Strategic Management: Tools and Techniques for Effective Administration

This document provides an overview of strategic management and explores various tools and techniques used for effective administration. It includes a case study on Tesco and discusses PESTEL analysis, SWOT analysis, Porter's five forces, value chain analysis, VRIO analysis, and Ansoff Matrix.

Strategic Management

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
PESTEL analysis.........................................................................................................................1
SWOT analysis............................................................................................................................3
Porter’s five force analysis..........................................................................................................5
Value chain analysis....................................................................................................................5
VRIO analysis..............................................................................................................................5
Ansoff Matrix..............................................................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................5

INTRODUCTION
Strategic management is the strategic utilisation of a business assets or resource to reach
organisation aims and objectives. Strategic management needs reflection on the activities and
procedures in which the firm and external components that may influence how the firm
functions. It consider setting objectives, determining the competitive atmosphere, analysing the
internal organisation, measuring plan of actions and assuring that ammonisation rolls out the
strategies crosswise the venture (Ansoff and et. al., 2018). To assure the determination devising
activities, it is essential that tactics are in place to support the business functions and operation.
This written document is based on Tesco which is a British multinational groceries and general
merchandise retail sector company. This venture was incorporated in 1919 by Jack Cohen and is
headquartered in Hertfordshire, England, UK. The respective firm has its shops and retail stores
in seven nations across Asia and Europe. There are approx 450,000 people are employed by the
establishment and they make their contribution in business operations of the firm globally. This
document will consider information about the strategic tools and techniques that are used by the
administration of a firm for effective administration of enterprise. It will consider the aspect of
compare theory and practices to compare the models which make their contribution in effective
management of establishment.
MAIN BODY
PESTEL analysis
It is a tool and framework which is used and implemented to determine and analyse the
macro-environmental components that may have a profound influence on an establishment’s
execution and business performance. This model is especially useful to manage and administrate
the business activities and operations of a company when macro environment factors affect the
firm. It is often utilised in comparison to other analytical business tools like SWOT analysis and
Porter’s Five Forces to provide a clear understanding of a situation and associated exterior
elements (Schilling and Shankar, 2019). By using this model, the management of organisation
like, Tesco can determine the impact of external factors over its business. The description of it is
as below:
Political factor- This component consider diverse elements like government intervention,
political stability or instability, trade restriction, foreign exchange policy, taxation policy,
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corruption, labour law and many more. In context of Tesco, the firm operate globally; it requires
keeping a tab on the changing political situation, in all nations it operates. Political stability is
major factor that positively affect the firm. The more stable political environment of UK will
assist the firm, offering better option to carry out trade. Brexit is another factor cause of which
government frame new rule and make change in its existing policies that might up and reason a
increase and minimise in sale.
Economical factor- It include economic development, interest rate, currency rate, inflation
and deflation, disposal income of customer and employment or unemployment rate etc. Brexit is
the main factor cause of which the business of Tesco affects highly in unfavourable manner
(Makadok, Burton and Barney, 2018). Due to it, inflation arises and suppliers make increment in
the prices of raw material which create direct impact over the economic system of respective
firm.
Social factor- This aspect of PESTEL analysis consider population trends like population
growth rate, age distribution, income allocation safety emphasis, lifestyle attitudes, cultural
barriers, change in consumers’ needs and preference etc. Due to range of social changes, trends
refer that consumers in the UK have moved regarding bulk shopping and one-stop shopping.
Thus, Tesco has maximised the number of non-food items provided for sale. Along with this, by
offering online shopping option it also is fulfilling the need of its target audiences which
positively influence it.
Technological factor- It consist to technological incentives, the extent of innovation,
automation, advance technology, research and development activity, technological
modifications, artificial intelligence and technological awareness. Tesco has been experimenting
with diverse aspects of retailing and has attained some amount of growth in a few behaviours.
