The PESTLE analytical tool is important for managers because it helps them to examine the external factors that face the organization and in the process, the managers can be able to think about the potential impacts of these individual factors on the business (Renewal Associates 2003). A PESTLE analysis enables the manager to better understand the environment in which the business is operating. As such, the manager can reduce potential threats to the business and at the same time, benefit from the opportunities available to the business entity (Rapidbi 2007).
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Undertaking a PESTLE analysis is always important, even in a case whereby the manager is selective. One of the main problems of the external factors of the PESTLE analysis is that they keep on changing continuously. As such, what worked yesterday may not work today. Even if the manager has decided on the course of action to take, nonetheless, conducting a PESTLE analysis of the organization is still a very important undertaking. It helps the manager to take into account any recent developments on any of the factors of the PESTLE analysis.
Corporate level Tesco
Corporate-level strategy refers to the actions taken by an organization to ensure that it realizes a competitive advantage by the identification and management of several businesses that are competing in various product markets or industries (Thomsen 2004, p. 31). For example, the management at Tesco supermarket realized that the retail industry experiencing overcapacity and for the company to remain competitive, the management deemed it necessary to embrace innovative services and products as its main competitive advantage (Veliyath & Fitzgerald 2000, p. 61). Therefore, for Tesco to remain competitive, the top management needs to embrace innovation as a key driver of the company’s product development process.
For instance, Tesco is in a position to develop various product portfolios at its different stores in the UK. Each of these store formats has been designed in such a manner as to ensure that the customers get a different shopping experience. As such, when a shopper visits another Tesco supermarket in a different town, he/she will experience a different shopping experience. This level of innovativeness may therefore act as a competitive advantage of Tesco in the retail industry, relative to the other competitors in the market. Tesco supermarket is always receptive to the needs of the customers and as such, the company’s research and development department is always introducing new lines of products to fulfill the growing needs of the customers.
On the other hand, business-level strategy refers to a coordinated and integrated set of actions and commitments that an organization relies on to gain a competitive advantage in the market, relative to the other competitors in the industry. To do this, the firm in question first has to exploit its core competencies in specific markets where its products are sold (Yip 2004, p. 22). There are two well known generic business-level strategies. To start with, we have cost leadership in which firm endeavors to reduce the cost of its products relative to competition as a way of generating economic value. The other generic business-level strategy is product differentiation. In the case of Tesco, the retail chain offers its customers the products that they seek the most, relative to the competition, in the hope of generating economic value.
Rapidbi., 2007. The PESTLE Analysis Tool and Template. [Online]. Web.
Renewal Associates., 2003. PESTEL Analysis. [Online]. Web.
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Thomsen, S., 2004. Corporate Values and Corporate Governance. Journal of Corporate Governance. International Journal of Business in Society, Vol. 4, No. 4, pp.29-46.
Veliyath, R., & Fitzgerald, E., 2000. Firm Capabilities, Business Strategies, Customer Preferences, and Hypercompetitive Arenas: The Sustainability of Competitive.
Advantages with Implications for Firm Competitiveness. Competitiveness Review, Vol. 10, No. 1, pp.56-82.
Yip, G., 2004. Using Strategy in Change Your Business Model. Business Strategy Review, Vol. 15, No. 12, pp. 17-24.