As a consequence of this, Tesco at present has been able to position itself as a leading retail chain in the UK. Correspondingly, the purpose of this study is to present an individual report about Tesco based on the case study Tesco versus Sainsbury’s Growth Strategies and Corporate Competitiveness 1990-2007 (University of St. Gallen, 2008). In order to meet the purpose of this report, external environment analysis will be conducted using PESTLE and Porter’s 5 forces model. Besides, analysis of internal environment using resource based view of the company coupled with value chain will also be performed.
In addition, the report will also focus on PR crisis analysis and strategic analysis. 2. Q1 – Analysis of the External Environment 1. Macro Environment Analysis – PESTLE Political Factor The role of government in promoting business is often argued to be extremely important. Notably, the UK government has placed significant importance on the retail industry as a means to achieve economic and social well-being of the nation. Correspondingly, the retail industry in the UK is imposed with lighter regulations as compared to other European regions (Crown, 2013; Djankov & et.
al. , 2002). Thus, the global operation of Tesco makes it vulnerable to the aspects of political environment prevailing in these markets. Any changes in the political framework of these countries can have a radical impact on the functioning of Tesco (Tesco, 2014). Economic Factor UK retail industry is considered to be large, complex and diverse in nature. The aspect of competition is identified to be relatively higher due to the presence of big retailers such as Tesco, Sainsbury’s and Asda. Accordingly, the retail industry in the UK is observed to contribute nearly 20% of the total Gross Domestic Product (GDP) along with contributing 9% of the total tax (Crown, 2012; Mugo & et.
al. , 2012). It has been predicted that retailers engaged in online sales of products will experience considerable increase almost double in their sales turnover in the next 3 to 4 years (Bristol Banking and Investment Society, 2014). In addition, economic factors such as price, economic recession and unemployment can be ascertained to have a radical influence on the performance of any business irrespective of the industry background.
Social Factor The UK retail environment is ascertained to be continuously changing over the years. In the similar manner, the customers’ needs and preferences are also identified to be changing.