Executive Summary

Tesco plc. is the largest retailer in the United Kingdom with many international

outlets .The first part this report looks at the SOSTAC analysis of Tesco and goes on to look

at various strategies employed by Tesco in their marketing efforts. Tesco uses strategies such

as e-marketing and special pricing mix designs to win the market. However, Tesco is affected

by a number of factors analysed in this report using the PEST analysis. The main factor is the

issue on BREXIT which is both political and economic issue. We look at how Tesco comes

up with their marketing mix. Analysing Tesco this report sums up all the tactics and strategies

employed by Tesco and how they impact its operations. The last part of this report examines

the setup of Tesco in an international market in a country it never existed, in this case, Kenya

which is a country in Africa. An analysis of the superior strategies of setting up a market in

Kenya shows that adaptation is the best since Kenya and the UK hold different aspects of the

market.
 Table of contents

Introduction……………………………………………………………………..3

International marketing ………………………………………………………..3

Tesco’s background……………………………………………………………...3

SOSTAC Analysis………………………………………………………………..4

Situation Analysis………………………………………………………………..5

Tesco’s Balanced Scorecard…………………………………………………….6

Internal Business Process Perspective………………………………………….6

Learning and Growth

Perspective………………………………………………………………………..7

Tesco’s PEST Analysis……………………………………………………………8

Objectives………………………………………………………………………….9

Current Strategies…………………………………………………………………9

E-commerce………………………………………………………………………...10

Social Media………………………………………………………………………..10

Tactics ………………………………………………………………………………11

Pricing mix………………………………………………………………………….11

An Analysis of Tesco…….…………………………………………………………12

Implementation in a Market of Choice…………………………………………16

Bibliography……………………………………………………………………….19
 Introduction

An analysis of Tesco comes up with all the strategies employed by Tesco and how its

international operations are impacted.

International marketing

It is when companies apply marketing principles for them to satisfy the various wants

and needs of the different customers living across the national borders. Some of the reasons

that attract companies to the global market are; high profit opportunities in the international

market, larger market share and increased economies of scale (Buckley, 2002)

International marketing mix

When a company such as Tesco launches a product into a foreign market they can

choose to use a standard marketing mix or adapt a marketing mix that suits the country they

are investing in. The factors to be considered are product, price, place and promotion. Before

a company designs an international marketing mix, it’s important that they carry out a PEST

analysis that suits the local needs of the country they want to operate in.

In the last part of this report, the setup of Tesco in international markets in Kenya is looked

into. In this case, adaptation would be the best strategy for Kenya after an analysis of the

approaches of setting up a market (Pulido Polo, 2018)

Tesco’s background

Tesco plc. Is the largest food retailer and general merchandiser in the United

Kingdom with a market share of more than 30% and operating thousands of stores and

employing thousands of staff worldwide. It was founded in 1919 by Jack Cohen. The

company’s entry in the international market cannot go unnoticed. Tesco expanded its

operations to 11 other countries in the world and continues to see growth. Tesco stands at
number 3 as the largest retailer in the world and at position 2vin the world in comparison to

profits. It has over 4,300 stores throughout the globe. The growth of Tesco’s international

market share has been on the rise and the predictions show that it accounts for 25% of the

businesses’ profit (UKessays.com, 2019).

Tesco’s international expansion strategy responded to the need to be sensitive to local

expectations to other countries .This has been made possible as a result of entering into joint

ventures with partners such as Charoen Pokphand in Thailand and Samsung-Tesco Home

Plus joint venture with Samsung group in South Korea. The company also makes small

acquisitions such as in Japan and Poland as part of its strategy to win the international retail

market. Tesco also sells non-food products such as electricals and clothing. Tesco started as a

grocery store but later expanded into the market with a wide variety of retail products. Tesco

has enhanced the retail stores with a wide range of services that include travel agencies,

insurance, telecommunication, financial services and other products. The company also has

an influential petrol retailing business. However, Tesco predominance is within the

supermarkets and the hypermarkets which have been diversified greatly (Guo and Wang,

2019)

Tesco focuses more on their customers as well as their employees. Their vision is to

be bigger and be the leading retailer worldwide by understanding their customers and

providing better products and services as well as being a more creative company with their

services and products. Tesco’s mission is to create value for customers to earn their loyalty

for a lifetime and also to grow their profitability and become the largest retailer globally that

would benefit both the customers and the shareholders. Tesco strives to understand their

customers by being the first to meet their consumers’ needs and also being responsible in the

community through corporate social responsibility. Tesco has to ensure that the employees
work together as a team and by motivating them so that they can provide the best services

leading to higher profits (UKessays.com, 2019).

