Strategic Analysis and Planning Recommendations for a Global Retailer Assignment Sample

Insights into Tesco's internal and external environment, competitive strategies, and recommendations for future growth and expansion.

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Introduction of Business Strategy Analysis and Planning for Tesco Assignment

Strategic management is a company's process that includes planning, monitoring, assessing, and analysing the organisation's necessities to complete the objectives and aims. For businesses, the changing environment will require them to constantly get success in their strategy. The mission considers that the organisation wants its position in the market and its vision is where they want to be in the future. The values replicate what guidance will be needed to fulfil their mission and vision. To fulfil or complete their strategic planning the organisation must have the ability to set short-term and long-term goals (Mišanková, and Ko?išová, 2014). For achieving the goals, an organisation must make some strategic decisions and allocation of resources and activities with the help of strategic planning this report, all the strategic management is based on the organisation of Tesco.

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The report will describe all the mission vision and objectives of Tesco. The role of the approach is to accomplish the goals and aims even the strategic planning techniques of the organisation will be also described briefly. The micro environment analysis of Tesco and its impact with the help of strategic management decisions will elaborate briefly. Tesco’s marketing strategies will be described here.

Macro Environment Analysis and Its Impact

Overview of the Company

Tesco, a UK-based company, overcame some of the toughest economic obstacles on the way to becoming a giant supermarket. It operates stores in a variety of sizes that differ in extent and the non-food products sold. Tesco has a large selection of both food and non-food items, such as home, frozen foods, beverages, bakery and entertainment items, beauty items, baby products, pet food and even electronic goods (TESCO PLC;2022). The company is expanding throughout Europe and the UK. The purpose and vision statements of this company have been vital in determining its success since its founding in 1919. Important business instruments that aid in a company's growth goal-setting include a corporate vision statement and recurrent online surveys.

The two declarations and the company's core values have an impact on the direction the business is taking as it works to become the leading retailer of general merchandise and groceries in the UK. Tesco's mission, vision, and core values are all included in one statement, which has helped the company accomplish all its objectives.

A company's long-term focus and direction are defined by its strategy. The company gains an advantage by allocating resources effectively in a challenging environment to meet stakeholder expectations and market demands (Nickols, 2012). The word "Strategos" was employed in military science in classical Greece to refer to a strategy for winning a conflict. Strategic management offers broad direction by developing an action plan and rules that are meant to achieve goals. The plans are then put into action by assigning funds. In the end, strategic management aims to provide companies with a competitive advantage over their competitors. Setting goals and attempting to achieve them are crucial activities for any organization. Various goal types can range in importance, timeframe, and type. It will be possible to accomplish goals if an efficient planning tool is created.

PESTEL Analysis

Political Factors:

Political issues are the main challenge for global corporations. Since each country has a unique government, businesses that operate in several countries will have to abide by several different regulations, some of which may be at odds with one another. This could reduce the company's efficiency. Tesco, a significant employer that had 423,092 workers at the beginning of this year, might profit from governments that have liberal views on workers' rights and lower minimum pay. Tesco and other UK supermarkets may have to hike prices as a result of tariffs on imports into the UK, which is another effect of the Brexit decision (Monte, 2021). Due to this, a business's study will now prioritise political concerns. Tesco is less vulnerable to foreign politics than other multinational corporations because it is primarily based in the UK, where it generated 81.3% of its 2019 sales. Governments changed, which is a disadvantage of Pestle in political aspects. In the US, they alter every four years, and in the UK, they may alter even more frequently (Ayodele, Abdallah, and Issaka, ND). This means that if a business starts a Pestle study, it can already be outdated by the time they finish it.