The online shopping and social media advertisement etc. is all a segment of impacting the
consumer, by offering diverse technical benefits (Okumus and et. al., 2019). Along with this the
respective firm ha s also invested a significant amount on energy efficiency projects to satisfy its
long term goal to minimise its carbon footprint.
Environmental factor- In it, ecological elements are considered like weather climate,
environmental offsets and climate change etc. Along with this, it also includes environmental act,
pollution act and other laws. Currently, the firm has launched its remove, reduce, reuse and
recycle plan. The firm has undertaken several initiatives to take away and minimise all the non-
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recyclable plastic to the minimal degree and discover new opportunities to utilise the remaining
plastic that is still being used. This will direct to development of a closed loop system and
minimise the amount if wastage which will create a positive impact over environment.
Legal factor- It considers different laws and legislation that are developed and framed by
the national authorities of nations for effective running of business organisations. (Sullivan,
Thomas and Rosano, 2018) Due to current issue of corona virus pandemic, there are several kind
of changes are occurred in government rules and regulations cause of which respective firm also
modify its business rules and policies. The management of Tesco effectively follow equality,
health & safety and discrimination act regarding the age and gender bias that overcome in the
workplace culture.
This model and tool is crucial for the firm in compare to others like SWOT, Porter’s
analysis and many more. Because, it offer the information about the impact of external
environment and briefly describe the output of influence. With the implementation of this
analysis, the administration of the firm can also aware with the areas that are influenced by the
impact of macro atmosphere components.
SWOT analysis
Tesco is a retail brand that is working 14 countries of Europe and Asia. They are having
around 7000 stores that are located in different parts of the world (Vlados, 2019). For purpose of
making its internal analysis there is use of SWOT analysis as mentioned below:
TESCO strength:
 It is one of biggest grocery stores their annual revenue is 33.911 million pounds in
Ireland and UK, their annual profits has also enhanced in the year 18-19.
 They poses efficient supplier network that is helping them in having higher amount of
cost effectiveness and a efficient system of waste management (Gürel and Tat, 2017).
 They are dominating the UK markets by holding a share of 27 percent. Tesco is also one of the largest private employers in Europe they are providing
employment to 743K people and they are having their operations in 14 countries.
Weakness:
 Tesco has their failed operations in Japanese markets and they have to shut down their
functions in the year 2012. they were not able to export their operations and execution of
plans apart from their home country (Hajizadeh, 2019).
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 In the year 2018 there were large amount of angry customers as they changed the club
card without informing their customers. That lead to a negative impact on their xeisting
brand image.
 The profits of Tesco has been affected because of high debt if credit cards. There has been reduction on their operational profits because of the Brexit referendum
that has resulted into reduction of the markets share prices of this organisation.
Opportunities:
 Tesco can expand their newly launched discount stores that is Jack stores so that they are
able to to compete with their low cost rival brand such as Aldi and Lodl. Tecso can expand in new markets that are emerging such as south korea, Turkey and
Indonesia. These markets have a very high growth potential.
Threats:
 In 2017 Tesco has faced a scandal that offended many customers and this lead to high
criticism.
 There has been high national economic crisis and threat because of factors like
government rues, credit and high inflation that is affecting the performance of Tesco
(Cui, Allan and Lin, 2019).
 There is presence of competitors like Carreefpur, Aldi and Walmart that is leading to
high competition for Tesco.
Critical analysis:
Internal analysis is an approach which focuses on identifying the competencies, resources
and shortcomings of a business. The importance of internal analysis is such that it helps in
determining strengths and weaknesses of business. The ascertaining of advantages and
disadvantages for the company is helpful in fulfilling needs of the target market.
Conducting an internal analysis is helpful in determining the competitiveness that lies in the
industry. The presence of challenges encourages a business to offer products that matches and
ultimately surpasses the quality offered by rival business. However there are some drawbacks
which are associated with conducting a macro environment analysis of a business. An external
analysis is based on lot of prediction and insufficient data which tends to hamper the strategies
formed by the business. Another major shortcoming is that factors of external environment
change very frequently which makes it difficult to track and form the business strategies.