Tesco aims at winning the new era of retail. There has been such a pace of change in

the recent years at Tesco and in the retail business. Their consumers are changing more

quickly than ever before. On the other hand there have been more opportunities for the long

time .The Company has had competitive advantage built over the decades, having strong

positions in convenience, online and digital spaces. In the recent years Tesco has been

developing and seamlessly integrating new channels at the same time penetrating the

international retail space committed to long term development (Adewuyi, 2016)

SOSTAC Analysis

SOSTAC stands for marketing aspects that are situation, objectives, strategy, tactics,

action, and control. Situational analysis focuses on businesses entering the market and the

business aspects that include weaknesses, strengths, resources and services. Objectives are

the goals that a business aims to achieve. Tactics focus with the methods a business intends to

utilize. Actions look into the daily activities that push the company to the ultimate goals

while control monitors all the aspects of the goals that set (Kim and Halls worth, 2015)
Diagram Representation

Situation Analysis

Control Objectives
SOSTAC

Strategy Analysis Tactics

Action

Situation Analysis

Tesco’s Balanced Scorecard

This changes the missions and strategy of an organization to a set of measures of

performance that provide a framework to implement its strategy highlighting how to sustain

and meet the financial objectives of an organization. It measures Tesco’s plc. Performance

from 4 perspectives.
 Diagram Representation

Customer

Financial Balanced Internal

Scorecard
Processes

Learning & Growth

Financial perspective

This examines shareholder value creation and the strategy’s profitability. Tesco’s key

strategies are reducing their costs relative to the competitor’s costs and sales growth. Its

penetration to the Kenyan market should focus on how much of the operating income will

result from reducing the costs and more units of their products being sold (Skinner, 1993)

Customer perspective

This assesses the identified customer of the company’s products and market segments

and success of the organization in this segment. Tesco should use measures such as customer

satisfaction to monitor its customers in Kenya through identifying the future needs of the

customers and increasing the customer focus of sales organization.

Internal Business Process Perspective

 It evaluates internal business operations that create customer value resulting in

achieving financial performance. Tesco should sell goods to the Kenyan market that meet the

needs of the customers. Tesco’s innovation should focus on lowering the costs and improving

on quality of their grocery products. Tesco should monitor how quickly and accurately they

respond to customer-service requests in order to take over the Kenyan space (Skinner, 1993)

Learning and Growth Perspective

It identifies the capabilities that Tesco should excel at in order for them to achieve the

best internal processes that will create value for the customers and shareholders. Tesco’s

learning and growth perspectives should have a focus on motivation measured by satisfaction

and the percentage of sales and processing employees empowered to manage the process.

This should lead to superior financial performance in the Kenyan retail market (Erbasi, 2014)

Tesco’s PEST Analysis

Political

Different governments have different policies. These in turn affect Tesco’s operations

internationally. The BREXIT factor which is a contributing factor in the policies change

affecting the European region, came about during Theresa Mays reign as the UK’s prime

minister. In addition, Tesco may be affected by political instability in countries such as Iran

leading to losses if it was to set up a camp there (Pehrsson, 2007, P. 59).

Economic Factors

There are different economic factors in different markets such as inflation that affects

the buying power that the consumers have. The inflation factor may hold the loss in value for

the products sold in companies such as Tesco since the money is not enough to sustain the
company and if it is enough then there is exploitation of the consumers (Strohhecker and

Größler, 2012, P. 560).

Social Factors

Tesco is limited by social factors. Tesco has majored in offering grocery products and

other products such as jewellery. For example, if Tesco sets up an outlet where there are

many Muslim consumers, then there would be little support for the sales of pig products such

as bacon and sausages (Pehrsson, 2007, P. 62).

