Strategic Management

STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Recommendations to Tesco ........................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Strategic management is the balance of ongoing business planning, analysing internal
environmental and monitoring all necessary factors of an organization to meet its objectives.
Modifications in business environment will need Tesco to continually assess their strategies for
achieving success. Tesco applies Ansoff's matrix to identify and analyse its growth related issue
that impacts its strategic management. This assignment defines growth theories that are
implemented by Tesco to acquire higher level of shares. It grows market share by developing
new segments and increase its profits. Tesco maximizes its operations scale to reduce production
cost. It establishes value preposition to keep long term sustainability and verify its revenue
stream. Tesco analyses the outcomes of using growth strategy which supports in displaying clear
evidence of evaluation and synthesis. It focusses on achieving competitive advantages by
targeting specific markets. Tesco prefer this strategy because it preserves quality, efficiency to
broaden its scope of durability.
MAIN BODY
Analysing and addressing growth issue of Tesco using Ansoff matrix. This issue
is related to strategic management which affect business if not solved. So, Tesco implement this
tool of growth to identify and analyse business situation to accept new opportunities and
challenges of market.
Ansoff's matrix
This model is a strategic framework created for the organizations which believe in
attempting new challenges beyond the usual business. It is very necessary in planning strategic
management of organizations to look at opportunities to grow business revenue through
developing different services and products by diversifying in new markets. Ansoff matrix is used
to identify the different tactics that should be used in the planing activities. This matrix is used
for evaluation and synthesis of organizations. Advantages of this model is it has easy way of
discussing different options such as strategic choices and calculate risks factors. It can be
understand very quickly and easily. It provides easy alternative strategies of growth to
organizations by which they can increase profits and their goals.

Disadvantages of this matrix are rivals are ignored. Sometimes lack of cost benefit analysis occur
while taking correct decisions. It becomes very difficult to predict the impacts of implementing
these strategies on profit and sales of company. There are some limitations of Ansoff's matrix:
this model is simple to its extent because a lot of thought is required to implement it in any
organization. It does not include reward factor while measuring risk.
Ansoff matrix has four unique and possible scenarios of growth strategies:
Market penetration
This strategy measures and compares the estimate volume of its own services and
products used by consumers. It is least risky because it has advantages of organization's existing
abilities and resources. This strategy helps in increasing market share with existing opportunities
in current segments of market. Marketing penetration supports in achieving high market shares
by combining pricing strategies and promotions. It has secure dominance of growth in current
markets. It helps organization to increase service utility volume of existing consumers by
launching different schemes of loyalty. It helps to understand and conduct new campaigns to
make unattractive market for new entrants and competitors.
Tesco starts its operations to identify and penetrate in different markets to find new opportunities
of market expansion. Tesco applied market penetration in its business to focus on strengthening
and increasing its market share in existing market. It started to maximize its market share by
offering club card points to its consumers. This idea of providing club card points supported it to
gain customer loyalty and identify those consumers who believe in brand rather than products.
This club card scheme became successful trump card for Tesco. Tesco offered free gifts like buy
one get one free promotions on specific products to boost sales volume. It became first brand and
entered in market by its own website where it self-advertise its product and expanded. Tesco
offers twelve months guarantee scheme on all its electronic products to gain consumers trust. It
modifies its price strategies like big price drop for attracting new consumers in existing markets.
It maximizes its efforts of promotions and distribution to focus on increasing sales volume and
business expansion. Tesco usually focus on acquiring the greatest level to challenge competitors.
It changes opening hours of its grocery store and super markets. It reduces processing time by
using different technologies in its production department. Tesco showcases its entire portfolio of

products to attract consumers by its fascinating product packaging. Tesco objective is to make its
consumers habitual of using its products and grow by their support and loyalty. Advantages of
market penetration in Tesco can lead to adoption and sales of its products. It leads to brand
awareness and build customer referrals. Market penetration in Tesco discourages competitors
from entering in the similar market because of high maximized competition. Disadvantages of
this strategy are it reduces profit margins and can harm image of Tesco.
Market development
This strategy of growth supports in identifying and expanding current business segments
to unknown consumers of new markets. It keeps new buyers in sight to pitch its existing product
to an other segments of customers in an effort to maximize sales. There are different possible
ways of approaching market development strategy including export of products in new
geographical regions. Market development is used to target new markets where a firm can fulfil
its expected objectives by serving its profitable product in different countries. The potential
growth of this strategy is significant but it is depended on organization to pick up the right
location to keep its business survive their for long term. This strategy main objective is to help
organizations to hold a necessary position globally. Market development helps organizations to
understand the potential demand and needs of consumers to serve in new global markets. This is
the risky strategy of growth because It is difficult to understand the complexities of different
regions. Market development entails to develop new opportunities of existing products to be
catered in different consumer segments. Its objective is to grow organizations on national and
international level.
Tesco intentions are to expand its current business by operating in some economically developed
countries. It go through some activities such as it researches different markets, and innovates
new facilities of manufacturing which led to improve and develop market. It modifies product
dimensions, distribution channels and strategies that supports in attracting new consumers for
expansion in new markets. Tesco puts majority of producers and suppliers because they better
understand the new segments of consumers. It uses different price policy in different markets
according the customer demands. Tesco used penetration strategy and then bought a store in
Poland for the purpose of market development. Tesco took over the supermarket of Scottish to
identify their new market. It inaugurates many stores in Thailand and achieved great success

