Combining balanced scorecard with SMART objectives

Running head: STRATEGIC EXPANSION
Strategic Expansion with New Cost-Effective Stores
[Tesco]
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1STRATEGIC EXPANSION
Executive Summary
The supermarket sector of the United Kingdom was competitive, and it has now turned fiercely
competitive. The change is being brought from Aldi and its growing success in the country. The
progress has been a matter of concern for Tesco, as found in the study. Tesco still leads the
industry with the highest market shares; however, the profit margin has considerably dropped. It
is because more and more new people are going to Aldi as it offers the cheapest pricing. It was
being found in the study that Tesco differs from Aldi in respect to the business model. Tesco is
much suitable for consumers with healthy income status. On the other hand, Aldi is more ideal
for low to middle-income groups. The growing interest in cheap pricing in the UK supermarket
industry gives an alarming signal to Tesco to have a revisit of its strategy. Tesco is being
recommended to open more new stores, especially in untouched areas of the country. As
explained in the study, new stores can help attract locals those who were not the part of Tesco
family. All is required is keeping the facility infrastructure simpler and sell relevant items only.
This is needed to cut on cost and offer many competitive offers to the target market.

2STRATEGIC EXPANSION
Table of Contents
Title..................................................................................................................................................3
Company Background.....................................................................................................................3
Introduction......................................................................................................................................4
Body.................................................................................................................................................4
Section 1......................................................................................................................................4
1. Situation Analysis................................................................................................................4
Section 2....................................................................................................................................11
2.1 The evaluation of the findings (SWOT without SW)......................................................11
Section 3....................................................................................................................................12
Combining balanced scorecard with SMART objectives (KPIs)..........................................14
Section 4....................................................................................................................................18
McKinsey’s 7S in managing strategic change.......................................................................18
Conclusion.....................................................................................................................................20
References......................................................................................................................................21

3STRATEGIC EXPANSION
Title
“Strategic Expansion with New Cost-Effective Stores: A Case Study on Tesco”
Company Background
Tesco is a UK based supermarket retailer selling groceries individually. Tesco is the
leading grocery retailer in the United Kingdom. Other than the UK it has operations in different
parts of the world like Asia and Europe. The UK supermarket sector has few notable names of
retailers in the forms of Tesco, Asda, Sainsbury’s and Morrisons. However, the competition
landscape got affected by the growing popularity of Aldi in the country. Tesco founded in 1919
in London, and the United Kingdom has shops in approximately 7000 locations across the globe.
Tesco offers products and services under a variety of store formats like supermarket, superstore,
hypermarket and convenience shop. Operating income for the company stood at £63,911 million
as of 2019. The number of employees as recorded in the same year was around 450,000. Tesco
has many subsidiaries identities, as well. Tesco operates a bank named Tesco Bank in joint union
with the Royal Bank of Scotland. Tesco Mobile service is also there that is being delivered using
O2 as the network carrier. Other than these Tesco offers numerous other services like Tesco
Extra, Tesco Superstores, Tesco Express, Tesco Metro, One Stop, Home Shopping, Tesco.com
dark stores, Tesco Clubcard and Petrol Stations(Tescoplc.com 2019).

4STRATEGIC EXPANSION
Introduction
Tesco is a major brand in the United Kingdom. It has adequately maintained its market
reputation for years and for that, it has to bypass many problems. However, the level of difficulty
has increased these days. It is more due to the existence and growing popularity of Aldi, which is
a German-based retailer. The business model for both of these companies is different. Aldi is
oriented explicitly with cheaper offers, whereas Tesco maintains a balance between pricing and
product quality. Discounted rates are what is the part of Tesco. Tesco is challenged for pricing as
Aldi is comparatively cheaper. Besides, Tesco, like other physical stores, faces the loss of a
customer in the hands of various e-commerce companies in the United Kingdom(Tescoplc.com
2019). It is due to this, and there is a dicey situation for Tesco to do something urgently to
maintain a safe market position. It needs to find a strategy that can help to retain its gained
reputation. Therefore, the purpose of this study is to identify issues faced by Tesco affecting its
profit margin. The study will also recommend possible way outs of the problems.
Body
This section will identify issues faced by Tesco in the United Kingdom by taking help of
different management frameworks like PEST analysis.
Section 1
1. Situation Analysis
1.1 The current situation

5STRATEGIC EXPANSION
The current situation for Tesco can be identified by conducting a SWOT analysis of the
company. Hence,
SWOT analysis
Strengths: Tesco is a trusted brand for a large number of people in the United Kingdom.
The recognition is due to its excellence in offering fresh groceries and quality products at a
valuable price range. Tesco leads the UK supermarket sector in terms of market shares. It gives
Tesco the leverage to go beyond someone’s expectation and produce something different. Tesco
has been doing it for years now. Superior use of technology and effective handling of the
supply chain are some others plus points to the company(Tescoplc.com 2019).
Weaknesses: The inability to explore opportunities was revealed during its operations
in Japan and the United States. Tesco should learn from these mistakes committed in the past.
The operating profits are considerably decreasing now. It may be due to the increasing number
of players in the UK supermarket sector. The low-cost strategy is less impactful in comparison
to that of Aldi. The war of pricing is also affecting the profit margin(Tescoplc.com 2019).
Opportunities:Expansion of stores can help to tap opportunities that are largely being
overlooked. Tesco’s online shopping gives a pleasant experience to users; however, it should be
reworked to make useful changes to it(Tescoplc.com 2019). It does not make any sense in
weakening an existing service. Instead, all current services should be made more competitive
than now.
Threats:The most significant danger for Tesco can perhaps be increasing competition
from Aldi. Tesco is trying to become the cost-leader; however, efforts have been unsuccessful so