Economic Factor

Since they have the most capability to affect the cost, demand, earnings, and prices, these factors are the ones Tesco is most focused on. Any policy changes, as well as any that may have an impact on taxes or other matters that may have an impact on the availability of funding, should be known to the business. Because Tesco is a retail company, it is highly prone to changes in the economy (Moura, 2021). Tesco would have built sufficient reserves to endure a few years of lost marketing till the crisis was over to attempt and counteract this decrease in demand. The price that Tesco will have to change for its items will also reflect on the pace of rising. People may decide to shop at other shops if they change more. From 2011 to 2019, the UK's engagement rate rose from 70% to 76.2%. As people often have more spendable money when they are employed, this raised Tesco's earnings. The company's achievement throughout the years has been mainly credited to its chase of globalization and variety as vital business strategies. Tesco changed its emphasis from marketing pricey products to selling its value brands as a result of people's lower income levels.

Social Factor

Another set of factors Tesco must consider is social factors. The sale of frozen food fell by 43% following the horsemeat incident. Customers shunned Tesco as a result, particularly their frozen food. This is a result of social stigma around the safety of Tesco's food. The Loyalty scheme is a customer loyalty programme run by Tesco. Customers have the incentive to stick with Tesco since every time they spend money there, points are earned. These points can then be exchanged for vouchers that can be used to save money on future purchases (Rosnizam et al., 2020). In the UK, there are reportedly 1.6 million Club cards. Social and fashion trends are subject to continuous change. Tesco is forced to adapt frequently as a result of this. The beliefs and attitudes that customers hold, which are in turn influenced by social conditioning, have a big impact on the amount of money they spend on services and products. Since consumers' views on food are continuously changing as a result of their increasing awareness of health issues, Tesco is responding to these developments by satisfying the demand for organic products.

Technological Factors

Another critical part is technology. Tesco would not be able to run without technology. Tesco's productivity and the ability to lower prices for users are both outcomes of technology. The "scan as you shop" programme is one way they achieve this. Due to fewer delays generated by customers, Tesco does not need as many employees or can transfer staff to other areas of the store. Tesco claims that its "scan as you shop" service has become increasingly popular. Technology can also work against a company like Tesco. Tesco's sales have declined as a result of the advent of online shopping as customers have shifted to more procedures of buying goods through online markets like Amazon or eBay. Tesco has introduced the Hudl tablet to try and engage with Amazon's Kindle to tackle this. They increased their revenue by 43% as a result of adopting the online market. This has led to a growing wide range of products and improved customer for both in-store and online customers. Tesco will lose money and market share to companies that invest in the correct technology if they make the wrong investment.

Environmental Factor

Tesco is impacted by environmental challenges. Tesco mistakenly discharged 23,500 litres of petrol into the river Irwell after forgetting to activate safety features. They received an £8 million fine for this. This indicates that Tesco could chase profits. Tesco's website states that they are dedicated to stopping Amazonian deforestation. This indicates Tesco's commitment to considering environmental issues seriously. A food-sharing app that Tesco recently partnered with would donate unsold food to people in need rather than throw it away (Ajibola, 2022). Tesco has just recently begun to consider environmental problems seriously as a result of the general public's growing awareness of and concern about climate change.

Legal Factor

Political and legal factors are linked since laws are established by governments. Tesco's ongoing activities are governed by legal considerations as they must comply with local regulations to do business. These laws have been broken by Tesco in the past, such as in 2014 when they exaggerated their half-year profit. Depending on the country Tesco operates in, separate legal issues will arise. Depending on the goods they can sell, there will be different tax rates and pay rates. For example, the sale of menthol has been banned in the Union. Tesco will suffer as a result of this law's drawbacks since it cannot offer types of cigarettes. Tesco has confessed to hiring international students for longer hours in the past. This led to Tesco being fined and those students being dismissed (Moura, 2021). This shows that Tesco might put profits above laws. It can be difficult for a business to predict any possible new laws that may be adopted because laws frequently change. The PESTLE study conducted by the organisation may become outdated as a result. The actions taken by the government have a direct impact on Tesco's success. Tesco offers its customer price reductions on the fuel they buy, based on how much money they spent at their grocery stores, to make these plans work.

