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STRATEGICANALYSIS

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TABLE OF CONTENTS

INTRODUCTION..........................................................................................................................3Strategic analysis of Tesco in Food retail industry in UK.................................3Value Chain analysis ........................................................................................... 4PEST analysis...........................................................................................................5SWOT analysis .......................................................................................................6

Competitive analysis and growth measures.........................................................7Porter 5 force analysis ........................................................................................7Strategic options....................................................................................................9Action plan.............................................................................................................10

Branding strategies......................................................................................................12Adaptation strategy............................................................................................12Cultural and behavioural factors...................................................................13

CONCLUSION............................................................................................................................13

ILLUSTRATION INDEX

Illustration 1: Value chain analysis.................................................................................... 4Illustration 2: Porter Five force analysis...........................................................................7Illustration 3: Porter Generic strategy..............................................................................9Illustration 4: Ansoff's growth matrix.............................................................................11




INTRODUCTIONStrategic development of the company plays a crucial role in

developing high growth prospects for the businesses. Companies criticallyanalyze the internal and external business environment in order to examinethe opportunities and threats for the future development. Strategic businessdevelopment focuses on combining vision, mission and organizationalobjectives with the market opportunities in order to create effective impacton the overall development of businesses (Nwankwo and Gbadamosi, 2010).Present study evaluates the business prospects of Tesco and examinesvarious strategic position of the business in the competitive market. Thisstudy seeks the growth strategies for the companies in order to create acompetitive edge within the market.

Strategic analysis of Tesco in Food retail industry in UKTesco is one of the leading retail business units which has effectively

established its business in the global market. Business operations of the

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company seek to deliver highly developed services and products in order toenhance consumer perception within the global economy (Palmer and Quinn,2007). Tesco seeks to create an edge within retail business sector in order togain high consumer value and perception for the buyers. Company focuseson becoming a market leader to develop high market share and enhancewide sales in the economy.

Tesco food is a successful venture of the company which focuses ondeveloping market growth prospects in the local as well as internationalmarket. Food retail segment has developed high market competition withinthe market. This has lead in limiting the growth prospect of variouscompanies (Bichueti, 2014). To develop a competitive edge and effectiveposition, organizations are focusing on enhancing strategic positioning of thecompany. Internal and external business factors help in analyzing theeffective position of the company in this competitive market. There arefollowing measures that help in analyzing the strategic position of Tesco.




Value Chain analysis

The value chain management of Tesco consist of six primary activities. Thatis as follows,

Inbound logistics: Inbound logistics in Tesco refers to the transport,storage and delivery of the products that are manufactured. In thisprocess the organization manages the transport and storage of the rawmaterial.

Illustration 1: Value chain analysis(Source: Cravens, 2006)




Operations: Further, this stage include the production process,development of goods, testing, packaging and all other activities thattransform the raw material into finished products.

Outbound logistics: The next step is distribution of finished productsto the customers via warehouse, order fulfillment, transportation anddistribution management etc. outbound logistics of Tesco takes care ofthese after manufacturing process (Sellers, 2007).

Marketing and sales: This step include advertising and promotion ofthe products. Marketing and selling activities of Tesco include Channelselection, product promotion, selling, product pricing, retailmanagement etc. Sales and marketing activities in Tesco areperformed to monitor that products are transferred in targetedcustomer groups.

Service: After marketing and promotion service is a crucial factor ofvalue chain management (Wang, 2007.). Because this step focuses onafter sales support to the customers.

furthermore, there are some secondary activities also to manage valuechain of Tesco, These are,

Firm Infrastructure: The infrastructure of the Tesco includes theplanning management, legal framework, financing, accounting, qualitymanagement and general management of the operations of theorganization.




Human resource management: Currently Human resourcemanagement of Tesco is in critical condition because its main focuswas on developing sales and production.

Technology development: To reduce production cost and to developnew products and to increase customer service facility Tesco isfocusing on New technologies development.

Procurement: Finally the procurement of products include thepurchasing activity of the manufactured products.

PEST analysis

Political factors - Performance of Tesco's is highly influenced by thecountry's legislative and political conditions. Global political factorsdirectly influence the performance of the company which includes taxrates, laws and the policies. In this government encourage the retailersto increase their employment (Kotler, 2012).




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Economic factors- Economic factors like economic growth andinflation rates directly influence the demand, cost, profits and prices.Company should be more aware about the changes in policies andrates, such as changes in taxation rates could effect the financeaccessibility (Mudie and Pirrie, 2012). It is important to figure thegrowth of company in national and international market. In recessiontime the rate of unemployment increases than the spendings ofcustomer would be decreases and they would switch to lower priceproducts.Social factors- In current scenario customers are moving towards thebulk shopping. Therefore, the type of goods are demanded by thecustomers is mostly influenced by social changes and their beliefs.Customers are continuously changing their approach about the foodbecause of they are more aware about the health issues.Technology factors- For the Tesco, technology is a critical factor forthe supply chain management. Company develops their supply chainmanagement in order to achieve the competitive advantages and italso enhance cost efficiency (Figge and et. al., 2002). They needs to bemore attentive to the updated technology because improvements maybe an good opportunity, like to improve the company's distributionservice mobile technology is better option because customers canselect their preferred food through their mobile.

