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Contents
Introduction to Tesco.............................................................................................. 2
Task 1.2.Using your chosen organisation as an example, assess the business
mission, vision, goals and objectives as well as the core competencies................2
Task 1.2 & M1 Analyse the factors that have to be considered when formulating a
strategic plan of the chosen organisation..............................................................3
Industry.............................................................................................................. 3
Competitors........................................................................................................ 3
Internal Factors................................................................................................... 4
External Factors.................................................................................................. 4
1.3 & D1 Using your chosen organisation evaluates the effectiveness of at least
two techniques used when developing strategic business plans for your
organisation, for example, SPACE and the BCG matrix..........................................4
BCG Matrix.......................................................................................................... 4
SPACE Matrix...................................................................................................... 5
Task 2.1 Analyse the strategic positioning of a given organisation by carrying out
an organisation audit............................................................................................. 6
SWOT.................................................................................................................. 6
Ansoff Matrix...................................................................................................... 6
Market Penetration.......................................................................................... 6
Market Development....................................................................................... 6
Product Development...................................................................................... 6
Diversification................................................................................................. 7
2.2 & M2Using appropriate methods and tools, such as PESTLE and Porters Five
Forces analyses, carry out an environmental audit of your chosen organisation...7
PESTLE Analysis.................................................................................................. 7
Porters Five Forces............................................................................................. 7
Task 2.3 & M2 Assess the significance of stakeholder analysis when formulating a
new strategy for your chosen organisation............................................................7
Task 2.4 Present the new strategy for your chosen business based on
organisational audit and stakeholder analysis.......................................................8
Task 3.1 & M3 Based on task 2.4, analyse the appropriateness of alternative
strategies relating to market entry, substantive growth, limited growth or
retrenchment of your chosen organisation............................................................8
Entry Strategy.................................................................................................... 8
Substantive Growth............................................................................................ 8
Limited Growth................................................................................................... 8

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 Retrenchment..................................................................................................... 8
Task 3.2 Based on the analysis of the appropriateness of alternative strategies,
justify the selection of new strategy for your chosen organisation........................9
Task 4.1 Based on Task 3, assess the roles and responsibilities of personnel in
charge of implementing the strategy.....................................................................9
Task 4.2 Analyse the estimated resource requirements to implement the new
strategy.................................................................................................................. 9
Task 4.3 & D3.Evaluate the contribution of SMART targets to the achievement of
the strategy implementation.................................................................................9
Bibliography......................................................................................................... 10

2
Introduction to Tesco

Tesco was established in Britain in 1919 and is currently one of the worlds largest retain and
merchandising chain of the world. Tesco has its presence in North America, Eastern Europe and Asia
and I planning on expanding into the Middle Eastern region. Since they are listed on the stock
exchange, they go by the name of TESCO PLC. They first got listed on the London Stock Exchange
in 1947 and currently also trade in the Irish Stock Exchange. In early 1950 and 60s alone, they
experienced growth an expansion through acquisition of 800 stores within the UK. Jack Chen was the
establisher of Tesco but the leadership was passed on to Leslie Porter in 1977 that brought in the
philosophy on which Tesco still operates. The philosophy is to Pile it High and Sell it Low. This is
when Tesco began their price reduction journey that allowed it to capture the price leadership position
in the market. Moving further, Terry Lehay replaces Leslie and introduced a more consumer centric
approach to the organization through Tesco all the way.

Through the journey of becoming a retail giant, Tesco has not had it easy. In 1977, due to economic
conditions, they further reduced prices in order to retain consumer and as a result began a price war
with major competitor, Sainsbury. In 1982, they further reduced prices between 3%--26% on major
food items and were able to earn revenue up to 2 billion pounds. In 1985, they began to aggressively
invest in expansion and technology for efficient warehouse and supply chain management system. In
1995, Tesco was able to replace competitor Sainsbury as market leader and with this victory they
launched the Clubcard program that focused on understanding consumer buying behaviour right down
to the individual consumer. In 1997, they opened doors to their first ever hypermarket and in 2000,
Tesco started their online store. By 2005, they were able to acquire a profit of 2 billion pounds
through acquisition of 800 plus T&S stores. In 2007, they expanded operations into the US and in
2010 they diversified through opening up Tesco Bank. In 2011, Phil Clarke announces a further price
reduction however, this strategy did not prove fruitful and sales began to fall. In 2012, Clarke invests
1 billion pounds in makeover for the stores in hopes of regaining losses from the previous failure. By
the end of 202, the US operations had resulted in failure and by the early 2013, Tesco was known to
be the first US retail store to have earned huge losses. In 2012, they had officially announced a loss in
their account after 20 years of operation and lost market position as the leader. (Guardian, 2014)