Technological factors

Technology has made it easy to promote sales and marketing activities and Tesco has

seized this opportunity. Tesco has used technology in providing services such as online

shopping and self-payment where a customer pays without the cashiers. Tesco has employed

the internet in marketing their products through the social media and mass media

(Strohhecker and Größler, 2012, P. 555).

Objectives

Tesco being a multinational retailer, is committed to providing quality products and

services. Tesco has employed well trained personnel and uses technology effectively to

satisfy all these things. Tesco’s business structure is structured to provide the best for the

company to remain at the top. Tesco can expand its network to the Kenyan market

successfully if they continuously provide quality and affordable goods to the citizens of

Kenya (UKEssays.com, 2019).

Current Strategies
E-commerce

Technology is the hub of all activities today. A unique online shopping experience is

what Tesco has come up with. Tesco has a strategy of acquiring new clients and associating

with the existing customers to hold a more personal level by creating an environment of

digital inspiration by joining details and emails with information concerning cheap and

healthy grocery products. Customers have come to terms with the upcoming trends within the

retail market (Strohhecker and Größler, 2012, P. 569).

Social Media

Tesco has set up social media accounts on Instagram, Facebook and Twitter to

actively post the latest in their products. Social media platforms are open to participation of

customers which makes it attractive. This ability has helped Tesco to gather ideas on how to

improve on their services. (Strohhecker and Größler, 2012, P. 558).

Tactics

Business Ethics

Means that a business is out to offer the best products and services with affordable

and reasonable prices that won’t hurt both the company and the customers. Tesco abides by

the laws that are set to govern businesses both locally and internationally, showing that Tesco

is in line with the international business standards that monitor and implement policies in

their locations (Pehrsson, 2007, P. 60).

Treasuring diversity

Diversity is in terms of religion, culture, disability or gender. Today’s world aims at

promoting equality in terms of gender and disability. Tesco holds products that serve the

needs of everyone despite their culture, disabilities or gender. Diversity is also achieved
through the staff members employed in the company. Tesco should considers an equal gender

employment policy conscious of the disabled (Reed FIDM, 2014, P. 147)

Respecting staff

The staff are the people who see to it that activities in a company are carried out

effectively. By recognition of work done and motivation, respect for staff members is

displayed. For example, Tesco dealing in the supermarkets business could appreciate its staff

members by getting them shopping vouchers from time to time. Respect for staff

professionalism is another aspect. The staff members are usually tested by the human

resource department to ensure they are capable for the job. Respect for their professionalism

means assigning jobs lying within the professional qualifications field of an employee

resulting in boosted productivity (Kim and Halls worth, 2015, p. 276)

Pricing mix

The following aspects should be considered to acquire the best out of pricing.

Market research

It looks into understanding the dynamics of the market structure from the competitor

to the consumer. A marketer comes up with the decisions a consumer makes for purchase and

what affects these decisions. These aspects may be hobbies, age or income figures (Grüner,

2016) while budgeting looks into salaries, marketing activities, product costs and the software

employed in all the operations (Coe and Lee, 2009, p. 80).

Revenue targets.

It focuses on the investment amount that a company requires to achieve its monthly

and annual targets. After revenue targets, competitive analysis sets in and looks into the
competitor profile, their strategies for marketing, and their interactions with their customers,

their promotional tactics and pricing mix.. Lastly, planning ahead is the other strategy. Here,

things are done easily when there are goals to be met. In many cases the sources of

motivation are goals, they determine the time period it should take to achieve certain

purposes, the processes that are involved and how to achieve the same (Reed FIDM, 2014)

An Analysis of Tesco Plc.

Tesco is a retail company started in the UK with London being its headquarters

despite the business being international. To realize their objectives, Tesco uses a number of

strategies. The first one being the use of social media to promote awareness in their base

market which is the UK. The company utilize social media platforms that include Google,

twitter, Facebook and Instagram to market their products in the UK. Tesco has an online

purchase model that allows consumers to shop from their homes .In relation to culture, Tesco

provides an environment that encompasses equality in choosing their employees. Hofstede’s

model of cultural dimensions shows that the UK is a country that is very conscious in terms

of gender equality therefore bringing about equality in their activities is an added advantage

to Tesco (Coe and Lee, 2009, p. 75).

