Unit 7 Business Strategy Assignment - TESCO

Programme	Diploma in Business
Unit Number and Title	Unit 7 Business Strategy
QFC Level	Level 5

 

Introduction

Business strategy defines the general long-term plan of action that an organization formulates to achieve its main objectives and goals. It is more or less a blueprint that defines the path in which a business wants to move and the steps it will actually implement to achieve its ideals.  A classic business strategy matures in three stages: analysis, integration, and implementation. With the support of assignment help services, by Locus Assignments, you can better understand the nuances of business strategy and its practical application.

This research focuses on the application of major strategic business tools and techniques with regards to Tesco, a leading United Kingdom-based multinational retailer. The report will provide essential analysis with regards to Tesco's mission, vision, objectives, and core competencies. It will further study essential aspects of strategic planning as well as common challenges that are associated with it. Furthermore, the report will explore various business strategy tools and techniques by demonstrating their real-world applicability in the case of Tesco, particularly in the matter of market development in the United Kingdom.

The analysis includes an organizational audit that involves a SWOT analysis, which assesses the implemented strategic tools by companies to determine internal and external factors affecting the operations. Tesco's strengths, weaknesses, opportunities, and threats will be analyzed, in particular. An environmental audit will also be performed on the use of tools such as PESTEL analysis to quantify and compare the external environment to help understand the industry situation, performance, and driving factors with respect to Tesco's operations. The report will critically analyze the functions and roles of Tesco's management and employees in implementing adopted strategies, the requirements, targets, and planning for timescale for market development.

1.1 Define Strategic Contexts and Terminology – Missions, Visions, Objectives, Goals, Core Competencies

Tesco PLC is a British multinational grocery and general merchandise retailer headquartered in Welwyn Garden City, Hertfordshire, England. It was established in 1919 and expanded to become a global retailing goliath with operations in many countries in Europe and Asia. It is always among the world's leading retailers in terms of revenue and profit. Beyond groceries, Tesco diversified extensively in markets like apparel, electronics, financial services, and telecommunications. It is quoted on the London Stock Exchange and is an important part of the FTSE 100 Index.

Tesco has always adapted its product ranges to meet evolving consumer demands. For instance, in 2014, it launched the 'Healthy Living' brand to promote healthier lifestyles among consumers. In 2014, Tesco re-launched Tesco Finest, which was the UK's fastest-growing premium food brand. The United Kingdom is Tesco's core market, and it records significant aggregate group sales. With a market-leading status in the UK grocery food retail market, Tesco competes fiercely with industry giants like Asda, Sainsbury's, and Morrisons.

Strategic planning in Tesco is an essential organizational management practice designed to set priorities, allocate energy and resources in an efficient manner, increase the efficiency of operations, and align employees and stakeholders with shared goals. The process is dynamic and adaptive in nature, determining key decisions and actions that define Tesco's identity, target market, operations, and underlying motivations, with a specific focus on future repercussions. 

The process involves a scientific approach to projecting possible future situations and converting them into well-defined goals and executable plans, requiring structured allocation of financial resources, human resources, and time. Primarily, the objective is to prioritize and meet the needs of its diverse stakeholders. Tesco's strategic plan is concise, flexible, and serves as essential guidelines for the implementation of various initiatives, requiring ongoing strategic planning, implementation, measurement, and evaluation to create a results-driven accountability framework for the organization.

The operational framework and key terminologies essential to Tesco's functioning are outlined as follows:

1. Objective

Tesco's vision is fundamental in promoting collaboration between employees with the aim of fulfilling the company's vision. It places specific critical objectives and performance targets within the context of organizational culture, vision, values, and principles.

Tesco's Mission Statement:

To improve organisational ability in the context of an international competitive market by delivering superior and lasting value to its stakeholders.

In order to obtain world-class customer relationships by enhancing operation systems and controls.

To encourage transparency regarding long-term sustainability.

