American Academy of English VRIO Core Competencies of TESCO Company Essay

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COURSEWORK ASSIGNMENT Academic Year 2020/2021 Module Name: Introduction to Business Management Word limit: 1000 words Coursework Title: Application of strategic tools Task Details/Description: TESCO is a British multinational groceries and general merchandise retailer with headquarters in Welwyn Garden City, Hertfordshire, England. In recent years, TESCO has faced growing competition from hard discounters, such as Lidl and Aldi, which has resulted in a fall in TESCO’s profits and share price. TESCO needs to respond to this competitive threat with an appropriate strategy in order to build the foundations for a successful future. Your task is to aid TESCO from the strategic management perspective by drawing on relevant strategy frameworks and concepts from the module. The structure is: 1. Introduction To complete this task, you must address each of the following: Task one: 2. Assess the corporate environment of your chosen company in the UK using PESTEL and five forces (external analysis, threats and opportunities). (11 points we should analysist about TESCO). Write Threat and Opportunities about each of them: • PESTEL: o Political o Economic o Social o Technological o Environmental o Legal • Porter’s Five forces: o Threat of new Entrants o Threat of substitute product or service o Bargaining power of buyers o Bargaining power of suppliers o Degree of Rivalry Task two: 3. Identify the key resources and competencies that your chosen company can use to gain competitive advantage (VRIO framework). o Is it Valuable? o Is it Rare? o Is it Imitable? o Is it exploited by Organization? Task three: 4. Discuss the most critical strategic choices that your chosen company can make o 5. Which strategy is the best for TESCO company to solve its problem, is it? ➢ Operation management strategy ➢ Financial strategy ➢ Human resources strategy ➢ Marketing strategy ➢ Research and development strategy ➢ Growth strategy Small Conclusion. Please note that whilst the scenario is a practical one, students should adopt a formal academic style when writing the report, using citations to support the analysis. Please only focus on the most critical aspect of the analysis to keep within the word limit. Key Dates: Levels of Achievement Criteria Novice (0 to 39%) Introduction The report and provides limited or conclusion no background (15%) information to provide context and purpose of the submission. Also a poor introduction to the company. Answer to Limited or poor Task 1 understanding of (25%) the brief and priorities. Incomprehensible. Answer to Limited or poor Task 2 understanding of (25%) the brief and priorities. Incomprehensible. Answer to Limited or poor Task 3 understanding of (25%) the brief and priorities. Incomprehensible. Overall The report is quality of poorly structured submission and delivered. (10%) There are numerous inaccuracies. There is limited or no attention to professional norms. Poor supporting Sufficient (40% to 59%) The report provides a basic background for the case Competent (50% to 69%) The report provides fair to good background information to provide some context and explanation of the purpose of the submission. Proficient (70% and above) The report provides excellent to outstanding background information that provides context and the purpose of the submission. An excellent introduction to team and company. Covers some basic and critical elements of the task Fair to very good understanding of the brief and priorities. Comprehensible. Excellent to outstanding understanding of the brief and priorities. Fully comprehensible. Covers some basic and critical elements of the task Fair to very good understanding of the brief and priorities. Comprehensible. Excellent to outstanding understanding of the brief and priorities. Fully comprehensible. Covers some basic and critical elements of the task Fair to very good understanding of the brief and priorities. Comprehensible. Excellent to outstanding understanding of the brief and priorities. Fully comprehensible. The report is clearly structured and delivered. There are inaccuracies throughout. The report is reasonably to very well structured and delivered. There are few inaccuracies. There is good attention to professional norms and appropriate supporting material. The report is excellently structured and delivered. There are no obvious inaccuracies. There is excellent attention to professional norms. Excellent supporting material. material.
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Running head: TESCO




Strategic tools are critical in business as they help managers in making better decisions. It
is important to place focus on them [particularly when running a business as they form a critical
and cognitively demanding element of effective strategies on organizational workers. Their use
goes beyond the conventional analytical application to a much wider range of social as well as
political applications. The study below will give an insight into TESCO, with insights on the
various analysis aspects of the organization. It will analyze its resources, competencies as well as
progress. It will also involve the analysis of strategic options available for the organization's use.
An assessment of TESCO using PESTEL
Tesco operates globally. This means that political factors across the globe affect its
performance tremendously. Such political factors do so by affecting the tax rates, the legislations
across different countries, and also the stability of these nations. As a result of the ongoing global
instabilities of different nations, a majority of different governments try and encourage retailers
to create more jobs for its people. TESCO plays a huge role in the creation of jobs. It also can
increase the demand for the products it deals in as well as improve on its employee
This is the main area of concern for the organization, mainly because in most cases they
leverage their products costs, prices, profits as well as demand. It must know whenever there is a
change in policy such as in taxation or in any other aspect that could affect its finances. No
matter how much growth the organization realizes globally, the organizations still are dependent
on the markets in the UK where it has a market share of approximately 30%