This PESTEL analysis of Tesco has been completed successfully. Companies create jobs throughout the Brexit period, which raises consumer sales and grows their workforce. The organisation is backed by the UK government as well. Considering the business's international expansion, the corporation remains mostly dependent on the UK market, where it holds a market share of about 30%. But the government of the UK changes frequently unlike the US government which is the stable minimum for some years. In the bad time company create jobs which give them recognition in the UK. From 2011-2019 employment rise from 70 to 76.2%. This recognition helps them to get success in this market (Moura, 2021). With the adaption of change in and focused on organic food items according to customer preference, Tesco gain popularity among the consumer because consumers are nowadays very aware of health. This will be Tesco’s opportunity to get one step closer to success. Although, one threat is big for the company which is technology. Technology can also work against a company like Tesco. Tesco's sales have declined as a result of the advent of online shopping as customers have shifted to more procedures of buying goods through online markets like Amazon or eBay. Tesco has introduced the Hudl tablet to try and engage with Amazon's Kindle to tackle this. Although, they increased their revenue by 43% as a result of adopting the online market. This has led to a growing wide range of products and improved customer for both in-store and online customers. But this online store did not help them as much because they come in this line a bit late.

Internal Environment & Capabilities

McKinsey’s 7S MODEL

The Tesco McKinsey 7S model demonstrates the links between seven different business elements to improve overall performance. This model states that companies use both hard and soft components, with common values serving as the soft component. All these components connect, resulting in a significant and direct impact on employee behaviour and attitude (Executive MBA Pro Resources 2022). The success and improved performance of the organization relies on these factors, which are more difficult to quantify and directly identify but are nevertheless equally crucial.

McKinsey’s 7S MODEL

Fig 1: McKinsey’s 7S MODEL

(Source: CFI Education Inc.2022)

  • Strategy: Tesco requires stability between keeping its main strategic advantage and obtaining short-term cost investments. Tesco products and services are generally viewed as offering "value for money" plus slightly more. Tesco must stop making financial cuts that might lead to inadequate quality of products and facilities in its desire to rise market share over price competition.
  • Structure: The epidemic has prompted an examination of the organisation's management structure and supply chain. To establish a more stable business and get prepared for future interruptions of a similar size, Tesco should focus on regionally spreading its vendors. This will make it less likely that the company's long-term survival will be affected by business disruptions due to climatic, geopolitical, or other factors.
  • System: Enhance internal events, and CRM, including risk management, web app performance, and computer vision transversely to the organisation. Tesco must establish a consistent system for "work from home" staff members so that there may be more appointments among the staff followers both virtual and in person. It will boost productivity in addition to enhancing data security and cyber security.
  • Staff: Working from home and onboarding Many employees are working from home as a result of the pandemic. Tesco should create a system for remote induction that incorporates a library of brief movies, interaction with small groups, and real-world examples to make the workplace more friendly for new hires.
  • Skills: Tesco offers structured training and development programmes for people who work abroad. Tesco may bring in fresh talent as more and more workers leave their current positions because they are not demanding enough.
  • Style: In a virtual situation, various leadership ideas are required than they are in physical surroundings. Managers that are present physically can stop by a chat, offer contributions, and look over the work. Staff must exertion in a much extra alone environment in faraway locations.
  • Shared values: Based on its controlling philosophies, goal, and assignment, the organization develops a profitable business model. The common organizational portion does not have to change all that much (Baroto, Arvand, and Ahmad, 2014). One area from which it may focus more is the environment. More openness may result from the growing focus on environmental, societal, and institutional frameworks among investment.

VIRO Analysis

 VIRO Analysis

Fig 2: VIRO Analysis







Competitive Advantage

Tesco's Pricing Policies

Tesco does utilize sound pricing strategies.


In the industry, pricing tactics are often imitated.

yes, the company has this analytics engine

It can only give Tesco a short-term strategic advantage.

Tesco's accessibility to possibilities in neighbouring businesses and the extra resources required to access those areas

can be important since they will generate new revenue streams


Can be imitated by competitors

The organisation has not yet utilized all of its assets to their full potential.