2. Vision

The vision statement expresses Tesco's central purpose and declares its future vision. It serves as a central guide to Tesco's strategic direction, normally developed in accordance with the company's hopes and anticipated business environment, and has been found to be extremely efficient in encouraging organizational growth.

Tesco Vision Statement:

Tesco wants to be market leader in the UK by delivering outstanding quality of performance, product assortment, and delivery network.

They aim to create increasing worth in the UK economy.

They are dedicated to building a chain of efficient supplies which are aimed at improving the process of delivery, raising customer service levels, and providing operational transparency.

3. Goals

Tesco's objectives encapsulate the grand vision to be the world's leading grocery retailer. The objectives are fundamental guidelines and facilitate adaptive planning to attain specified aims. It is the duty of Tesco PLC's top management to set the kind of goals that all employees then align their efforts towards

The goals of Tesco are:

To establish various sources of growth through the enhancement of a superior business portfolio and associated competencies.

To gain technological skills to establish standards in product quality and service.

To strengthen and enhance corporate governance by creating accountability at each level.

4. Objectives

Objectives are precise actions to be performed in an effort to achieve main goals. Although objectives are part of a goal, goals consist of numerous objectives. Tesco objectives provide the key problems and business desires, hence creating a platform of trust for customers, partners, and regulatory bodies.

Tesco's Objectives are as follows:

In an effort to develop critical desired results to build a customer-centric and high-performance-driven corporation that builds value for its stakeholders.

To strive for excellence and innovation in creating better processes, products, services, and management practices.

5. Core Competencies

Core competencies are the fundamental capabilities which enable Tesco to attain competitive advantage over its rivals. The capabilities reflect Tesco's strong areas in the market and guarantee customer and supplier confidence.

The key competencies of Tesco are:

• Technological as well as functional competence.

• A strong conviction in improving supply chain efficiencies in terms of cost savings and the provision of quality products and services.

• Committed efforts to propel business ahead by engaging with varied skills and expertise to achieve growth and performance.

• An obligation to deliver a competitive edge in the market (Martin, 2005).

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1.2 Review the Issues Involved in Strategic Planning

Strategic planning is a structured means of conceptualizing a perfect future and converting the vision into well-defined objectives and goals. Strategic planning offers a framework for sustainable success and performance in a dynamic market environment. Strategic planning enhances knowledge of the evolving business environment and enables the development of realistic, attainable business objectives that cater to the needs of suppliers', stakeholders', and customers', thus fostering continuous development and continuous improvement in critical thinking and strategic operations.

Key challenges that may occur in Tesco's strategic planning are:

Inefficient Planning: Tesco needs to be keen on creating effective systems, improving employee skills, optimizing resources, and having a favorable market image.

Lack of Effective Response: The organization should undertake to meet its responsibilities to stakeholders if it is to achieve the expected outcomes, especially in changing market conditions.

Poor Communication: Strategic plans have to be communicated in a way that is understandable and transparent across all organizational levels to instill improved performance and sharper individual roles and responsibilities.

Deficit in Monitoring: Tesco must continuously monitor its processes and performance measures through a sound monitoring system within its operations.

Lack of Participation: The company must have a participative model of expansion that fosters active engagement in key decision-making from all levels.

Lack of Leadership: Good leadership is crucial to driving performance and productivity and facilitating smooth strategic implementation.

Tesco has in the past found it difficult to create innovative cultures owing to constraints in its team. Increased realization of the business environment and stiff competition, however, have encouraged its evolution into a top market leader. Failure to cope with changing circumstances has the potential to greatly affect a company's profitability as well as long-term existence. Resource weaknesses coupled with a failure to prioritize major concerns of the business environment can result in negative consequences, which can adversely affect Tesco's operational effectiveness and financial well-being (L. Draft, 2008).