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Porter’s five force analysis
A framework of Porter Five forces is managerial method for measuring the competition
between internal and external business that consider about having the competitive
insensitivity that can impact on the particular industry or company’s profitability. In below
there is evaluation of Porter five forces within the context of Tesco company (Schilling
and Shankar, 2019).
 Threat of Industry Rivalry: There is a high presence of intensity of competitive
rivalry that are people like Walmart, Amazon and Asda etc, along with other super
market where they introducing their new productive product that enhance to increasing
the competition in competitive market for Tesco in terms of customer, market share
and growth.
 Bargaining power of Supplier: In this situation, there is having moderate threat for
Tesco as more large and small super market are actively introduce their product with
less price they pay to the suppliers. In which Tesco need to abide the prices of their
supplier other wise they have to faces huge challenges to recommend other supplier to
manufacture for their products (Okumus and et . al., 2019).
 Bargaining power of buyers : As per this situation, the buyers having high bargaining
power for Tesco, as customers having their more option to approach other brand
products like Asda, Sainsbury’s etc, where they can easily buy as per their expected
price. In this scenario Tesco need to cut down their prices or they have to negotiate with
them,
 Threat of new entrant: There is a low threat of new entrant for Tesco where many
company are present like Asda, Sainsbury, and other super market. If any super market
planning or started new concept in retail industry they have to face many challenges to
exist in the competitive market.
 Threat of substitute product: the Tesco having less threat of substitute of product
from other super market which provide substitute of goods drives the prices of Tesco
and other supermarket companies have to compromise with their prices but not in the
quality.
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As per the above discussion Tesco usually follows the Porter Five forces in which
they usually focus into competitive rivalry and bargaining power of buyers as they
need to improve their product quality which enhance the control to reduce the
customer bargaining power as well as more profitability in the current competitive
market.
The comparsison between Porter Five Forces and VIRO model:
The comparison between Porter Five forces and VIRO analysation is having
common difference that Porter five forces is usually analysis the company’s
external competitive business environment while VIRO is determines to measure
the internal business environment towards company perspective.
Value chain analysis:
The description of Value chain is defines about the major key roles which added in
activities and their interference generates with the help from the managerial activities. It
utilised for the evaluation the company’s strength and weakness to differentiate the erros to
improve as per the process. In following there some value chain method which highlight
for Tesco company perspective are: Inbound logistic: In this method it derives about for referring the products which is being
obtain from specific company’s supplier and assorted towards the producing the quality
of product (Teece., 2019). As per the Tesco company perspective, the overall cost
leadership strategies is depicts the flexible and lean inbound logistic. As Tesco has not
own their own suppliers they procure the raw material from other venture manufacturing
supplier to produce the product, the company having high rate of market share where
they use to measure the bargaining power of customer and as per that they reduces their
product cost. Operations: It comprises the raw material and products point of view, where they
manufactured till to become the final product, the value in form of raw material which is
added to increase its reliability as well as quality. As Tesco is known for their better
operation management where they utilise their optimum informational technology system
that facilitates the company’s low cost (Pröllochs. and Feuerriegel., 2020).
 Outbound logistic: This is a tool when the product is been manufactured they are ready
to be optimise and distributed in the market for deliverables purpose such as wholesaler,
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retailer or customer as finished goods that is known as Outbound Logistic. In Tesco
company their product and services existence in the offline and online platforms to
having motive of availability of products to the customer to retain them. Role of Marketing and Sales: This consists the simple role process of marketing that
they usually targeted the market and customer for their product in which marketing mix
strategy helps to identify the product and market specification to the marketing team of
an organisation. After that role of sales is to pitch the product in the targeted market or
customer (Certo and et . al., 2020). As per the Tesco perspective, their products are so
reliable Tesco’s marketing and sales team plays loyalty card to their customer by assuring
them for services and new develop product otherwise, they customer can switch the brand
or market to approach other form of company product and services.