over there. Tesco has its stakes in associated Quinn worth, British foods. It also re- examined the
strategies of European and Asian countries for the purpose of expansion. Tesco has undergone
many modifications in existing market for the sake of market development. It also makes new
distribution channels like fulfilling consumers requirement of products by E-commerce and
orders through mail. Later, Tesco obtains success in expanding its business using market
development strategy by managing difficult complex situations. Tesco targets the markets where
consumers believe in experiencing a unique shopping experience. It aims to perform and succeed
in zero carbon business after some years which is depended on formulating and re-assessing
clear strategies of business. Advantages of implementing market development strategy in
strategic management led Tesco to gain new consumers, maximize its revenue and acquire
growth of its business. Major disadvantage or risk of market development is it typically need
capital investment in expansion. Tesco can bear losses of capital and resources if this opportunity
of this strategy does not pay off. Tesco aims to improve its core in UK business in order to
expand in other countries.
Product development
This strategy is appropriate to support organizations in strengthening their new
innovations in existing market. It is applied when an organization aims to develop a new
competitive products in the industry. Product development strategy is particularly suitable when
a company needs a different product to be invented for remaining competitive in the market. A
successful strategy of product development places the emphasis of market on innovations and
invest in research and development to serve in current market. It keeps customer needs, demands
and modifications in their choices in sight. This strategy is referred in companies which have
high market share in an existing market but needs new products to be developed for expansion.
Merge resources and achieve products of competitors to create a innovative product that better
meets the requirements of current market. Product development can be done by collaborating or
doing strategic partnerships with other companies to earn access to one another brand or
distribution channels. It is the best approach to serve with new products in existing market.
Product development has higher risk than market penetration because it is totally depended on
services which targets the changes according to the consumers. Objectives of this strategy
implies consumer generation and confidence in the innovated product. This can capture existing

market by providing large scale production which results in reducing price and give benefits to
consumers.
Some factors of product development are:
 To discover the usefulness of the product production.
 To develop characteristics and qualities of products.
 To develop and select different designs and models of the products.
 To make decisions of packing, size and colour.
 Contraction and expansion of products
 discontinuing the product which is unprofitable and make better advancements to
improve quality and taste of products.
Advantages of product development are it is the prime factor for organizations and opportunities
to develop and grow. Development of product provides possible satisfaction to the costumers. It
helps in acquiring stability in the demands of products. It reduces the possibilities of
discontinuance of products and face rivals effectively. It also maximizes possibilities of earning
profits and good will of the companies. Risks which are associated with this strategy are the
major delays and cost of economy for keeping a belief that high use of resources can improve
organizations performance. Maximizing costs as a outcome of work procedures in big batches.
Risk of losing sticking opportunities to a single plan of growth. Disadvantages of it are it has
extra cost investment and heavy competition. It typically does not have accurate information
formulated research and can lead to poor results. This strategy is time constraint because it is
time consuming process and needs a relevant time to survey in market. Continually changing
markets are not easily monitored according to the conditions of market.
Tesco identifies and analyses the market situations very carefully and recognized that the
customers are effectively moving towards health conscious diet. It launches and offers organic
food after keeping the required changes of consumers in sight. Tesco provides one stop solution
services in the market for fulfilling the daily basis needs of its loyal consumers. It understands
consumers preferences of social responsibilities and products that are environment friendly.
Tesco introduced biofuel instead of petrol and diesel. Tesco is working constantly on this
operations to make improvements. It is also looking forward for expanding in middle class
sector. Tesco identifies the profitability and growth in Asian markets also and trying to grow in
telecom industries as well as electronic items to grow and compete effectively in the developing