1.3 Describe Various Planning Strategies That Enable Strategy Development

Tesco's strategy for planning is to attain better operational performance, efficiency, and safety. They try to provide value in their supply chain and customer base to attain competitive advantage based on price competitiveness. They try to maximize shareholder value to gain constant capital inflow and efficient resource usage. Tesco also invests in research programs to fuel exploration and innovation to provide quality goods and services and to build better relationships with suppliers, partners, and customers.

Strategic planning methods are critical to gathering and analyzing information used to plan Tesco's strategic programs. They improve resource planning to enhance business performance and productivity, and determining major challenges and creating innovative, effective solutions. Strategic planning methods also assist in assessing the effects of performance and strategic planning, thus creating long-term progress and effective business results.

Strategic planning techniques important are:

• The Boston Matrix (BCG Matrix)

• SPACE Matrix (Strategic Position and Action Evaluation Matrix)

• PIMS Strategy (Profit Impact of Market Strategy)

• Directional Policy Matrices

The Boston Matrix (BCG Matrix)

Emerging in the early 1970s, the Boston Matrix, also known as the BCG Matrix, helps managers make decisions on which business units or product lines to invest in and which to discontinue.

BCG Matrix categorizes businesses or products into four categories:

Cash Cows: These segments consistently hit profit objectives and create a high capital, enabling reinvestment in other product lines, typically at their maturity phase.

Canines: These business segments experience challenges in growth because they lack investment. They may need costly restructuring schemes to generate cash flows; otherwise, where there is constantly low cash generation, asset disposal may become a necessity.

Interrogative Markers: Businesses in this group experience cash flow disruptions owing to heightened needs along with diminishing returns. The major objective is to build cash generation and expand the market coverage.

Stars are market-leading business ventures with significant cash flows.

BCG Matrix helps Tesco in efficient deployment of the resources at its disposal and serves as a valuable marketing tool for product planning, strategic planning, and portfolio analysis.

The success of the BCG Matrix in Tesco:

It helps to evaluate the alignment of Tesco's portfolio with regard to its 'Stars,' 'Cash Cows,' 'Question Marks,' and 'Dogs' product and service lines.

It is especially relevant to volume and economies of scale-focused companies, such as Tesco.

The model is intuitive and straightforward, with an obvious framework for the decision-making process.

It provides a firm foundation for management to budget in advance for future projects.

Tesco capitalizes on the experience curve to enhance its competitive position, introducing and marketing new products at advantageous prices to secure a dominant share of the market. After a product attains 'Star' classification, it is subsequently refined for maximum profitability.

 

SPACE Matrix – The Strategic Position and Action Evaluation (SPACE) Matrix

SPACE Matrix is a planning instrument used for the evaluation of appropriate strategic positions based on a firm's competitive position. It classifies strategies into four major categories: aggressive, conservative, defensive, and competitive.

 

 

 

The SPACE Matrix Dimensions:

The SPACE Matrix is built on two different dimensions:

• Internal Dimensions: Financial strength and competitive advantage.

• External Dimensions: Industry strength and environmental stability.

The assessment of the SPACE Matrix concerning Tesco:

Tesco frequently utilizes a robust strategy to preserve its competitive edge and encourage quick market expansion. The strategy is to utilize its strengths to implement market penetration and market development strategies, which require expanding its product assortment and strategically acquiring its rivals.

Tesco demonstrates strong financial health, reflected in high investment returns, high revenue generation, solid working capital, and regular production of cash inflows.

They demonstrate excellent use of creativity and innovation in their strategies, thus ensuring strong customer loyalty, good product and service quality, large market share, and a strong competitive edge.

Tesco enjoys favorable environmental stability, including favorable economic climate, price elasticity, technological innovation, realizable competitive barriers, and robust industry growth prospects.

PIMS Strategy (Profit Impact of Market Strategy)

The PIMS Strategy focuses on the connection between strategic choice and the resultant consequences. Upon little scrutiny, the data gathered with the help of PIMS can help managers better understand their business surroundings, identify analytical determinants that can improve the state of the firm, and develop strategies that generate long-term competitive advantage. The concepts and data linked with PIMS are widely utilized in academic studies and have had a considerable influence on business strategy in various companies globally.