Has potential

Marketing Expertise within Tesco

Yes, companies are competing based on the industry differentiation


Pricing strategies of Tesco are offered match by a competitor

Yes, Tesco is making use of both its internal marketing department and outside expertise.

Transient competitive Advantage

Goals of the Leadership for the Upcoming Challenges



cannot be imitated by Tesco's rivals

not by the data provided in the case

This can result in a significant competitive advantage

Tesco's Customer Community

Yes, because consumers are involved in product creation.

Yes, Tesco has been successful in fostering a unique relationship with its customers.

Competitors of Tesco find it challenging to replicate the values and commitment to the local community

According to the data, expanding the Tesco customers' community ecosystem has a lot of potential benefits.

Providing a significant competitive edge.

(Source: Stefan, and Richard, 2014; Source: Al-Gamdi, ND )

Application of Appropriate Management Tools to Analyse a Given Market Sector for An Organisation and Inform Strategy

Porter’s five forces analysis

Competition in the industry

Recent research reveals that the United Kingdom is one of the world's most difficult retail marketplaces. This is perhaps one of the world's most competitive retail environments (Adelakun, 2020). Aspects that posed a threat included intense rivalry, the expansion of discounters' market share, and consumers' increasing propensity to make purchases online. The Big Four in the UK consists of Tesco, Sainsbury's, ASDA, and Morrison's, the latter two of which are also major food retailers (Jones and Comfort, 2019). Following the Big Four in terms of the footprint is another major retailer, Waitrose.

Potential of new entrants into the industry

Entry barriers are a key factor in determining how competitive a sector is. It's true that it's tough for a new firm to get into the UK grocery market, but it just means that established players have a lot of advantages (Samdani, 2020). The difference in public perception between supermarket giants like Tesco is striking. The timing isn't right for a start-up to take on one of these established titans. Both Aldi and Lidl took a long time to reach their current level of success. There is a lot of product differentiation in the market, with many companies offering customised offerings instead of mass-produced commodities (Nastasoiu and Vandenbosch, 2019). Significant effort is also put into marketing and customer service. Because of these factors, new entrants to the industry have little influence. It is challenging for new entrants to enter the market due to the high capital requirements of the sector.

Power of suppliers

Fewer vendors in a sector mean those providers have greater influence over the market (Rosnizam et al., 2020). With so many domestic and foreign vendors serving the demands of UK supermarkets like Tesco, supplier power is not especially strong in this sector. Therefore, grocery stores may enhance their bottom lines by negotiating better terms with the vendors. These producers' products are largely standardized; there is nothing to differentiate them, and switching costs are cheap (Rosnizam et al., 2020). For retailers like Tesco, this makes switching suppliers much less of a hassle. Therefore, the bargaining position of suppliers is weakened.

Power of customers

Customers with power have the capacity to affect price and boost service and product usage at the same prices. When these variables are accounted, several analysts believe that customers' bargaining strength in the UK supermarket industry is relatively low, which is excellent news for the industry's larger businesses (Moura, 2021).

The threat of substitute products

When it comes to food products, competition from other stores is quite modest in the UK grocery sector. Similarly, local convenience stores, licenses, corner shops, and businesses offering organic items are trying to fill the void left by large supermarkets, but they simply cannot. As a result, supermarkets face less competition, making this sector a good one for established players (Samdani, 2020). A few high-quality alternatives exist, but they come at a hefty premium. However, businesses in this sector often undercut the competition on price without sacrificing quality. Thus, customers were stuck without viable alternatives. As a result, there is a possibility that consumers would turn to cheaper options.