Tesco plc. Is affected by a number of factors in relation to the PEST analysis. The

first is political. Because of the ongoing BREXIT factor, Tesco is faced by a change of

policies that would come about in the case when Britain exits the EU. Additionally, the

economic factors affecting the company are related to BREXIT. The EU had made it easier to

trade since they had made similar trade tariffs across all the European countries. However

that will change because Britain’s exit from the European Union will make it set its own trade

tariff policies that will change the twist of business in the UK (Strohhecker and Größler,

2012).
 Products

The company has turned its products in a manner that is accommodative to the

needs of most if not all the customers. The company has made it possible for all categories of

its customers to access the products they need by offering them a variety of products. The UK

is a very large region populated with different people of many ethnicities, cultures and

backgrounds. Tesco has accommodated the wage bracket aspect by making their products

affordable to everyone.

Tesco plc. is able to achieve a competitive strategy in the UK by putting into

considerations all the different consumers who are available in the UK. The company’s

products are able to fit in within the purposes expected by the user hence considered to be

convenient .Tesco’s products fit in within different demographics such as those of gender,

age and culture. Lastly, pricing strategies makes Tesco to be favoured by clients since they

accommodate all the economic and social classes. Their prices are not too high to be

unaffordable and neither too low to cause the company losses (Kim and Hallsworth, 2015, p.

277).

Boston Matrix

Tesco has a portfolio of products. Therefore the portfolio of products at Tesco are

analyzed based on the market share and market growth. Tesco has gained market share

through investment in marketing. Most of their products are in the category of stars, some in

cash cows and a few in question marks and are competing in markets where they are stronger

compared with the competition. Often heavy investments are needed to sustain growth. This

brings about a balanced portfolio of products (Haltofová and Štěpánková, 2014)

Pricing mix
 The company has examined the market conditions of the UK using some strategies

with the most common being the market segmentation plan of action. Tesco analyzes the

customer base according their tastes and preferences and how they are affected by certain

demographics as culture or age through this analysis. Today’s UK market is full of

consumers who are concerned about healthy eating. The concern is mainly among the elder

population because they are concerned about healthy eating due to lifestyle diseases. In

considerations to this, Tesco plc. Provides organic foods that pose little or no health risks to

their consumers. Tesco provides knowledge on healthy eating through an app they own called

Tesco diets. The company has made an effort to make sure that their state of the art service

are easily accessible and hence Tesco has set up stalls in numerous places in the urban as well

as the rural areas where mini stalls have been set up (Coe and Lee, 2009, p, 67).

Place

Tesco has various kinds of stores. These are superstores selling groceries and non-

food items, metro stores situated in towns, express stores that small stall with essentials and

high margin products and Tesco extra stores that have a wide range of products under one

roof. These stores are a convenience to the UK customers making their products easily

accessible.

Implementation in a Market of Choice

Owing to the fact of Tesco’s plc. Products adaptability, the company has the

capability to set up global branches in any region. However, Tesco may need to consider

some of the aspects previously seen in the UK. Taking Kenya as the prospective market

center for the company’s products, the following should be put into consideration.
 At First, Kenya is rich with all types of people. Their products should be able to fit in

within the needs of most people in Kenya. People in Kenya are after healthy foods that are

offered at affordable prices. Tesco’s products in Kenya should accommodate the different

backgrounds in the country. Kenya is filled with all sorts of cultures ranging from Islamic

cultures to Indian cultures and of course Christian cultures not forgetting other cultures such

as Rastafari that do not embrace the consumption of dead animals. In this respect, for the

Muslims, products such as beef should be provided whereas for the Indians there should be

no beef products, pork and or white meat. For the Rastafari, Tesco should aim at giving

vegetables considering their culture is against dead meat. Christian tend to consume most

food products therefore that would not be a challenge (Coe and Lee, 2009)

Kenya being a developing third world country, most of its residents are all about the

cost of products not quality. The company should therefore consider pricing strategies that

are favourable to most of the Kenyan citizens but not too low to cause losses to the company

or to make it hard for the company to operate. Kenya being a developing country has most of

its supermarkets set up in the urban areas. Tesco could take into considerations going rural in

order for them to make the products accessible to those in the rural areas. However, in order

to get familiar with the market conditions in Kenya it is advisable that Tesco begins in urban

areas (Kim and Hallsworth, 2015, p. 273).