PIMS generally attempts to answer three basic questions:

• What is the normative profit margin for all business categories?

• Given a company's current strategic methods, what can be expected of its future operational results?

• What are the best ways to improve future operational performance?

The achievements of PIMS at Tesco can be measured as follows:

• It allows us to see the intricate relationship between key strategic decisions and how they impact the world of business.

• It helps build crucial determinants that have the potential to enhance market position and establish a competitive edge.

• It allows for the measurement of quality and performance assessment in an attempt to access new market potential.

• It allows for enhanced resource allocation to achieve quantifiable and quantifiable organizational outcomes (Grieves, 2006).

Directional Policy Matrices

The Directional Policy Matrix evaluates market forces in conjunction with the essential capabilities of an enterprise to gauge its ability to be self-sufficient against evolving circumstances. It designs investment opportunity strategies, guiding investment, growth, maximization, or selling decisions.

 

 

 

 

The evaluation of Directional Policy Matrix for Tesco:

Tesco is capable of making investment choices when market appeal and organizational capability are high, thereby ensuring the use of resources to further enhance its strengths.

They are able to make strategic choices to create strong competitive strengths, including product portfolio building, innovative store layout for convenience to customers, and a strong delivery mechanism, particularly if market attractiveness is greater than their existing business strengths. This keeps them in the lead and sustainable.

Tesco can continue to be profitable by utilizing its advantageous market position and strengths regardless of the poor relative market attractiveness in relation to its business strengths.

If both business strength and market attractiveness are poor, Tesco can concentrate on minimizing its overhead costs and product line segments to stay profitable.

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2.1 Perform an Organizational Audit for the Target Organization

An organizational audit is a process that assists an organization towards successful operations by aligning its internal organization, processes, and systems with its grand strategy, particularly in a dynamic business world. This auditing process would be of immense value to Tesco by recognizing and confirming its organizational strategy and major business units, creating core business processes with skilled teams, allocating resources to optimize system improvement, synchronizing planning and development timelines with managerial backing, and designing and executing new design projects effectively (Mackenzie, 1986).

Several methods for undertaking an organizational audit can be utilized by Tesco, primarily aimed at evaluating both internal capabilities and external influences.

SWOT Analysis of Tesco:

STRENGTHS: Strong brand identity and premium brand recognition in European markets. A dense array of resources underlies flexibility and resilience. In-depth understanding of both local and global customer demands. A firm and stable liquidity ratio represents good financial health. The vast UK market is the main source of income. Enduring and consistent retail experience and expertise gained over decades, along with robust inventive capability.

WEAKNESS: Lower brand recognition and some uncertainty regarding the Tesco brand in Asian and Eastern markets, limiting foreign expansion. Demand for Tesco prices is extremely elastic due to intense competition, low switching costs for customers, and varying degrees of customer loyalty. Reliance on the British market to fund its foreign diversification attempts, which will be a risk if the British market is on the decline. Obstacles faced by specific economies regarding substantial foreign corporations, encompassing regulatory challenges or cultural impediments. Weak or poor sales growth in the general merchandise retail (GRM) in a few of the developed European nations, affecting overall performance.

OPPORTUNITIES: To capture overseas markets, especially in Asia, with stable socio-economic positions to provide a counter-balance to the intensity of the UK markets. Growing per-capita incomes in major markets such as South Korea and BRIC nations (Brazil, Russia, India, and China), reflecting improved purchasing power. The growth in retail diversification beyond traditional consumables has opened new opportunities for the generation of revenues. Expansion of Tesco into healthcare and cosmetic products, leveraging consumer trends.