SWOT analysis

Strengths




Company has won awards for its customer service and retailexcellence.In the world company is one of the most profitable and largestsupermarket and retailer.The company have brand name with global recognition and theystands in term of good quality, service and selection.Improved and enhance the use of technology and service experience.With the help of 'Tesco Clubcard' its loyalty scheme, they have proventheir customer retention strategy.

WeaknessSome subsidiaries and retail formats have not performed well as theywere expected.For the sales company is highly dependent on the UK and Europe.They do not spent more time and resources on the development.

OpportunitiesIn other countries where company is not performing well, there couldbe opportunity of joint venture in which local companies can helpthem in market research to improve their performance.Online shopping is also a great opportunity for them and they canalso offer them home delivery service (Olson, Slater and Hult, 2005).In private label market there are more opportunities.

ThreatsThere are more competitors in the industry of supermarkets.




Credit crunches and recessions would continue to threaten theprofitability and market share.Rising of raw material cost also threatens the company's profitability.

Competitive analysis and growth measures




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Porter 5 force analysis

In order to analyze the competitive position of the company Porter fiveforce model will applied in the study. This will help in creating an in-depth

Illustration 2: Porter Five force analysis

(Source: Peng, 2002)




analysis of market position and competitiveness of the company in currentmarket scenario.

Threats of new entry: The retail industry has developed an effectiveinfrastructure and competitive standards within the market. Tesco isone of the most efficient players of the market. The organization hasdeveloped an effective measures of competitiveness. New marketentrants will require high amount of investment to develop competitiveposition within the market (Doole and Lowe, 2005). Moreover meetingcompetitive standards of Tesco is very difficult for the new businessfirm. Thus Threat of new entrant is low in the market.Threats of substitutes: Retail industry has expanded highly in theUK market. Tesco is facing wide range of competition from domesticplayers such as M&S, ASDA, Sainsbury, Waitrose etc as well as theinternational players such as Aldi, Lidl etc. Thus it can be analyzed thatthe company has high threat from substitute firms as productdifferentiation within the industry is considerable low.Buyers power: The consumers in the retail sector are not loyal. Highmarket competition has developed high buyer power within the marketas the effective promotional measures offered by the firms helps inattracting new buyers efficiently towards the products and serviceswith attractive offers and attributes within the market (Elbanna, 2010).Thus bargaining power of buyer is very high for Tesco.Supplier's power: The raw material and good demanded by tesco arenot exclusive and are easily available within the market. The company




thus keeps a close check on price effectiveness of the supplires inorder to gain cost leadership within the market. Thus it can beanalyzed that supplier's power is low for the company as it can easilyswitch to other suppliers to take cost advantage.Competitive rivalry: Tesco is operating the business operation inperfect competitive market. Increasing rate of competition formnational as well as international sellers has increased the rate ofcompetition for the organization thus creating high competitive rivalryfor the firm.




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Strategic options

In order to analyze the firm’s competitiveness with the marketapplication of Porter generic forces will help in delivering the effective resultsfor the growth and development of the company. Strategies adopted byTesco foods to develop high impact on the growth and development withinthe market are:




Cost leadership: Tesco has adopted effective measures to enhancethe cost effectiveness within the market. Company has developed asystem of developing supplier relations which has helped business inenhancing the cost effectiveness within the market. Moreover focusingon managing and maintaining low cost factors has helped company increating high impact on market demand (What is marketingmanagement. 2015). Company's ability to control operating costs hashelped it in enhancing its competitiveness within the industry.Differentiation: This strategy focuses on developing a wide variety ofproducts and services within the market in order to enhance thecompetitiveness of the firm. Tesco food delivers high quality of foodoptions to the consumers through managing the quality and standardsof products. Company has effective measures to develop productrange in order to attract new consumers within the market.Focus: This segment deals with creating a well-developed impact ofcost leadership or differentiation on a narrow segments of the marketto enhance high market sales. UK market is one of the most prominentmarkets for Tesco. Company has developed an effective means ofbusiness measures in UK (Cravens, 2006). However developing highrange of products as per the tastes and preferences of UK consumerswill help company in enhancing its growth measures.

On the basis of given analysis it can be effectively determined that Tesco hsdeveloped high cost leadership within the market. This has helped thecompany in developing effective brand image within consumers. Developing




product range and enhancing focus of the company in UK will help it indeveloping effective competitive edge.

Action plan

In order to develop international leadership within the market Tescomay implement variety of measures. The following analysis will help inexamining the best measure to develop high growth prospect for thecompany.