Standardization versus Adaptation

Taking a business global and successfully selling the products in the international

markets most of the times poses many challenges. The issues of standardization and

adaptation strategies can guide multinational companies such as Tesco in competing

internationally. However, both approaches appear to be coherent and rational.

Standardization strategy requires that as companies are entering the international market, one
 essential decision is to use a standardized marketing mix (price, product, promotion and

place) a single marketing strategy in all the countries while the adaptation strategy advocates

for customization and market adaptation (Yap and Yazdanifard, 2014)

Standardization Adaptation

Advantages  Economies of scale.  Respects local expectations and

 Excellent communication specifications.

monitoring  Excellent local image

 Less tome to set up  Customers satisfaction is high

Disadvantages  Possible loss of advertising  High costs

effectiveness Difficult to know the needs of the consumer

 Negative reactions when

local needs are neglected

Kenya being a British colony takes most of Britain’s cultural aspects, with the only

difference being that there are different conditions in Kenya’s markets and also economic

wise. An approach that would be most suitable in this case is the standardization approach as

it tends to make operations cheap. Standardization means that the products would be made in

such a way such as to be fit in within the Kenyan environment. Both countries, possess

similar traits in terms of spending and therefore this make standardization most appropriate.

However, there are some issues that would make it not possible to assume this approach.

Issues such as the economy of Kenya which isn’t entirely stable and a GDP that is extremely

low as compared to the UK. The climatic conditions in Kenya would make the sale of certain
products as an extra expense since they would require very special means of transportation

and preservation (Kim and Hallsworth, 2015, p. 275).

A look at both UK and Kenya prove that the differences between both countries rule

out the use of the standardization approach in Kenya. There are variations between Kenya

and the UK in terms of climate and tastes and preferences of the people. An adaption

approach means that the products would be molded in a design that would fit the Kenyan

market. This would make Tesco consider all the environmental factors and constraints .These

include climate, occupation, race, the different laws, cultural differences and customs. Tesco

should therefore find out how they can adjust the marketing strategy including how they sell

and distribute their products in Kenya in order to meet the market demands. For example,

prices should be set to fit a third world country. The products produced should fit in with the

numerous cultural backgrounds in Kenya (Kim and Hallsworth, 2015, p. 279).

Conclusion

Tesco’s retail operations in the world cannot go unnoticed .Tesco being a leader in the

retail business, its brands value continues to rise. The company uses a number of marketing

strategies to win and retain the market .E-marketing and special pricing mix are the main

strategies used BREXIT is an economic factor that affects the operations of Tesco.

SOSTAC analysis looks at how the company gets into the market and analyses all the

business aspects. Current strategies such as e commerce, and social media have been actively

used by Tesco to retain the existing customers and also to win other customers. This move

has proved to be very fruitful to Tesco.

Being a multinational company Tesco has utilised values such as Business ethics,

treasuring diversity, respect for the staff in terms of their rights and freedoms and lastly

respecting the professionalism of their staff members boosting productivity and returns.
The PESTEL analysis shows political, economic, social and technological factors that affect

Tesco’s operations. Pricing mix brings about market research, budgeting and revenue aspects

in order to set up their own pricing policies different from the competitors pricing figures. An

analysis of Tesco plc. Shows that the company has scrutinised the UK market conditions

mainly by using the market segmentation strategy. The prices set are not too high to be

unaffordable to the low earning consumers and not too low to lead to losses for the company.

Tesco has the capability of setting branches all over the world. Taking Kenya as a

potential market, Tesco should put into considerations the different backgrounds in Kenya,

affordable prices and also the locations to set up the stalls. A look at the UK and Kenya

proves that there are differences between the two countries and hence the most suitable

approach would be the adaptation approach.

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