THREATS: Competing market forces can create destructive price competition, cutting into profit margins. Economic conditions can change and lead to lower overseas demand, thus affecting global sales figures. Differences in tastes and preferences, lifestyles, organizational forms, interpersonal relationships, and consumer attitudes of regional markets in international markets require costly modifications. Global competition from high-end market leaders like ASDA and Walmart, adding to the competitive landscape. Euro-zone debt crisis and reorganization of the global political and economic structure could represent serious threats to Tesco's finance and operations.

 

Value Chain Analysis of Tesco

Value Chain Analysis focuses on Tesco's in-firm activities, ranging from product design to market segmentation, delivery channels, and strategic support following sales. It involves key activities like inbound logistics (warehousing), operations, outbound logistics, marketing and sales, and services. In addition, it covers support activities such as technology development, human resource management, and infrastructure development options.

 

 

 

The value chain analysis in Tesco identifies high customer satisfaction and loyalty, extremely high product quality, diversified differentiated products, on-time delivery, and enhanced customer benefits. These factors in aggregate represent the high value and solid financial health that are vital to the sustained growth and sustainability of Tesco (Phillips, 2003).

Analysis of Product Positioning for Tesco

Creating an overall understanding of Tesco's product positioning strategy and outward persona it portrays is crucial in achieving success and establishing a strong customer impression and market identity over its competitors.

Organizational Analysis: Determining strengths in organizations to structure services and capacities in a way that creates differentiated experiences for customers, thus gaining a long-term sustainable competitive advantage.

High Performance Initiatives: Supporting Tesco's high-performance initiatives through effective communication of its distinctive selling proposition and persuasive advantages to customers (J. Leo, 2007).

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2.2 Perform an environmental analysis of chosen organizations.

Political, economic, and social Impacts:

• Impacts on land use trends, such as agriculture, fisheries, and unregulated overexploitation of natural resources due to commercialization.

• Local population dynamics shifts owing to increased immigration or displacement resulting from activity.

• Socioeconomic imbalance in irregular patterns caused by income disparity among host populations affected by the activities of the company.

Technological Impacts:

• New ways of producing goods and services, driven by innovation.

• New means of delivering goods and services, increased efficiency and availability.

• Sophisticated means of interacting with target markets, through internet platforms.

Environmental Impacts:

• Exploration and production operations resulting in harmful atmospheric emissions such as carbon dioxide, carbon monoxide, methane, sulfur dioxide, hydrogen sulfide, etc.

• The depletion of the ozone layer due to chemicals like halons requires strict monitoring.

Legal Impacts:

• Regulation of the formation and operations of cartels by companies for encouraging fair competition.

• Prevention of abuse of a company's natural market position at national or local levels.

• Prevention of deliberate collusion between corporations and promotion of sound competition.

• Prevention of price fixing or unforeseen price increases as a result of a firm's single action (Slamming, 2013).

Implementation of Porter’s Five Forces Model for Environmental Audit in Tesco Plc

Porter's Five Forces Model is one of the important environmental auditing tools because it offers a framework for the examination of competitive forces within an industry.

The Five Forces are:

Suppliers' Bargaining Power: It looks at the number of raw material suppliers, their strength and size, and the switch cost.

Bargaining Power of Buyers: This assesses the quantity of probable buyers available in the market and the final switching cost for them.

Level of competition: The basic premise here is the number and capability of existing competitors with attractive services.

Threat of Substitutes: Buyers will move towards substitute products when prices increase, lowering the bargaining power of suppliers and incumbent companies.

Threat of New Entrants: New entrants are always drawn to lucrative markets, which can erode profit margins of existing players gradually (Roy, 2011).

2.3 Assess the significance of stakeholder analysis when formulating a new strategy

Stakeholder analysis is a critical step in developing new strategies as it helps in identifying, categorizing, and analyzing the power and influence of various individuals or groups who have an interest in the activities and outcomes of the organization. Analyzing the stakeholders in detail helps in developing inclusive strategies, securing the necessary support, and also discarding potential conflicts or dangers.

