Tesco's Strategic Management Practices

This assignment requires a detailed analysis of Tesco's strategic management practices. Students should examine various aspects, including its approach to innovation and strategic transformation, customer relationship management (CRM) strategies, and its global expansion efforts. The analysis should draw upon relevant academic literature and case studies to provide a comprehensive understanding of Tesco's strategic direction and performance.

Running head: STRATEGIC MANAGEMENT
Strategic Management
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Table of Contents
Executive Summary.........................................................................................................................2
Market size and trends.....................................................................................................................2
Financial and Corporate Performance.............................................................................................4
Strategic options..............................................................................................................................6
Final recommended strategy............................................................................................................7
Implementation of final strategy......................................................................................................8
Monitoring and control of Future Performance...............................................................................9
Reference List................................................................................................................................11

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Executive Summary
The main purpose of the assignment is to discuss about the strategic management
approaches that are adopted by UK supermarket chain named as Tesco Multinational
Corporation (Tesco PLC, 2017). The public limited company came into existence in the year
1919 and currently ranks third largest among the global grocer as well as merchandize retailer in
term of revenue. In addition, the Unique Selling Proposition of Tesco Multinational Corporation
had been its size as they have large in-built spaced stores that are located outside the town. The
current segment explains about market size and trends of Tesco Multinational Corporation. The
present study provides details about three strategic options and then selects the best
recommended strategy for the supermarket retail chain that will help them to sustain their current
market position in UK retail market.
Market size and trends
According to current market trends, Tesco Multinational Corporation had lifted the
market share for first time in 5 years (Wood, Wrigley & Coe, 2016). The supermarket chain in
UK reports positive underlying sales growth during the festive season (Christmas). Tesco
Multinational Corporation had expanded its operations aggressively as well as profitably to
become one of the reputed Multinational Corporation and occupy the topmost position in retail
sector or industry in and across three major regions and these regions are Europe, United States
and Asia.

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The retail market of United Kingdom is dominated by four biggest retailers and these
companies face stiff competition with each other and they are Tesco Multinational Corporation,
Sainsbury, Morrisons and Walmart (Wood, Coe & Wrigley, 2016).
Figure: Comparison of market trends between all retail sales and clothing or footwear in
UK for the year 2014 to 2017)
(Source: Varley, 2014).
The retail market in UK is sailing into a perfect storm. This is because of recession
stricken times when there was fall in profits and cutting jobs.
Tesco Multinational Corporation had diversified its operations in terms of geography as
well as products or services as it is provided to the customers. The supermarket retail chain in
UK operates in 14 countries with more than 4811 stores. The employees who are working under
Tesco Multinational Corporation are 4,72,000 (Sparrow, Hird & Cooper, 2015).

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Figure: Market share of retail sector companies in UK
(Source: Samantara & Sharma, 2014).
From the above pie-chart, it is quite easy to understand that Tesco Multinational
Corporation has the highest market share and that is followed by Sainsbury (2nd position). The
other company is Morrison, ASDA and other retailing supermarket chain hat operates in UK.
Tesco Multinational Corporation dominates the UK market with a market share of around
30.5%. This company was the first company who had launch self-service system in their stores
so that they can avoid long queues as it leads to high waiting time. In addition, the company had
even arranged for in-store cameras for security purpose. In order to attain competitive advantage
over their competitors, Tesco Multinational Corporation manufactures as well as sells its own
labeled products (Rosenbaum-Elliott, Percy & Pervan, 2015).
Financial and Corporate Performance
Tesco Multinational Corporation is one of the international companies that have strong
reputation in the retail market where they aim at providing quality products as well as services.

