Competitive Strategy Assignment Analyzing Case of Tesco

Question

Task: Write a report on competitive strategy assignment illustrating the concept of competitive strategy considering various analytical tools for the organization of your choice.

Answer

Introduction
According to the research on competitive strategy assignment,the competitive strategywithin a business environment refers to the long term planning of the particular organization for gaining the competitive advantage over the competitors within the business market. It helps in aiming for the defensive position within the industry along with generating the superior Return On Investment (ROI). Thus, the present study focuses upon the use of analytical tools PESTEL analysis, Five forces analysis and Ansoff Matrix analysis within the UK’s multinational merchandise and groceries retailer TESCO that was established in the year 1919 with a revenue income of GBP 63.9 billion and the net income of GBP1.320 billion with a leading market share of 28.4% in UK grocery industry.

Figure 1: TESCO logo
Source: (Tesco, 2020)

Discussion
PESTEL analysis
What is PESTEL
As viewed by Sarwaret al., (2017), the PESTEL analysis is the tool used by the marketers for analyzing and monitoring the macro environmental factors that are the external factors which are confronted by the organizations like TESCO within the business market. It is the acronym for the tool wherein each letter represents a factor like“P- Political, E- Economic, S- Social, T- Technology, E- Environmental and L- Legal”.

How to utilize PESTLE
The traditional utilization of PESTLE analysis before expansion or adoption of business strategies consists of few steps, which can be enlisted as below:
Step 1- Listing of the external, macro environmental factors of PESTLE for the business which needs the brainstorming or have the expert knowledge regarding the likely factors that might impact the strategies adopted by the concerned business organization as well as its operation.

Step 2- Identification of the implication regarding each of the factors in PESTLE for the business. As stated by Zahari and Romli (2019), the significance of each of the external factors needs to be decided and accordingly rated or ranked. Usually, this includes the assessment of their impact over the time, the impact of the positive or negative affect and the impact by the dynamics. Step 3-In this step, the impact excised by the factors are rated, on a scale of low to high, to judge the extent to which the factors might act as a threat for the operations of the company.

Step 4- Further analysis can be undertaken within the form of SWOT analysis or the scenario building with developing the scenarios that will enable the visualization of substituteplans for the business operations, focusing upon ways to enhance and improve.

PESTEL of Tesco [EXAMPLE]
PESTLE analysis of TESCO in the UK and Germany.

Table 1: PESTLE analysis
Source: (developed by the learner)

Five (5) forces analysis
What is five forces analysis?
As evidenced by Moreno-Izquierdoet al., (2016), the Porter’s Five Forces analysis is the simple framework that assesses and evaluates the competitiveness of the business establishment through analyzing the position and the strength of the particular company.

How to use the five forces analysis
The five forces analysis includes the certain factors from which use the business organization and clearly analyses the issue arising such as, Competitive rivalry- that highlights the difference of the company with its rival and with presenting ist price to be competitive. Substitute products threats- it helps in focusing upon the expertise, customer service and the added value of the company which distinguish it from others.

Buyer’s bargaining power- it presents the retain power of the company over its supplier due to the volume and the price of the contract, it dictates the terms, setting of price and can also send the agreement at any time.
New entrants threats- it represents the barrier or the ease of the new companies to enter the market and become a threat to the existing companies (Nguyen, 2017).
Supplier’s bargaining power- it shows the power of the supplier within a company whether being monopolistic or oligopolistic.

Five forces analysis of TESCO [Example]
Threat for substitute product: Low to medium, as within the retail market substitute to the major retail food stores are small chain convenience stores, off license and organic shops that are not seen as the threat to TESCO which offers the high quality commodities and service. Threats of new entrants- Low, as major brands like TESCO have already captured the UK’s market by 80%, it becomes difficult for the new companies as it requires huge investment capital to establish the brand name.

Competitive rivalry- High, TESCO confronts intense competition from prime rivals like Asda, Sainsbury, Waitrose and Morrison over the price, products and its promotions. Buyer’s bargaining power- High, since the products sold by Tesco are not uncommon and owing to its easy availability in other departmental shops as well as over online apps, the switching cost for the customers is very low (Mukherjee, 2018).