Illustration 4: Ansoff's growth matrix

(Source:Wang, 2007)




Market penetration: Current market analysis of the companyrepresents high market competition for Tesco. This poses wide rangeof challenges for the organizational growth. The company thus mustdevelop effective focus on the UK market to create and enhancemarket sales within the selected segment. Tesco foods should developproduct range to create a differential market position within thecompany. Moreover enhancing promotional measures will help it infighting competition form companies such as Ald, lidl etc.Product development: Enhancing the range of products will helpsthe company in enhancing market sales for the unit (Figge and et. al.,2002). Developing new products for UK market will help Tesco ingenerating high demand within the current market. Moreover offeringcustomized products will help the company in developing thecompetitiveness of the firm.

Market development: This measures may prove to an strategicmove for the business to enhance market share within the competitive




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environment. Markets of Asia has high potential for growth anddevelopment of food industry. High rate of population within the sectorwill help the company in creating an effective impact on thedevelopment of Tesco. Thus the company must develop an effectiveinfrastructure for food industry in the Asian market in order to develophigh market sales.Diversification: This is most risky measure for developing growthprospects of the business. The current market position of Tesco iscritical and demand effective analysis on developing market share inorder to enhance the profitability and competitiveness of the company.Thus Tesco should not indulge in the diversification activities toenhance the growth prospects within the international market.

Branding strategiesInternational expansion is one of the most effective measure for

growth and development of business. Enhancing the target market markethelps the companies in creating a wide impact on developing market shareand sales well. As discussed above Tesco must develop the market in Asianmarket in order to enhance the sales of the company and developing theprofitability measures as well (Mudie and Pirrie, 2012). In order to develop aglobal brad in the region Tesco food segment must adopt the adaptationstrategy.

Adaptation strategy

This strategy focuses on developing an effective brand image of thecompany the international market by adopting the cultural and demographic




differentiation of the place. The adaptation marketing strategy, forgoesuniversality in favor of tailoring marketing to appeal to the cultural ordemographic particulars of customers in the new market. Tesco food mustadopt this measure in order to develop the strategic position of the productsand services in the international market. The strategies those will help thecompany for the same are:

Brand adaptation: To develop the effective brand image of productsand services within the Asian market Tesco must develop an effectivemeasures of enhancing the organizational growth by enhancinglocalization of the brand. The use of foreign language tools andelement will help in re-positing Tesco efficiently in Asian market ("Theeffort of marketing our brands needs to have a more positive impacton society" Marc Mathieu, 2015). Marketing messages for a brand thatwork in one market or market segment can fail spectacularly for othersthus Tesco must develop effective brand image adhering local needs.Product adaptation: The products and services offered by thecompany must be modified to meet the local supplies and demands aswell. Tesco foods should develop product range as per the local needsto enhance demand within the market. This measure will help theorganization in creating cost effectiveness within the market.

Cultural and behavioural factors

The cultural and behavioral factors which will help the Tesco inenhancing the sales within Asian market are as follows:




Cultural values: This factor is significant for analyzing the local needsof the consumers. To develop business prospect of Tesco within Asianmarket the company must effectively cultural values of the market. Forexample Indian market demands vegetarian food while Chinese markethas huge cultural significance for rice and fish. Thus effective analyzingof cultural values will help the company in developing effective brandimage for the organization.Consumer perception: Analyzing consumer demands efficientlyhelps the company in creating wide impact on the growth measuresand international development of the company. Tesco must closelyanalyze the consumers needs and preferences in order to develop aglobal brand within the market (Fripp., 2012). Effective analysis ofconsumer perception will help the company in promoting anddeveloping the product meeting local needs and demands. Forexample perception for beef in Indian market is contradictory from thatin Chinese and Japanese market. Thus the production process andpromotional measures has to considers consumer perception efficiently.

CONCLUSIONThe above report reflects the effective measures that are demanded

by Tesco in order to create an effective impact on the growth of thecompany in both national and international market. The effectiveimplementation of strategies helps in examining that the company has highprospects for growth globally. Thus effective measures strategies adopted bythe company may helps in enhancing organizational growth.



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REFERENCESBooks and JournalsBichueti, G., 2014. Strategic sustainability management and export

performance. Management of Environmental Quality: An InternationalJournal. 25(4). pp.431 – 445.

Cravens, D., 2006. Strategic marketing’s global challenges and opportunities.Handbook of Business Strategy. 7(1). pp.63 – 70.

Doole, I. and Lowe, R., 2005. Strategic Marketing Decisions in Global Markets.Cengage Learning EMEA.

Elbanna, S., 2010. Strategic planning in the United Arab Emirates.International Journal of Commerce and Management. 20(1). pp.26–40.

Figge, F. and et. al., 2002. The sustainability balanced scorecard–linkingsustainability management to business strategy. Business strategy andthe Environment. 11(5). pp.269-284.

Kotler, P., 2012. Kotler on marketing. Simon and Schuster.




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