The above analysation of value chain in Tesco company is describes about their
overall process of internal and external activities in terms of sales, marketing,
Human resource and operation and other procedure which plays important role
having a valuable for Tesco as their input their contribution and obtain their
profitable outcomes.
The distinguish between Value chain analysis and Ansoff Matrix
The major role of Value chain analysis is to enhance the service provide of overall
activities in the organisation such to handling operations, sales, administrative and other aspect
of activities that optimise their own role and presumes the work regulation to attain the
objectives.
The Ansoff matrix is a managerial tools which provides the information related to the scope,
opportunity and challenging probability towards market and product point of view.
VRIO analysis:
This is a tool to analyse internal resources and capabilities as well as to measure the scope
of those resources are having sustainable competitive advantage towards the particular
organisation.
Valuable: In the perspective of resources can be valuable factor if it generates the
increasing of perceived organisation value. It is execute through the making comparison of
differentiate of prices in increase and decrease order of products. For Tesco, their resources
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are play important role as it helps to bring productivity and generates growth opportunity
for Tesco.
Rare: This type of resources could be acquired by one of few companies, as the rare type
of resources are considered to be company’s strength in perspective high profitability,
product quality etc.
Cost of Imitability: It is factor of resources that derives about their cost imitate but if other
company doesn’t have imitate or substitute as per the reliable price. It only can only
happen if the resource having duplicate or another similar substitution as replacement
(Khosiev, and et . al., 2019).
Organised: As per this factor, the resources are not counted productivity if it will not
organised in proper manner. A particular company must organised their policies, system,
process of culture analysation for better positive working environment.
VIRO Analysation
Basic Valuable Rare Imitable Organised
Human
Resource
Yes No No No
Brand Quality Yes Yes No No
Advanced
Equipment
Yes Yes Yes Yes
Distribution
Network
Yes No Yes Yes
Supply chain
Integration
Yes No No Yes
As per the above Tesco company VIRO Analysation is describes that basic resources of
Tesco like Human resource is having valuable presence as it handle the company’s internal
workforce and other management aspect, the product brand quality is valuable and rare as
it helps to increase the growth and reflects the quality traits that only Tesco having in osme
of its products. Advanced resources of equipment which are valuable, rare, imitable and
organised because it own by Tesco. The distribution network is Valuable and Imitable
because it supports to generates the distributors and dealership network in market and
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difficult to negotiate and replacement for other company and last supply chain integration
which is valuable and organised because it plays important role in Tesco production of raw
material supply as well as it well structured where it work as per the process.
Comparison:
A VIRO analysation differentiate between with Porter Five forces as VIRO only address
about the internal assessment of particular company growth in terms of having the
resources but it could share the external forces description of market perspective.
Ansoff Matrix:
It is the strategic managerial tool which utilised by specific company to measure the
opportunity and challenges for product and market in the competitive business environment.
It also provide a better understanding of market risk to measure effectively for business
development (Drobyazko and et . al., 2019). There is analysation of Ansoff Matrix of Tesco
company for better forecasting of product and market growth. Market Penetration: This is the factor that depicts about to determine the increasing in
sales of existing product to the existing market. In the context of Tesco venture, they
have valuable growth expansion of their current product in the current market of United
Kingdom where they are planning to other branches in different locations. The product
expansion of Tesco is having effective generates the outcomes factor in international
retail industry such as food and beverages, home appliances and other aspect of products.