Supplier's bargaining power- Low, as supplies are mostly inclined towards the major grocery and food retailers, which are common items and lacks uniqueness, with ready availability. Moreover there are a number of suppliers providing the same raw materials, in the market segment, which reduces the switching cost for Tesco and increases the dread of losing the business contract with the large supermarket, for the suppliers, thus minimizing their power.

Ansoff’smatrix
What is Ansoff Matrix Analysis
As defined by Yin (2016), the Ansoff matrix is the market or product expansion Grid which is the toolutilized by the business organization for analysing and planning their strategies for the growth of the company. This matrix shows four of the strategies that are used for helping the organization grow along with analysing the risk associated with each of the strategies.

How to use the Ansoff matrix
The decision makers for essentially managing the scope of the organisation’s portfolio mainly use the Ansoff matrix. As it is defined as the marketing planning tools, the executive and the managers of the company decide out of which four strategies will be more beneficial and less risky for the growth and development of the company’s business (Gurcaylilar-Yenidogan and Aksoy, 2018).

Ansoff matrix of TESCO [Example]
Market penetration: Tesco entered the market with its own advertising website that is Tesco Property marker and promoted all of its products and services and in 1995, the company crossed Sainsbury and became the largest retailer in the UK. Thus, the company gained customer loyalty through the Clubcard concept.

New service and products- Tesco provides the wide ranges of products that are credit cards, insurance products, saving schemes, electronic goods and have introduced innovative commodities like biofuel and is even trying to expand its sector in mobiles and tablets (Loredana, 2016).

Market development- In 1994, Tesco took over the Scottish supermarket chain William Low and in 1997, the company bought stakes from ABFC. in 2003, it purchased Japan’s C two network and in 2006 it bought the Casino Leader Price Supermarket of Poland. Thus, in 2006 certain significant changes within the marketing strategy were made by the company in Asian and European countries.

Product Diversification-TheCompany has diversified its product from food items to non food items like garments, books, furniture, dd sales, financial services, beauty and health products. The company consists of its own garment brands like F+F and Cherokee, and food brands like Finest and Value. Diversification of products, though a risky initiative, allowed Tesco to successfully penetrate into varied markets and establish them.

Conclusion
The present study focuses upon the competitive strategy models of TESCO such as Pestle, Porter’s five-force analysis and Ansoff Matrix that helps the company to gain competitive advantage within the worldwide business market.

Reference
Gurcaylilar-Yenidogan, T. and Aksoy, S., 2018. Applying Ansoff’S Growth Strategy Matrix To Innovation Classification. International Journal of Innovation Management, 22(04), p.1850039.

Loredana, E.M., 2016. The Use OfAnsoff Matrix In The Field Of Business. In MATEC Web of Conferences (Vol. 44, p. 01006). Moreno-Izquierdo, L., Ramón-Rodríguez, A.B. and Perles-Ribes, J.F., 2016. Pricing strategies of the European low-cost carriers explained using Porter's Five Forces Model. Tourism Economics, 22(2), pp.293-310.

Mukherjee, I., 2018. Applying Porter’s Five Force Framework in Emerging Markets—Issues and Recommendations. In Strategic Marketing Issues in Emerging Markets (pp. 307-316).Springer, Singapore.

Nguyen, T.T., 2017. Management education as an industry and MBA as a product: revisiting joint MBA programs using Porters five forces model. Global Business and Economics Review, 19(3), pp.356-377.

Sarwar, D., Ramachandran, M. and Hosseinian-Far, A., 2017, January.Disaster management system as an element of risk management for natural disaster systems using the PESTLE framework.Competitive strategy assignment In International Conference on Global Security, Safety, and Sustainability (pp. 191-204).Springer, Cham. Shatskaya, E., Samarina, M. and Nekhorosheva, K., 2016.PESTEL analysis as a tool of strategic analysis in international markets. SCOPE ACADEMIC HOUSE B&M PUBLISHING, p.47.

Tesco - Supermarkets | Online Groceries, Clubcard& Recipes. (2020). Retrieved 22 April 2020, from https://www.tesco.com/

Yin, N., 2016. Application of AHP-Ansoff matrix analysis in business diversification: The case of Evergrande Group. In MATEC Web of Conferences (Vol. 44, p. 01006).EDP Sciences. Zahari, A.R. and Romli, F.I., 2019. Analysis of suborbital flight operation using PESTLE. Journal of Atmospheric and Solar-Terrestrial Physics, 192, p.104901.