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The supermarket retail giant seek to deliver the best results by providing highest returns to the
shareholders as well as beneficial services to the customers and provide safe work environment
for the employees (Peppard & Ward, 2016).
Ethical conduct means performing activities that is morally correct as well as honorable.
In order to maintain valuation reputation and build on success, Tesco Multinational Corporation
need to conduct the business in a way that is both legal as well as ethical. The corporate
governance policies of Tesco Multinational Corporation believe in maintaining level of
commitment by conducting ethical business practices. The company gives proper details about
the business that comprises of ethical business behavior as well as defining the responsibilities of
all the employee and company executives and representatives (Payne & Frow, 2013).
In addition to that, there were several governance issues that take place at Tesco
Multinational Corporation. It was noted that company’s admission had overstated figures at the
time of half-year profit by 250 million Euros and there was even problem with the composition
of Board of Directors and the company was claimed that they were using inappropriate
accounting policies (Özman, 2017).
Ethics plays an important role for determining the level of success of any business
enterprise. For instance, when an organization carry out its business operations by using ethical
ways, then the company will increase their reputation in the market and finally have positive
impact on the business activities. Ethics should be embedded in strategy adopted by company
and at the time of decision-making process. However, Tesco Multinational Corporation is
corporate social responsible business as well as had made Corporate Social Responsibility as a
major role and properly publishes it in the annual report (Jenkins & Williamson, 2015).

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Strategic options
Tesco Multinational Corporation had already expanded in countries like UK, Asia, USA
and Europe as we as has 6531 stores in and across the world. The supermarket retail chain still
continues to open new markets for increasing their current market share as well as market growth
(Hubbard, Rice & Galvin, 2014).
Diversification- It is important to consider the fact that diversification is the most risky strategy
where a particular business enterprise enters and there is no information or facts available and
has less experience to it. The risk can be a failure of acceptance of products by the consumers for
not making enough of sales. However, Tesco Multinational Corporation had diversified their
market by launching various non-food products into new market segments.
Tesco Multinational Corporation enjoys long-term success because of which the
companies remains focus and has main core vision that remain same at the time of implementing
corporate strategy change based in changing scenario. It is because of the competitive global
environment, if any business enterprise does not have clear vision, then the company actually has
direction and may not be able to sustain in the near future. However, Tesco Multinational
Corporation had established business strategies so that they can attain or achieve vision and
mission statement stated by the company (Hensmans, Johnson & Yip, 2013).
The strategic management of Tesco Multinational Corporation is of the opinion that the
mission statement, vision statement as well as strategic objectives plays major role towards
attainment of success and make use of key performance indicators for measuring the level of
performance in an organization. The Key performance that can be used by Tesco Multinational
Corporation is the Balanced Scorecard approach as it measures both financial and non-financial

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aspects. There are four major perspectives of balanced scorecard that are addressed properly and
these are customer perspective, business process perspective, learning & growth perspective and
financial perspective.
Final recommended strategy
Figure: Porter’s Generic Strategies
(Source: Haleem & Jehangir, 2017)
Currently, Tesco Multinational Corporation follows a strategy that will help in
maximizing customer value by using market-orientation strategy. The supermarket retail chain
aims at providing quality products at a competitive price based on needs as well as preferences of
customers. The above diagram shows the Porter’s generic strategic options adopted by Tesco
Multinational Corporation within the next 5 years of time span.
It is recommended to Tesco Multinational Corporation for following the generic
strategies that had been proposed by Porter as it will help in gaining competitive advantage

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within next 5 years time frame. However, Tesco Multinational Corporation already has a reputed
background where the company provides best quality products at affordable prices to the
customers in order to achieve cost leadership with little efforts as it focus more on own label
products sell by reducing production costs. Therefore, clearly defined market segment will help
Tesco Multinational Corporation to target differentiated range of product lines to specific
markets or positioning of few products on wide range of market segments (Goodman & Dingli,
2017).
Implementation of final strategy
After using suitable criteria, three strategic options are determined and it is needed to
select the best one for the company that they will follow in the near future. The three strategic
options are criteria for suitability as well as acceptability and feasibility and it is needed to be
judged for each of the options (Frynas & Mellahi, 2015).
Suitability- Here, the suitability criteria explain how the organization environment help in
measuring the strategic implications of the business enterprise in a given surroundings. It is
mainly used for integrating the strengths as well as weakness for efficient implementation of best
strategies. The operational aspects of Tesco Multinational Corporation are continuously updated
so that they can cope with the fast-changing environmental dynamics. Therefore, the
environment as well as the market oriented operations of Tesco Multinational Corporation
provide proper platform for implementing the strategies of cost leadership as well as product
development largely.

