focus strategy of porter’s generic strategy and it can be observed that this is the strategy that aids in encouraging the business to focus on their resources for successful expansion while also narrowing the targeted market segments. When the business engages in adopting the cost focus strategy, it engages in serving the various needs of the niche segment of the market. This strategy can be very beneficial for Tesco since it aids in offering the business offerings at the lowest price possible to the consumers (Um et al., 2018). The cost focus strategy for Tesco also needs to consider the size, design and taste of the commodities that can match the needs and requirements of the consumers.

Differentiation Focus : Differentiation focus strategy is the way of bringing change in the business while also considering packaging, taste, design as well as various other components of the commodities that aid immensely in having a competitive advantage in the market including other competitors or rivals (Xinyun, 2018). However, it can be observed that Tesco is not so focused on bringing an immense amount of differentiation to their business offerings. The differentiation focus is not so relevant in the case of Tesco since the company do not only deals in a narrow segment of the market instead the company engages in serving various other segments in different nations around the world at the same time. 

Application of the Ansoff Matrix for Defining the Strategic Position of Tesco

Ansoff matrix is a very important tool for strategic marketing that can be effectively used for planning and generating more opportunities in the process as well (Dawes, 2018).

Market Development : The market development strategies of Tesco involve selling the existing commodities to the new market profitably. From the United Kingdom, the company has managed to expand to various nations in the world. The market development strategy can also be recognised as failing in many scenarios as well where the company failed in developing the new market such as the United States of America, China, and Thailand. On the positive side, the majority of the suppliers of the company mainly belong from the United Kingdom and which can aid in the development of the market for the existing commodities as well as services. The company is actively investing in expanding and developing new markets and also engaging in making new changes depending on the nations (Witek-Hajduk and Grudecka, 2018). The factors that are considered while implementing the market development strategies are strategies, channels of distribution as well as the product dimension that can aid in attracting new consumers for the formation of new markets.

Diversification : Diversification Strategies tend to be very tough to implement. Selling new commodities and services to new consumers takes a lot of effective decision-making to get effective outcomes. It can be identified that Tesco started its business as a grocery and over the period of time, the company immensely engaged in diversifying its product offerings. Some of the instances of Tesco are credit cards, insurance products as well as mortgages. Tesco has failed in various diversification strategies such as when the company purchased Giraffe Restaurants in the year of 2013 for £48.6 million (Keys, 2013). But later the acquisition did not result in profit instead the company has to sell the Giraffe Restaurants with a loss in the year 2016. Tesco is immensely engaging in diversifying its beauty as well as health commodities and it also has its own food brands.

Market Penetration : There is no denying the fact that whenever any company starts to operate, it becomes very vital for the company to penetrate various markets for engaging in finding new growth opportunities. Tesco actively engages in penetrating the market for identifying more growth opportunities in the process as well. Tesco Clubcard points are very effective and there is a requirement of taking care of the service for increasing the overall market share. There are many consumers that rely on the brand immensely because of its identity and popularity. The company engaged in setting competitive pricing for the consumers and the various campaigns of advertisement can be identified as taking place for effectively carrying the market penetration strategy (Aiello et al., 2020). There are various scenarios where the company frequently engages in putting special offers on the commodities and services for increasing the overall market share and also generate more profit in the process as well.

Product Development : At last, the product development strategy involves the development of various innovative and creative commodities that can meet the needs and wants of the customer effectively and efficiently in this competitive retail market. Tesco is the company that has its own version of various food-related commodities and man more and sells all the versions of the company for catering to different segments of the market. The strategy of product development is one of the most effective for the company since it also aids in understanding the preferences of the consumer (Zhao, 2021). Especially, in the time of the ongoing pandemic, the customer is adopting a healthy lifestyle and businesses also have to engage in creating commodities that are healthier.

Conclusion and Recommendations

Tesco has to engage in the creation of products that are healthier for the consumers. Furthermore, the company also has to put immense emphasis on taking care of the reputation of the company and the company must avoid any kind of scandal and unethical actions that can hamper the overall brand image of the company. The market is filled with many other solid competitors that are also engaging in the creation of commodities and services at par with Tesco. After the arrival of the pandemic, the technological advancements in the business environment have been immensely boosted and businesses of all sizes are offering so many choices to the customer living in different parts of the world effectively and efficiently. Tesco engaging in pricing the commodities not considering the prices of the other competitors can result in a decrement in the market share of the company.

From the above discussion, it can be concluded that Tesco is still at the top of the retail industry and there are some loose ends which can be overcome by engaging in effective analysing, and evaluating the strategy effectively and efficiently. From the pestle analysis, it can be observed that there are many factors that are required to be considered to carry out the business operations in the competitive retail industry.

Furthermore, the porters 5 forces analysis also demonstrated the significance of understanding the 5 forces that are the threat of new entrants, bargaining power of the suppliers, bargaining power of buyers, the threat of substitutes as well as industrial rivalries. This analysis showed how simple and easy for any company to enter the retail market and it is very important to be considered since the small size business can also generate more sales than any bigger brand or company by offering more compelling and improving the overall accessibility in the process as well. Other tools like SWOT Analysis, porter’s generic strategy model and also include the application of the Ansoff matrix for understanding the strategic position of the business organisation.


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