As a result of the social changes, there has been an increasing indication that over the
years, the UK market has shifted to shopping in bulk and shopping at once. This has resulted in
the organization increasing non-food items that they deal in. This is because the goods demanded
by customers’ demands are fueled by their social conditioning. For instance, because their
customers are becoming more health sensitive, TESCO is also taking adaptive measures through
its accommodation of the demand for products that are healthier and organic (Rosnizam, et al.,
The various changes in technology have created opportunities for the organization. An
example is through the introduction of online shopping facilities which come with delivery
services. It has also enabled checkouts that are self-serviced and are of convenience to
customers, these have reduced substantially the cost of labor. Technology has also allowed the
organization to invest in projects that save energy.
There is increased pressure on organizations to address various concerns about the
environment. TESCO is making sure it minimizes waste creation in all its stores.
The legislation by the government, as well as its policies, have a direct impact on the
organization. Some policies advocate for consumers through price control policies. To facilitate
such, TESCO gives its customers reductions in prices of products that they buy per the amounts
that they spend in their stores. They also have various promotions whereby their prices are


Porter’s five forces

The threat of new Entrants
This threat is very low. The capability of new entrants venturing into the UK markets is
substantially lowered particularly since it requires huge amounts of capital. The organization
needs not to worry about the new entrance particularly because it already has economies of scale
as well as a host of core competencies. Its competition may lack the necessary networks for
distribution, finances as well as the required experience needed to ensure success in the UK
(Zhao, 2014).
The threat of substitute product or service
The organization offers a huge range of products. It also sells substitute products. This
threat is irrelevant since it already sells substitute products. For instance, it already sells coke,
likewise, it also sells Pepsi, Fanta, and sprite.
Bargaining power of buyers
It serves numerous customers daily. UK buyers are not organized and this has lowered
their bargaining power. Even if they switch to the competition they may not be able to get the
kind of goods they get at TESCO. This has made this industry even more attractive for the
Bargaining power of suppliers
The organization is in service with over 2,500 suppliers in the UK alone. There are many
more worldwide. They however cannot exert any kind of ownership or power over the
organization particularly since there are numerous other suppliers. TESCO ensures that it
negotiates with suppliers to make its profits larger. Several accusations have been leveled over
the organization's arm twisting suppliers to make cuts in their prices.



Degree of Rivalry
The organization has powerful competitors who spend a lot on advertising as well as in
marketing. These wars in prices affect the organization's margins of profit even though it is a
market leader.

VRIO core competencies of TESCO
This VRIO analysis is inclusive of its inventory management system which is an area of
core competency when it comes to its competitive advantage, this strategic resource caters
particularly to the needs of TESCO to ensure that there are reduced bottlenecks as well as costs
in inventory. These systems have helped the organization in widening their profit margins. Its
strong sense of brand value is also a core sense of competency since it meets all the requirements
of the VRIO variables. The organization's brand is valuable, rare well as hard to imitate the kind
of resources that they offer. The organization uses its brand through all the operations that it is
involved in and it also applies this in the organization's value chain to make it easy for its
customers to be able to identify the areas where goods that can be afforded are affordable.
The best strategy for Tesco to solve its problems
Research and development strategy
This is the best strategy for TESCO to use because its use can enable the organization to
create new markets, adopt new products in addition to adding more features to the older products
that it has been distributing. The strategy can connect the organization's cost management with
the other aspects of its business strategy. These are various benefits that come along with this
strategy which include will include an improvement in its market participation. This is because,



at its core, it seeks to emulate innovation that is about giving customers new experiences. Such
product offerings can increase the interest of consumers in the organization.
It can also result in organizations' cost management benefits. The strategy doesn't give direct
value. However, its success is dependent on the talents, innovation as well as practices that are
put in place as opposed to the amount of cash that a department is allocated.

The organization's success clearly shows how the effective delivery of service and
products goes a long way as opposed to just splashing brand names to make profits. TESCO has
managed to build a powerful sense of individuality through the retiling construct. They have
dared and managed to adopt new expansion schemes and ensured their diversification in a
manner that prolongs their place in a market place that was already established.



Rosnizam, M. R., Kee, D., Akhir, M., Shahqira, M., Yusoff, M. A., Budiman, R., & Alajmi, A.
(2020). Market Opportunities and Challenges: A Case Study of Tesco. Journal Of The
Community Development in Asia, 3(2), 1-6.
Zhao, S. (2014). Market Opportunities and Challenges: A Case Study of Tesco. Journal of
Management and Sustainability, 4(4), 1-10. doi:10.5539/jms.v4n4p184

use this as the final document

Running head: TESCO





Strategic tools are critical in business as they help managers in making bette...

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