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Feasibility- Here, feasibility means the scope of Tesco Multinational Corporation for operating
in an environment after application of any of the above-listed strategies that need to be evaluated
based on financial viability and time duration for implementing the strategy and other important
factors such as internal skills as well as competencies that support the strategy option. However,
Tesco Multinational Corporation already has a strong financial background as well as huge
capital invested in technology that mainly focus more on product development, imitability or
leadership strategies options that make Tesco Multinational Corporation occupy the leading
position in and across the world. In order to implement these strategies, it is important for Tesco
Multinational Corporation to focus on its core competencies and this is possible if the company
start recruiting more skilled professionals.
Acceptability- Tesco Multinational Corporation already has high brand recognition in the UK
market but the company would not take long to implement the strategies in successful ways. The
financials of Tesco Multinational Corporation are expected to increase rapidly after they start
implementing the suitable strategic option. However, the cost benefit analysis shows benefit in a
case where the company had already had upgraded technology operating in their stores as well as
opted market oriented strategies that will retain customer loyalty. Therefore, product
development as well as cost leadership would be considered as less risky and less costly venture
that should be enforced.
Monitoring and control of Future Performance
The environmental factors as well as operational efficiencies of Tesco Multinational
Corporation show the strategy of cost leadership to be best for creation of strategic fit for the
company. In addition, the product development strategy had been discarded as compared to other

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strategies as the supermarket chain deals in wide variety of products as well as services (Frow et
al., 2016).
Figure: Future recommended strategy
(Source: Borland et al., 2016)
The cost leadership strategy mainly covers wide range of products as well as service that
provide a boost to the customer purchase rate. However, the market share of Tesco Multinational
Corporation is expected to increase where the company ranks in the third position in terms of
revenues as it contributes mainly towards their missions of creating customer value.

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Reference List
Borland, H., Ambrosini, V., Lindgreen, A., & Vanhamme, J. (2016). Building theory at the
intersection of ecological sustainability and strategic management. Journal of Business
Ethics, 135(2), 293-307.
Frow, P., Payne, A., Wilkinson, I. F., & Young, L. C. (2016). CRM and customer management:
identifying and confronting dark side behaviours. Dark Side of CRM: Customers,
Relationships and Management, 21-38.
Frynas, J. G., & Mellahi, K. (2015). Global strategic management. Oxford University Press,
USA.
Goodman, M., & Dingli, S. M. (2017). Creativity and Strategic Innovation Management:
Directions for Future Value in Changing Times. Taylor & Francis.
Haleem, F., & Jehangir, M. (2017). Strategic Management Practices by Morrison PLC, UK.
Analysis, Lessons and Implications. Middle East Journal of Business, 12(3).
Hensmans, M., Johnson, G., & Yip, G. (2013). The Three Successful Strategic Transformers:
Developments. In Strategic Transformation (pp. 76-96). Palgrave Macmillan UK.
Hubbard, G., Rice, J., & Galvin, P. (2014). Strategic management. Pearson Australia.
Jenkins, W., & Williamson, D. (2015). Strategic management and business analysis. Routledge.
MacIntosh, R. and Maclean, D., 2014. Strategic management: Strategists at work. Palgrave
Macmillan.

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Özman, M. (2017). Strategic Management of Innovation Networks. Cambridge University Press.
Payne, A., & Frow, P. (2013). Strategic customer management: Integrating relationship
marketing and CRM. Cambridge University Press.
Peppard, J., & Ward, J. (2016). The strategic management of information systems: Building a
digital strategy. John Wiley & Sons.
Rosenbaum-Elliott, R., Percy, L., & Pervan, S. (2015). Strategic brand management. Oxford
University Press, USA.
Samantara, R., & Sharma, N. (2014). Talent Management at Tesco HSC—A Case
Study. Management and Labour Studies, 39(4), 477-485.
Sparrow, P., Hird, M., & Cooper, C. L. (2015). Strategic Talent Management. In Do We Need
HR? (pp. 177-212). Palgrave Macmillan UK.
Tesco PLC. (2017). Tesco plc. Retrieved 19 October 2017, from http://www.tescoplc.com
Varley, R. (2014). Retail product management: buying and merchandising. Routledge.
Wood, S., Coe, N. M., & Wrigley, N. (2016). Multi-scalar localization and capability
transference: exploring embeddedness in the Asian retail expansion of Tesco. Regional
Studies, 50(3), 475-495.
Wood, S., Wrigley, N., & Coe, N. M. (2016). Capital discipline and financial market relations in
retail globalization: insights from the case of Tesco plc. Journal of Economic
Geography, 17(1), 31-57.

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