Business Strategy Analysis for Tesco PLC

Business Strategy
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Table of Contents
Introduction................................................................................................................................4
Task 1:........................................................................................................................................5
1.1: Assess how business missions, visions, objectives, goals and core competencies inform
strategic planning.......................................................................................................................5
1.2: Analyse the factors that have to be considered when formulating strategic plans by
making reference to practical examples from Tesco PLC.........................................................6
1.3: Evaluate the effectiveness of techniques that you use when developing strategic business
plans in Tesco PLC....................................................................................................................7
Task 2.......................................................................................................................................10
2.1: Analyse the strategic positioning of Tesco PLC by carrying out an organisational audit 10
2.2: Carry out an environmental audit for Tesco PLC.............................................................10
2.3: Assess the significance of stakeholder analysis when formulating new strategy.............12
2.4 Present a new strategy for Tesco PLC...............................................................................13
Task 3.......................................................................................................................................15
3.1: Analyse the appropriateness of alternative strategies relating to market entry, substantive
growth, limited growth or retrenchment for Tesco PLC relating these strategies to the results
of the audits done in task 2 above............................................................................................15
3.2: Select an appropriate future strategy for Tesco PLC........................................................16
Task 4.......................................................................................................................................18
4.1: Assess the roles and responsibilities of personnel who are charged with the
implementation of the strategy in Tesco PLC..........................................................................18
4.2: Analyse the estimated resource requirements for implementing a new strategy in Tesco
PLC..........................................................................................................................................19
4.3: Evaluate the contribution of SMART targets to the achievement of the implementation of
the strategy mentioned in 3.2 in Tesco PLC............................................................................20
Conclusion................................................................................................................................21
Reference List..........................................................................................................................22
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Introduction
The increase in the competition has forced the organization to focus on the strategy to
compete with its competitors in the market. This will help the organization to attain its goals
and objectives. The strategy formulation will help the organization to mitigate the issues such
as environmental and organizational audit, strategic position and stakeholders needs. This
assignment will focus on the appropriate alternative strategy that will help the organization
for market entry. This assignment will also provide effective future strategy for Tesco, which
will help in increasing its market share. This assignment will also investigate the appropriate
resources that will be required to implement a new strategy in the market.
Company background-Tesco
Tesco is a British multinational grocery and merchandise retailer organization. In terms of
profit, Tesco is the third largest retailer in the world and as per revenue; it is the ninth largest
retailer in the world. Jack Cohen founded Tesco in the year 1919. There are more than 6553
stores of the company. As per the reports of 2017, the total revenue of the company was
estimated to be more than £55917 million. There are more than 476000 employees working
in Tesco (Tesco.com, 2018).
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Task 1:
Introduction
Organizations all around the world have focussed strongly on developing their strategies, not
only to strengthen their business but to communicate those ideas and principles with their
consumers as well. A well documented business mission, along with visions, goals and
objectives have always helped companies inform their consumers about the various
strategies. At the same time, they also act as guidelines and help the particular company
formulate their strategies more efficiently.
1.1: Assess how business missions, visions, objectives, goals and core competencies
inform strategic planning
Taking TESCO Plc into consideration, this study shall now focus on how the company’s
strategic planning is reflected by their various core competencies as well as their mission,
vision etc.
Business missions: TESCO Plc has always focussed on increasing the way and standard of
their consumer’s lives. They want to provide quality products at affordable prices so that their
consumers can enjoy a better quality of life. Their most important statement in their business
mission however, is “to be the champion for customers” (Tesco.com, 2018). From TESCO’s
point of view, their business mission is to create a great bond with their consumers through
the availability of great products at great values.
Visions: TESCO Plc has a vision, which is comprised of five inter-linked elements. They are:
 To create a global demand
 To have a good scope for their ever expanding business
 Innovation and modernization
 To be renowned on a global basis through correct application of skills
 To build and gain the trust and loyalty of their global as well as local consumers
Objectives: TESCO Plc’s objectives are many fold. They have been mentioned below:
 To increase profits through maximization of sales
 To make shopping a cheaper experience for customers
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 To maintain a certain standard in their products, thereby reducing any health costs
 To develop and maintain a strong online presence
 To employ both young and experienced people, thereby creating jobs for the local
communities
Goals: The goals of TESCO are to provide their consumers with all sorts of products at
affordable prices and be able to offer almost 3.5% - 4% of their group-operating margin.
Initially, in the previous years, it was 2.18% (Tesco.com, 2018)
Core competencies: TESCO Plc is one of the few companies left in the world that focuses
strongly on maintaining a strong relationship with their consumers. Their Club-Card reward
system not only benefits their consumers while shopping, but it also helps the organization
gain valuable insight on the things it needs to do better. Therefore, understanding and
adapting to the consumers’ demands is the greatest core competency for TESCO Plc.
1.2: Analyse the factors that have to be considered when formulating strategic plans by
making reference to practical examples from Tesco PLC.
Formulating strategic plans for TESCO Plc is a task that requires the understanding of both
internal as well as external factors. Since the company caters to a diverse consumer base, the
strategic plans have to be aimed at increasing unanimity amongst the various departments and
branches that TESCO functions through (Sreeram et al., 2017). The external and internal
factors affecting the formulation of strategies have been discussed below.
External factors:
1. Global economies- Having an international consumer base means that TESCO have
to take into account the various economies that they shall be functioning in.
Fluctuations, taxes as well as overhead costs of running a retail store in a foreign land
have to be taken into account in order to form their strategies as well as implement it.
For example, events like the BREXIT have had an extensive impact on TESCO who
now have to pay extra in order to export their goods into EU-27 (Chkalova and
Efremova, 2015).
2. Cultural diversities- TESCO have always had backup plans regarding their
functioning. Wherever TESCO could implement technological advancements to grow
in sales, they have. For example, TESCO’s functioning in South Korea was
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extensively because the people of that region were tech savvy and the purpose of an
online store would be more beneficial.
3. Brand awareness and image- TESCO have never been shy of promoting their brand
wherever and whenever required. Their strategies have had an uncanny resemblance
in areas where their brand was well known. At the same time, TESCO have made use
of already strong brands in a particular region, to tie up with them and increase the
trust of consumers. One of the most recent examples of the same was the tie up with
Samsung in South Korea, which helped TESCO promote its brand in South Korea.
Internal factors: Whilst Tesco focus on external factors that might affect their business
strategies, they also focus on their capabilities and strengths when coming up with strategies.
A huge employee base is the biggest strength for TESCO in the current scenario. It allows
them to have many perspectives when dealing with a present issue and at the same time,
enables the company to be ready for any future crises. Another huge internal factor that plays
a part in formulating strategies is the communication that persists between the different
hierarchal levels (Wood et al., 2016). This enables the company to record all suggestions
from different departments and make use of them as and when required.
1.3: Evaluate the effectiveness of techniques that you use when developing strategic
business plans in Tesco PLC.
Figure 1: The BCG Matrix
(Source: Bhattacharya, 2016)
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