Report on Strategic Analysis of Retail Industry : Assignment

Strategic Analysis

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK ..............................................................................................................................................1
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Strategic management refers to a process of creation and implementation of major
objectives and goals. Top management takes initiatives on the behalf of company's owners,
based on assessment of business environment, i.e., internal and external in which firm competes
and also, considers resources in same (Amaldoss, Desai and Shin, 2015). It administers the
overall direction to the company. It includes formulation of plans and policies, specify the
objectives and allocation of resources in order to implement plans. This report is based on Retail
Industry which has emerged as fast paced and most dynamic one because of entry of various new
players. The main responsibility of retailers is to satisfied demand that is determined by supply
chain. In the present assignment, chosen organisation is Tesco which is a general merchandise
and grocery retailer of UK. It is a British multinational organisation with having its
headquartering in Welwyn Garden City, England. The report includes key strategic issues faced
by firm globally and influence of internal as well as external environment on innovation that
takes place in company.
TASK
Detailed description of Industry:
Retail Industry is one of the rapidly growing industry in today's world. Tesco is a British
multinational grocery retailer of United Kingdom. It is the third largest retailer of world by its
profits and ninth by its revenue. Many stores of company are located in around 12 countries
across Europe and Asia. Company was established 99 years ago in the year 1919. Business of
firm expanded rapidly and has diversified geographically in the areas of electronics, petrol,
furniture, books, toys, software, financial services, clothing, telecom, internet services, etc.
Innovation is a process of translating invention or idea into products and services that
creates some value for customers. In businesses, when ideas are implemented by firm to satisfy
the expectations and needs of customers then it often results in innovation. It is not an
individual’s action but, a whole process of interconnected sub processes. All those activities that
includes in process of generating ideas, marketing technology development, manufacturing and
producing new goods is refers to as as innovation. In context of organisations, it is a procedure to
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develop or enhance new goods and services so that competitive advantage can be gained in the
market place (Andrews and et. al., 2011).
One of the effective innovation of Tesco is replenishment application system. This
collects data of sales from checkout points and transferred it to supply department. By the help of
this system, supply department easily knows requirement of products. It maintains the product
availability and stock control in its every store for consumers. Oracle retail supply management
system is an important system in Tesco. It assists the firm to manage chain administration across
their business world. By the use of this system, company easily maintains capacity, production
and distribution. Various types of systems are used by the management people of Tesco in order
to manage innovation. They always try to find new innovation (Büyüközkan and Çifçi, 2012).
In 1990, Tesco introduced club card or loyalty scheme card. In this, when customers
purchase something, each time they get points by using this card. This helps the firm in colleting
visiting data of customers, products they buy, the goods which are sold quickly etc. These
modern technologies help the firm in meeting out their main goals. Now, Tesco upgrading micro
focus the develops replenishment system in IBM server.
Key strategic issues faced by Tesco at the global level:
The economy of United Kingdom is changing. Since 1960, because of deflation, the
supermarkets of that region face many issues. Tesco is one of them which face many issues at the
global level. Some issues are defined as below:
High cost and low price of discount chains
The biggest threat to supermarkets is swift rise and entrance of discount models as chains
such as Lidl and Aldi have expanded from Europe in order to find success and growth in UK. As
per the previous data, these discount chains grew 10% to 15% in 2014. The firms that gain
profits are directly translated into losses for traditional chains of supermarkets. The market share
of Tesco fell from 28.8 % to 28.4%. The huge impact on success and growth of discount chains
has been that, the supermarkets like Tesco and Asda had to lower down prices of their own
products to discount levels so as to hold on and keep up large amount of market – the outcome
being diluent profit margins & the push to negative inflation (Jetzek, Avital and Bjorn-Andersen,
2012).
Outnumbered
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