Stakeholder Analysis

  • High power, high interest: For Tesco, investors and suppliers are at the core of their business, they define the competitive force of the company and that is why they need to be kept satisfied throughout their journey (Naidoo and Gasparatos, 2018). Investors judge the capacity of the company and have the highest power and interest in investing capital in the company’s products and services. They are highly concerned with the type of competitive edge it has and how it will yield profitability for the investors.
  • High power, low interest: Government organizations have high authority over the operations of a business and they usually do not have any interest in the operations of the company (Awadari and Kanwal, 2019). However, this is essential to ensure that they are kept informed and satisfied with legal compliance. The establishment of concise and proactive communication will lead to increased transparency and stakeholder satisfaction.
  • Low power, high interest: there are various organizations (Environmental preservation communities) which often show high interest in a company’s operations and attempt to evaluate the operational approaches of the business to judge whether these are beneficial or harmful to the society and environment. However, they do not have any power over the company, thus keeping them mutually engaged and informed is enough to carry out different business approaches.
  • Low power, low interest: The customers usually have low power over a company’s operations and strategic approaches (Sharmaa, Jain and Pajni, 2022). They also do not have any interest in the strategic accomplishment of the company.

Application of Ansoff Matrix

  • Market Penetration: Management uses a market penetration strategy to increase sales of established items in target areas where the company already has a foothold. Increased marketing or streamlined distribution, price reductions to attract new clients within the market segment, and the acquisition of a rival in the same market are all examples of common execution tactics that might help a giant company like Tesco (Clarissia, 2019).
  • Market Development: As it does not need heavy investments in research and development or new product introduction, market development is the next least hazardous option. Instead, it permits the company's leadership to expand into new markets with proven goods (Tsatsoula, 2018). Approaches to execution include expanding into new local or international markets, expanding services to a new consumer base, or any combination of these.
  • Product Development: When a company has captured the attention of its target demographic, it may try to increase its revenue share within that demographic. The product development effort could be tackled in a number of ways, including by making an investment in R&D to create innovative products, by obtaining the entitlement to manufacture and sell another company's products, or by creating a brand-new offering by branding a white-label product that is actually created by a third party (Krummel, 2022).
  • Diversification: Given the need for both new products and new markets, diversification is often the most high-risk of all possible business strategies. Although it has the greatest potential for loss, diversifying a company's income streams in pursuit of fresh product/market fits may pay off generously (Loredana, 2016). When considering diversification options, management teams often weigh two main factors: Diversification that is "related" occurs when the company's current operations and the new product or market might benefit from one another. As well as unrelated diversification, when no genuine synergies are anticipated to be created between the current business and the new product/market.

Using the Ansoff matrix as a strategic tool may help Tesco maintain steady growth while concentrating on the development of value for its current market. Strategic positioning aids a firm in avoiding potential problems. The plan will centre on preserving resources while maintaining a competitive edge in the market. The organization will be better able to assess market trends and make choices in response to them with the aid of this approach (Loredana, 2016). This will free up Tesco's resources to be used toward creating innovative new items and ensuring their success in the marketplace. The corporation may use this technique as a springboard into other areas, where it can then implement more targeted growth plans. Tesco has always centred its business on traditional food items, but this plan will let the corporation enter new markets using the most effective methods (Krummel, 2022). For Tesco, expanding into new markets can be a useful measure to sustain global competition. It should not compromise the quality of its products and should not undercut its value-for-money approach to gain short-term success.

Devise appropriate strategic objectives, based on the outcomes of analysis for an organisation to inform strategy

Strategic Objectives with The Alignment of Company Analysis Result

Tesco has been one of the market titans in the UK retail sector for several years. It has gained the market capability to sustain itself in a highly saturated market without falling short of its product or service value in the time of the global pandemic as well as UK inflation (Jefferson., 2021). The company has emerged as a strong competitor in the industry by focusing on the value of the product. However, considering the constant market evolution and need for market relevance, Tesco needs to prioritize its expansion strategies and focus on extensive marketing leadership to reach a substantial market across the globe.

Strategic objectives:

Tesco has committed to "exploit the power" of its Finest collection as part of a renewed emphasis on premium items, after the introduction of a number of initiatives geared to compete on cheap pricing (Jefferson., 2021). The authority says that the change in strategy was prompted by peak periods of the week when customers show a greater interest in the Finest product line. As a result, the supermarket is trying to come up with novel product solutions for the event, broaden its product offering to include other product categories, and facilitate greater product distribution.