By using of cost leadership strategy and other sales promotion activity through Tesco
they able to sell their existing product to the existing market. Market Development: As per this strategy framework it focuses to enter in to new market
with existing product. On the basis of Tesco company, having a objective to expand their
retail business in other new competitive market with their existing product by introducing
with new specification for attract the customer attention. As the company has already
well established in United Kingdom as well as they know about their customer’s
preferences and expectation with product and services. So, Tesco form strategy and
develop new market with their current product. Product Development: this is factor that determines the new product concept introduce in
the existing market. In perspective of Tesco, the growth of their product as in food
expansion or other traits product is having well structure strategy as well as their
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customer are much influenced by Tesco ‘s services where they can able to introduce the
new vision of product in current market as in United kingdom. Through implies the
approaches of sales promotion and other pricing strategy can develop their new product
productivity in existing market (Li and et . al, 2019). Diversification: According to this factor it comprises to introduce new product enter into
new market. This could very risky factor where many business has to faces any
challenges in terms of low capitalism, unaware of market and product scopes, not able to
retain customer and other aspects but Tesco need to understand the market or should
conduct the optimum market research to get aware about opportunities and challenges
which would easily to reduce the risk.
As per above evaluation of Ansoff Matrix for Tesco company, where they need to consider
and follow the strategy of Product Development , as many other competitive companies are
exists in United Kingdom who are actively introduced their new goods and services which
could create an impact on Tesco market growth. For that Tesco need a product research and
procure to implement new product which can change the customer’s preferences and provide
positive influence.
Comparison between Ansoff Matrix with Value chain analysis:
As Ansoff Matrix derives about the basic information of having scope of opportunity and
challenges driven towards the specific company for their product and market growth.
In another hand, Value Chain makes understand about the importance of activities which are
perform to generates valuable outcomes for the organisation. Value chain not provide any
general information regarding with external market environment.
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CONCLUSION
From above report of Strategic Management it concludes the overall details are highlighted
with organisation consideration where the external and internal environment analysation by
determining the Pestle analysation, that derives the particular external forces influence
through different external environmental factor and Swot analysation is for making internal
environment assessment related with strength, weakness, opportunity and threats with
critical evaluation. After that considering Porter Five forces for the better Strategic
management tool for organisation and compare with Ansoff Matrix, VIRO, Value chain
Analysis with each other for assess the best managerial tool to measure which will generates
better outcomes.
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REFERENCES
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McGraw-Hill Education.
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in strategic management. Strategic Management Journal, 39(6), pp.1530-1545.
Okumus, F. and et. al., 2019. Strategic management for hospitality and tourism. Routledge.
Sullivan, K., Thomas, S. and Rosano, M., 2018. Using industrial ecology and strategic
management concepts to pursue the Sustainable Development Goals. Journal of
Cleaner Production, 174, pp.237-246.
Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of International
Social Research, 10(51).
Vlados, C., 2019. On a correlative and evolutionary SWOT analysis. Journal of Strategy and
Management.
Hajizadeh, Y., 2019. Machine learning in oil and gas; a SWOT analysis approach. Journal of
Petroleum Science and Engineering, 176, pp.661-663.
Cui, J., Allan, A. and Lin, D., 2019. SWOT analysis and development strategies for underground
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McGraw-Hill Education.
Okumus and et . al., 2019. Strategic management for hospitality and tourism. Routledge.
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perspective. New Zealand Economic Papers. 53(1). pp.1-43.
Pröllochs, N. and Feuerriegel, S., 2020. Business analytics for strategic management: Identifying
and assessing corporate challenges via topic modeling. Information & Management, 57(1)
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Certo and et . al., 2020. Divided we fall: How ratios undermine research in strategic
management. Organizational Research Methods. 23(2). pp.211-237.
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Khosiev, and et . al., 2019. Strategic management and zootechnical control in pig-breeding
enterprises: development of its information base. Research Journal of Pharmaceutical,
Biological and Chemical Sciences. 10(1). pp.1267-1279.v
Drobyazko and et . al., 2019. Factors of influence on the sustainable development in the strategy
management of corporations. Academy of Strategic Management Journal. 18. pp.1-5.v
Li and et . al, 2019. Statistical and methodological myths and urban legends in strategic
management research: The case of moderation analysis. European Management Review.
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Online
TESCO COMPANY PROFILE. 2020. [Online]. Available Through:
<https://corporatewatch.org/tesco-company-profile/>.
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