Task 1.2.Using your chosen organisation as an example, assess the

business mission, vision, goals and objectives as well as the core
competencies

1. Mission: The mission statement of Tesco focuses on expansion in loyalty and market
leadership while creating value for their customers. It aims at delivering the superior value to
their stakeholders while strengthening themselves in the global competitive environment.
2. Vision: Visions are more short term goals that the organization aims at achieving. Tesco aims
at maintaining leadership in the UK market through offering quality from a diversified
portfolio and complete consumer buying experience. They are focused on growing further in
the UK market through invest in supply chain systems and technologies that will enable them
to meet consumer needs at all times.

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 3. Goals: These are set of plans that will allow Tesco to achieve their vision. This will also allow
the employees ta Tesco to make decisions based on understanding the best way of achieving
these goals. The goal of Tesco focuses on creating multiple drivers of growth through a
diverse product and business portfolio and enhancing their capabilities in terms of supply
chain and delivery. They have certain technological benchmarks that they wish to achieve that
will allow them to maintain modern and advancement management systems. They aim at
making a space and image in the community through creation of accountability through
corporate governance.
4. Objectives: These are further broken own and more specific plans that will allow Tesco to
reach their goals. (S, 2016). The objectives of Tesco aims expanding market leadership
position by 10% though creation of consumer loyalty. This will be done by giving the
consumers a complete shopping experience and after ales service. This will involve Tesco to
invest in employee training in customer services and team work.
5. Core Competencies: These are the exceptional skills; capabilities or technology that a
company owns that allows them to be better than the competitor. Tescos core competencies
include their vast market knowledge and expertise in understanding consumer needs. They
have great technological advantage through outstanding supply chain systems and consumer
profiling techniques. They have a strong commitment to deliver the best quality and
experience to the consumer and based on this, they have structured their culture accordingly.
Tesco also has a great talent pool that allows them to create and maintain their policies such
that its one of the most successful organizations in the word that mains such a vast and
diversified workplace and brings them together as a team. (Tesco, TESCO Core Values)

Task 1.2 & M1 Analyse the factors that have to be considered

when formulating a strategic plan of the chosen organisation.

Strategic planning is the vital ingredient for Tesco to achieve their goals. Once the objectives are
highlighted and defined, the strategic planning defines the strategy that is the planning on how the
objectives will be achieved. They are a series of steps strategically placed that ensures the
achievement of goals and objectives. For Tesco to ensure a well-structured strategy, they need to take
in factors from different angels.

Industry
The retail industry that Tesco belongs to needs to be studies sharply. The industry information will
include the market size of the industry. The size of the market and the growth aspects of the industry
itself. If the industry or market is at maturity, then the strategic planning for Tesco will involve
expansion in terms of diversity. The future movement of Tesco will need to be studied and predicted
while making the strategic plan.

Competitors
The competitors position and movements need to be studies. Major competitors are Sainsbury,
ASDA, Morrisions an Aldi. Tescos planning will be influenced by the movements, promotions and
strategies of these competitors since Tesco needs to ensure to be better than them. Tesco cannot
achieve their market leadership position unless they know what their competitors are doing to achieve
the same position.

4
Internal Factors
These include the strength and weaknesses of Tesco. They will have to conduct a complete audit that
will allow them to uncover their strengths competitive advantages and the capabilities of their
resources. This will also help them in understanding their weaknesses and what they need to be
careful in not doing. Often organizations forget their weakness and experiment by expanding into
activities that they do not have the infrastructure or resources to maintain and as a result, they face
losses.

External Factors
External factors involve the external environment that Tesco cannot control however; they have a
heavy influence on the organizations activities. These include the government and legislation system.
Political changes and modification in the law and legislation system or economic factors like inflation
and taxes that directly affect the purchasing power of customers. The external environment also
involves the progress of technology.

1.3 & D1 Using your chosen organisation evaluates the

effectiveness of at least two techniques used when developing
strategic business plans for your organisation, for example,
SPACE and the BCG matrix.
The following are the two techniques to be used:

BCG Matrix
Where business unit have a vast and diversified portfolio, this method was introduced in the early 70s
and is still used as a tool to allow management to decide which business unit to invest in and which
needs more work. The modern management also uses it to decide upon product line investments and
idea generation (Debrecht, 2014). The BCG Matrix focuses on four main categories:

- The Dog: Low growth and low market share is the problem child of the company as they
have money tied up and limited to no potential of growing.