Key Stakeholders of Tesco

Shareholders, as large investors, contribute significantly to Tesco's capital inflow. They are engaged at the strategic level of making decisions, whereby they have a key role in implementation. Representation of these shareholders is done by a board of directors.

Employees: Tesco and employees have a bilateral relationship. Excellence, work standards, and health and safety are all prioritized and affect employees positively, enabling Tesco to function as a market leader.

Suppliers: Suppliers are key players in Tesco's supply chain network and a vital component of the business. Supply chain management is deeply rooted in Tesco's values.

Customers: Tesco is aimed at delivering customers value for money in terms of quality offerings and services, competitive prices, high safety levels, and environmentally friendly practices. Its R&D activities always aim to enhance core offerings to obtain satisfied and loyal customers.

Local Communities: Tesco wants to contribute back to society for inclusive growth as well as business growth, being actively engaged in community development.

Interest Groups: Tesco works with different interest groups such as government organizations, NGOs, business executives, universities, and the financial community to ensure effective regulation and a good image of the market (Freeman, 2010).

The Relevance of Stakeholder Analysis in Tesco

• Helps in developing open and critical plans for ensuring client satisfaction, product innovation, and good reputation.

• Ensures healthy employee relationships and improves coordination by efficiently addressing their needs and expectations, thereby fostering a healthy working environment.

• Includes corporate social responsibility as part of its business, thus maintaining a good public image and enhancing brand credibility.

• Improves cooperation with strategic suppliers and partners, thus allowing for efficiency in supply and distribution channels to ensure smooth operations and reduced costs (W. Wessis, 2014).

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References 

• The Six Strategic Drivers - Tesco PLC (2017), https://www.tescoplc.com/media/392349/tesco_ar17_6drivers.pdf

• Tesco Sustainability Report 2025, https://www.tescoplc.com/media/wvkj1yic/tesco-sustainability-report-2025.pdf

• Tesco PLC Strategic Report (2018), https://www.tescoplc.com/media/hjpmggdp/tesco_2018_strategic_report.pdf

• Serving Our Customers, Communities and Planet a Little Better Every Day - Tesco PLC (2022), https://www.tescoplc.com/media/759006/tes018_2022-ara_hires.pdf

• Tesco Strategy Analysis & Recommendations - Aithor (2024), https://aithor.com/essay-examples/tesco-strategy-analysis-recommendations

• Analysis of Business Operation Mode and Marketing Strategy of British Mainstream Supermarket: Case study of Tesco - ResearchGate (2025), https://www.researchgate.net/publication/387834876_Analysis_of_Business_Operation_Mode_and_Marketing_Strategy_of_British_Mainstream_Supermarket_Case_study_of_Tesco

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• Tesco PESTLE Analysis (2025) - Business Model Analyst, https://businessmodelanalyst.com/tesco-pestle-analysis/

• How Tesco Became The UK's Biggest Retailer (Word-of-Mouth) - ReferralCandy (2016), https://www.referralcandy.com/blog/tesco-marketing-strategy

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• How Tesco turned its marketing strategy around | Smart Insights (2017), https://www.smartinsights.com/online-pr/reputation-management-online-pr/tesco-turned-marketing-strategy-around/

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• Tesco Plc Digital Transformation Strategy Analysis Report 2023 - IANS, https://ians.in/pr-wire-detail/tesco-plc-digital-transformation-strategy-analysis-report-2023-accelerators-incubators-and-other-innovation-programs-13-01-2024

 

Author’s BIO:

Dr. Amelia, is a seasoned business strategist and academic, specializing in corporate strategy, organizational development, and market analysis. Holding a Diploma in Business (Level 5), their expertise spans strategic planning, stakeholder engagement, and environmental auditing within dynamic multinational contexts. This work, focusing on Tesco, exemplifies their practical application of theoretical frameworks like SWOT, PESTEL, and Porter's Five Forces to deliver actionable business insights. Her research contributes to a deeper understanding of market leadership and sustainable growth strategies.