  • New product development
  • New market development
  • Focusing on marketing approaches

Application of a range of models, concepts or theories to interpret and devise strategic planning for a given organisation

Porter's Generic Strategies

The Cost Leadership Strategy: A competitive advantage, or a "rim" over the opponent, is the end goal of the typical tactics mentioned by Porter (Islami, Mustafa and Topuzovska Latkovikj, 2020). Tesco has two key options for achieving this objective within a Cost Leadership framework: Increasing earnings while maintaining average pricing in the market.

  • Gaining a larger portion of the market at a cheaper price while still turning a profit owing to cost-cutting measures.

The Differentiation Strategy: To differentiate business offerings from the competition, businesses must find ways to set them apart from similar offerings (Lee, Hoehn?Weiss and Karim, 2021). This entails elements like innovation, usability, reliability, service, and brand recognition that are important to the target demographic.

to sum up, the three most important factors are:

  • Proper research, development, and progress.
  • The capacity to provide excellent services.
  • Possessing a well-developed sales and marketing strategy is essential to making sure the market is aware of the advantages provided by the distinct products and services.

The Focus Strategy: Targeting certain niche markets allows businesses to better understand the market's dynamics as well as their client's specific desires and requirements, allowing them to create goods that are either very affordable or highly tailored to the niche's demands. Customers of these businesses tend to be very loyal to the brand because of the special way in which they are served. As a result, rivals are less likely to enter that specific market (Tanwar, 2013). Tesco has the possibility to ensure that it caters to the recent demand of customers for a luxurious range of products while remaining price sensitive to keep the value-for-money approach.

Differentiation Focus Strategy: The Differentiation Strategy has developed into what is now known as the Differentiation Focus Strategy. Both the Differentiation and Niche Market components of the approach are important, as is the Cost Focus component. Tesco can opt for this approach as well.

Merger and Acquisition Strategy while Market Expansion

Considering Tesco's continual growth and future possibilities to sustain through aggressive global competition, the retailer needs to focus on its foreign expansion strategy. Tesco should now focus on both the Indian and the Bangladeshi markets to develop supermarkets that authentically targets the middle-income and lower-income category of customer (Renneboog and Vansteenkiste, 2019). It also should focus on niche market development by diversifying its extravagant product range. However, this approach will require the company to take proper and market-adjusted strategies to cope with the differences of the host market. The term "M&A strategy" is used to describe the overarching goal of a merger or acquisition. The reasons behind a company's and investors' decision to pursue a certain sort of agreement will influence the nature of the deal itself. Increasing financial performance and lowering risk are the two most typical motivations for M&A (Lee, Hoehn?Weiss and Karim, 2021). One must be familiar with the two primary categories of buyers in order to comprehend the strategy behind corporate mergers and acquisitions since each type of buyer has their own unique motivations for acquiring firms.

Strategic purchasers engage in M&A activity to further their own stated objectives, such as the development of new goods or services, the penetration of new markets, or the accumulation of new consumers (Tanwar, 2013). Typically, other businesses act as the strategic purchasers in strategic mergers and acquisitions. Tesco can merge with the existing retail companies in the intended nations to gain market advantage and build a concentrated identity.


Managing a company's resources strategically means directing them toward the organization's desired outcomes. Objectives must be established, the external and internal environments must be analysed, strategies must be evaluated, and management must ensure that the tactics are carried out across the business. The strategic management approach is to help an organisation to get an advantage in the marketplace. Therefore, the most crucial component of the strategic planning process is carrying out the strategies in a rational manner while keeping tabs on various aspects of the market. Implementing a plan requires establishing metrics, reorganizing financial and human assets, and appointing the necessary leadership to manage the production, distribution, and promotion of goods and services. The present report has critically demonstrated a sound comprehension of the strategic management initiatives of Tesco. A concise internal and external environmental analysis has informed the suggested strategic directions and tactics for the company.


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