- The Cash Cow: Growth is low but the market share is

high. This is the safest investment as the product is
already doing not just well but is the best in the market
and highly demanded. Tesco will know what products to
constantly promote and keep consumers engaged with.

- The Question Mark: The growth is high but the market

share is low. Investing in these will need further
investigation as low growth means chances of loss are
high. For Tesco, these could be certain imported goods
that may not be doing so well or the products might be
new. Figure 1. BCG Matrix

- Stars: Products that fall under the star category indicates high growth and high market share.
All products falling under here will need more investments that will allow them to capture the
opportunity. These products are those that may be in latest trend for the market. That includes
healthy and organic food.

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Once Tesco is able to identify which of its products fall under what category, they will be able to
make better judgement on how to utilize their investments well. It will allow them to see where to
invest, disinvest and where to look for opportunities to grow. However, this system only looks at
market position in isolation; there are no indications of future changes, influence of external
environment etc. It also does not help in prediction of the future or allows management to understand
why a certain product is a dog and another star.

SPACE Matrix
Strategic Position of Action Matrix allows organizations to focus on the competitive position of the
company. It takes in factors like the environment, industry and the financial position of the company
itself and based on that, it tells us what the strategy will do bets for the company.

Figure 2. SPACE Matrix

Through market development and market penetration, Tesco has allowed itself to maintain their
competitive advantage. This means, according to the Matrix, they have am aggressive strategy. Their
financial stability is strong as they have great investments and cash flow. The environmental and
economic factors allow them to maintain consumer loyalty and meet their demands.

Task 2.1 Analyse the strategic positioning of a given organisation

by carrying out an organisation audit.

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SWOT
A SWOT analysis allows the organizations to study their internal strength and weakness while at the
same time understands the external threats and possible opportunities they can take advantage of.

STRENGTHS
1. They have an established brand
image and identity that allows
them to easily position themselves
in the market.
2. They have a diversified resource
pool including their employees.
3. They have a strong market research
grip that allows them to gain
information on national and
international markets.
4. Their immense experience in retail
allows them to have wisdom.
OPPORTUNITIES
1. International markets are growing with
more stable economies that can allow the
dependency on the UK markets to
loosen.
2. Per-Capita income is rising in Asian
markets, opening new territories.
3. Diversity in product range.
4. Growth opportunities in health care and
cosmetics sections.
WEAKNESSES
1. Low brand consciousness.
2. They have a high price flexibility
demand given the competition is fierce
that loyalties easily switch.
3. They are highly dependent on the UK
markets as they are unstable in the global
market.
4. Sales in the recent years has not been
growing within the EU.
THREATS
1. Market competition is highly aggressive.
2. Price wars are common in the market.
3. Oil prices have affected international
economies, lowering demands.
4. Euro-Zone has their own debt crisis and
in addition, Britexit has further applied
pressure on the economies.

Ansoff Matrix
This matrix analysis the company based on two main factors, their market and their product. We have
market penetration, product development, market development and diversification as growth
strategies to be used.

Market Penetration
They focus on increasing market share through the use of current and existing products. It is ablut
securing your position in a mature market. The grocery and retail industry is at a secure level where
there is limited growth left. Here Tesco can be the dominating leader. In the UK market Tesco has
been able to create their dominant position which is not true for their global market. They ca do so by
increasing price strategy, promotion and discount options for consumers.

Market Development
This is where the business will create new markets for their existing products This can be done
through bringing alternate uses of their products which will create a new need using the same product.

Product Development
A new product is created by Tesco to sell in to the existing pool of consumers.

Diversification
Where Tesco decided to move into home furniture, electronics etc.

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2.2 & M2Using appropriate methods and tools, such as PESTLE
and Porters Five Forces analyses, carry out an environmental
audit of your chosen organisation.
PESTLE Analysis
PESTLE analysis is an external audit conducted by the organization to study the external factors that
are out of the control of the company but they influence business activities heavily.

1. Political, Economic and Social: Any changes that occur within the economy or in the
government. This includes the Britexit that falls under political, changes in oil prices that
again falls under economical. Any changes that occur in the agricultural those affect the
factors of production falls under economical. Social will include changes in lifestyle and
trends that will change the way consumers consume foods. This includes the latest trend of
healthy and organic food.
2. Technological: Any changes in technology that can influence and improve the production
process will directly impact Tesco. These include changes in technology that help better
manage the supply chain or target consumers.
3. Environment: Production and operations activities result in harmful production of waste and
pollution. Environment activities can damage the brand name.
4. Legal: This body regulates proceedings of cartels and may bring policies to protect local
firms from international competition.