conditions. Tesco developed its own label products in its current market and sells branded and
affordable products. It sells both version to serve different segments of market. This strategy
helped Tesco to come up with its capabilities and develop its own version of popular products. If
it does not come up with these developments it would have suffered a lot for being back among
all. Product development led Tesco to have more power and do negotiations with its suppliers
and reduce possible cost. So, this strategy helped Tesco to increase usage of products in its
market and maximize in market.
Diversification:
Diversification is the last growth strategy in the ansoff matrix. In the diversification strategy,
company enter the new market with the new product. This is also known as the risky strategy
because market and product development both are required at the same time. If diversification is
done properly after doing proper research then the risk can be reduced. Diversification open the
scope for the company to increase the revenue. It is majorly used by the start-up companies.
Companies adopt this strategy because they want to increase its market share. In this new skills
are needed for both marketing and operations which require high investment as well.
Organization which adopt this strategy should have knowledge that what are the demands of the
market and how they can attain growth by doing this (Khajezadeh, M. and et.al., 2019).
Diversification ceases the scope to use the existing expertise, achieving economies of scale is
also difficult in this because the product and market both are new for the customers. Income
level of consumer affects diversification if, the diversified goods are costly then low income
people will not buy it and if less costly and adjusted on quality than those people will not buy
who want luxury products only. If diversification is adopted by the existing business then that
business will get the advantage of diversification by if they are not making profits from existing
products and markets then diversification can bring many benefits in the business and can help
the business to survive in long run. Launching uncompetitive products can lead to failure of
diversification. Diversification are of two types-
Related diversification: Related diversification means when diversification is done in related
sector. There is a relation between existing product and diversification. Eg leather shoe
manufacturer has done related diversification by started selling leather accessories, wallets, bags,
belts etc.

Unrelated diversification: Unrelated diversification means when diversification is done in non-
related sector. In this no relation is done between existing company and diversification (Dawes,
2018). Eg if a leather shoe producer started producing cell phones as well then unrelated
diversification occur.
Tesco agrees that diversification strategy are not very easy to implement but also says that if
diversification is done properly with proper market research can help the company to increase its
revenue. Tesco started their company by doing grocery business and with time it has diversified
into many businesses which include insurance products, mortgages, credit cards etc. Although
company has failed in some diversification like they bought Giraffe restaurant but company is
unable to proper carry out this business and in the end Tesco has to sell this company in loss only
and company also bought shares in blinkbox entertainment which is an online video shop but
that business also incur loss and later it sold to other company.
Tesco also diversified into non-food items along with that they started rental services, selling
furniture, books, electronics, financial services etc. They also launch a clothing brand which are
F+F and Cherokee then after that they had launched their own food brand namely value and
finest. Company also tried it hands in the diversification of health and beauty products. They also
entered many foreign markets to do the business. Again market can bring advantage or
disadvantage for the company. Every market is different from the other it is based on the
geography, weather, location etc (Loredana, E.M., 2017). Tesco failed in some markets while got
success in some. Customer behaviour will also influence diversification. In some region
customer purchases goods which are good in quality apart from concerning about their price
while in some locations where purchasing power of customer is not more than they will prefer
cost effective products only in those locations customer are ready to sacrifice on the level of
quality.
Recommendations to Tesco
It is recommended that company should adopt diversification strategy from the ansoff matrix
because diversification will help the company to grow as diversification means doing business in
the new market with the new product. International diversification has helped the company to
grow in the international market. Those regions turned out success for the company where the
income level of the customers are high because their company launched luxurious products with

high prices and earned high revenue from their. Diversification of Tesco into other products are
also proved as the success.
From all the above strategies diversification is the only strategy through which company had
made more money because it is concerned with both market and product. Product diversification
is done by the company into financial products, books, telecoms, health and beauty products,
insurance products etc. Diversification will help the company to get experience into new
markets. Company have the best research and development team which timely do research to
bring innovation and company knows this very well that to survive in the market innovation
plays an important role (Chintalapati, S., 2020). Customer get bored with the product and
demand innovation they get attracted towards the company who bring new product in the market.
In the telecom business company made good profit so here product diversification turned out
successful. Tesco is a multinational company so diversification for company can be easy also
because they are having proper funding, sources and man power. This strategy incurs high costs
so high costs can be easily born by the company. Tesco is having experience employees and
company also having the capacity to hire experts while carrying out this strategy. If
diversification carried out properly then it can bring huge success for the company.
CONCLUSION
Through this report it is concluded that ansoff matrix is a growth strategy matrix and can
be applied on the company to see the growth of the company. Tesco is taken as an organization
and applied ansoff matrix on that. Ansoff matrix has four quadrants which are market
penetration, product development, market development and diversification. Each strategy is
explained in detail in this report in context of the company and recommendations are also drawn
in the end for the company. Diversification is recommended to the company because company
have the knowledge on how to carried out product and market diversification and also have
experts who can help the company in that.

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with Two Logical Problems (February 27. 2018).
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Khajezadeh, M. and et.al., 2019. Application of Neural Network in Portfolio Product Companies:
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