The paper "Small Businesses and the Environment" is a perfect example of a Business Case Study. Business strategy is essential in the success of a business in a competitive market. Tesco is a shop located in the UK and operates in a number of countries. A business has to identify factors that influence the success of its business strategy in a competitive external business environment. Tesco aims at gaining a competitive advantage in a competitive environment. The business strategy of Tesco is; “ To expand as an international multichannel leading retailer in different markets with rising market share to 34% in three years, in order to deliver perceive values to customers through innovations and to meet stakeholders' expectations” (Tesco Annual Report, 2014).
This paper seeks to explore the external business environment that Tesco is supposed to identify in order to have success in its business strategy. The paper looks at Porter’ s five forces and PESTEL analysis of Tesco’ s external environment. Tesco operates in a very competitive environment, but it wishes to expand its operations through the opening of more retail shops in different economies (Tesco Annual Report, 2014, p.
1). It is the aim of Tesco to attract many customers by engaging in innovation activities and meeting its stakeholders’ requirements. It is clear that Tesco focuses on building a business, which has diversifications in various market segments, such as, groceries stores, petrol stations, convenience stores, as well as banking sector (Collis and Rukstad, 2008, p. 3). This would enable Tesco to gain some bargaining power to its suppliers. Tesco aims at engaging in the external environment by innovating its operations where it would launch its stores for many consumers to shop from its retail shops.
In order to achieve all this and to make it's the business strategy a reality, Tesco requires conducting an effective analysis of its external environment, that is, using Porter's five forces to identify its competitive environment and PESTEL analysis to recognize its external environment (Tesco PLC, 2015, p. 1). In order to gain a competitive advantage, Tesco is supposed to identify the forces affecting its operations in the market. Michael Porter’ s five forces; This is an environmental analysis that is conducted to identify if the business or its products are performing well in the competitive market.
Tesco business profitability in the environment is analyzed using the following forces; Rivalry among existing competitors; The UK market is very competitive and this is the same case with other economies where Tesco operates because there are other small supermarkets offering the same products sold by Tesco in the market. However, Tesco Plc. operates in an effective strategy whereby it focuses on the centralization of its business strategy (Weinstein, 2013, p. 10). In order to be competitive enough in the market, Tesco follows its business strategy statement strictly through observing its set objective, business scope, as well as target market share (Bureš ová , & Dvořá ková , 2014, p.
155). Tesco outdoes its rivals in the market by following a strict time frame characterized by an achievable target. Being a multichannel leader in the global market, it would be possible to attain a market share of 34% (Grant 2012, p. 41). Tesco has been making increased sales in the market compared to its rivals, thus gaining a competitive advantage.
Since Tesco aims at improving the way it values its customers and become more innovative in the market, this would ease the threat of rivals since it will retain its market position through improved performance and winning customer trust even in the intended geographical locations of business expansion. Since a good number of customers are loyal to this brand and willing to purchase products at Tesco Plc, the brand will not be threatened despite the existence of many competitors in the market (Fernie, Sparks, & McKinnon, 2010, p.
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