Porters Five Forces

1. Bargaining Power of the Suppliers: The number of suppliers in the market depending on their
costs.
2. Bargaining power of Buyers: Number of substitutes available for the consumers.
3. Rivalry: Competitors like Sainsbury in the market.
4. Number of Substitutes available: The availability and convince of switching to substitutes
with better offerings.
5. Risk of new Entrants: The barriers to entry are low and this is an attractive market.

Task 2.3 & M2 Assess the significance of stakeholder analysis

when formulating a new strategy for your chosen organisation.
Key stakeholders for Tesco:

1. Shareholders: The most important individuals that bring in the cash flow as investments and
in return seek dividends.
2. Employees: Tesco needs to looks aft their health and safety at work by bring procedures and
policies to protect employees and employers both. They add value to the organization.
3. Suppliers: They reflect the supply chain management and Tesco is dependent on them for
supply and delivery of goods on time.
4. Customers: They offer the customers value for their money by providing quality products
and good service.
5. Local Communities: This includes giving back to the community through CSR activities to
show as a responsible member of the community.

8
These stakeholders help in building the name and image of the company. Employees and shareholders
invest their resources and time while the management gives strategies and guidance for better future
success.

Task 2.4 Present the new strategy for your chosen business based
on organisational audit and stakeholder analysis.
Tesco focuses on creation of value for customers. A new product development strategy can be
inherited where a new product line for organic and ready to eat healthy meals are prepared.

Task 3.1 & M3 Based on task 2.4, analyse the appropriateness of

alternative strategies relating to market entry, substantive
growth, limited growth or retrenchment of your chosen
organisation.
Entry Strategy
Tesco can opt for organic growth or acquisition. Organic growth will be where Tesco individually
grows itself like it has been since ages and acquisition will be when it takes over various other stores.

Substantive Growth
Tesco can go for diversification where they are entering into new product line altogether. They can opt
for vertical integration where they take control over a different stage of production of the goods.

Limited Growth
Market penetration and development means that Tesco penetrates the current market and increase
their market share while development means expanding into new markets with the same product line.
Tesco can also start focusing on product development.

Retrenchment

Tesco can opt for divestment by selling a product line that is not profitable to another company. Under
retrenchment, Tesco also has the option for turnaround, that is converting underperforming lines to
profitable ones through development or liquidation, that is sell of the company completely, which I
believe is not needed at the moment.

Task 3.2 Based on the analysis of the appropriateness of

alternative strategies, justify the selection of new strategy for your
chosen organisation.
Tesco needs to opt for market development and product development strategy with backwards
integration. This will allow them to expand globally and venture into new market with new products.
Integration will allow them to have control over the production processs and control costs and the
product itself.

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Task 4.1 Based on Task 3, assess the roles and responsibilities of
personnel in charge of implementing the strategy.
For the strategy implementation to be successful Tesco will need a capable and experienced leader
that will be able to control, inspire, lead and delegate a team in achieving the objectives. Each
personal involve will need to be trained and their job descriptions will need to be altered accordingly.
He HR will be responsible for doing so. The strategic planning will be led by the senior management
of the company who will also decide on the team leader and the team members involved in the
project. Tesco will need a new department for managing the legal and monitoring the external
environment situation that may act as a barrier for the implementation. Monitoring throughout will be
the responsible of the leader who will ensure weekly check ins to see if the goals are being met and if
there is a need for changing them.

Task 4.2 Analyse the estimated resource requirements to

implement the new strategy.
Human and financial will be the most important resource categories. The financial resources will
ensure the availability of funds an allocate budgets to each department like marketing, operations and
production. They will also look after the needed material and manage time. Time is the most valuable
resources needed to be used efficiently as time is money. On the other hand, human resources will
ensure that the right talent is placed at the right time for the right job.

Task 4.3 & D3.Evaluate the contribution of SMART targets to the

achievement of the strategy implementation.
To be successful, Tesco needs to set objectives that are specific, measurable, achievable, and realistic
and time bound. If Tescos targets are not defined and specific, there will be ambiguity and confusion
for the employees and everyone will have their own version. If one cannot measure the objectives,
one will not know if they have achieved them or not. If targets are not realistic, then resources will be
wasted and if there is no time limit to each, Tesco may take twice the time to achieve what can be
done in half of it.

10
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