STRATEGIC MANAGEMENT AT TESCO

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STRATEGIC MANAGEMENT AT TESCO
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Organizational Strategies
Organizational strategies can be defined as the plan for the actions and the manner in
which they are to be undertaken in a business organization for the purpose of achieving its
short term or long term goals (Rothaermel 2016). In this regard, it can be mentioned that
organizational strategies act as a foundation to the business organization, on the basis of
which their operations and foundations are directed. Such strategies adopted by the business
organization act as guidelines to all the members of the organization, including the internal
and external stakeholders. There are various kinds of organizational strategies that can be
adopted by business organizations, which can be segmented on the basis of their nature and
purpose. The organizational strategies that will be discussed in the essay include corporate,
business and operational strategies for the British multinational retail company TESCO plc.
The company was founded in the year 1919, and since then it has expanded and managed its
operations in an effective manner, thereby rising to the position of one of the world’s largest
retailers (Tescoplc.com 2020).
Corporate Strategies
Since its foundation in the year 1919, the British multinational retail company
TESCO has expanded the scope of its business operations exponentially not only in the
United Kingdom but also other countries such as China, Japan, Malaysia, Poland, Ireland and
others (Tescoplc.com 2020). Furthermore, the company has also engaged in the expansion of
the products and services offered by it to its customers through the process of diversification.
In this regard, it may be noted that the company has followed the corporate strategy of
expansion.
The adoption of the corporate strategy in TESCO can be observed through their
expansion into the non-food sector of retailing. This diversification was marked by the sale of

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non-grocery items like pharmacy, health and home products, financial services and
telecommunication services (Wood, Coe and Wrigley 2016). This facilitated the expansion of
the customer base for the company. Furthermore, the expansion strategy of the company was
also noted when they expanded the scope of their business operations into other countries as
mentioned above (Zhang and Warner 2017). Such geographical expansion helped the
company to increase its share in the retail market and gain a competitive advantage among its
major rivals.
Business Strategies
The business strategy of TESCO can be observed to be the obtaining of maximum
customer satisfaction and loyalty by providing their targeted customers with a memorable
shopping experience (Mollah and Sharif 2014). In order to achieve this the company focuses
on the recruitment of employees who are highly skilled and knowledgeable in their respective
fields and can provide an excellent quality of services to the customers. The mission of the
company is to product the customers with great value for the products that are purchased by
them.
Operational Strategies
Aligning itself with the business strategy of obtaining maximum customer satisfaction
and loyalty, the operational strategies of the company pertain to the achievement of cost
effectiveness in the business operations. This operational strategy allows the company to
provide high quality of products and services to its targeted customers at low prices.
Efficiency in business operations is achieved with the help of installing advanced technology
that improves the overall performance of the organizations as well as that of the individual
employees (Lavery, Pennell and Evans 2014). Furthermore, the employees and workers are
also given adequate training in order to be able to provide high quality of customer services.
Apart from this, the company follows strict codes of conduct and organizational values that

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aligns the interests of the members of the organization with the organizational objectives,
thereby preventing discrepancies in business operations.
Relation among Organizational Strategies
From the above discussion regarding the corporate, business and operational
strategies adopted by TESCO plc, it can be noted that these organizational strategies are
aligned with each other and help in achieving the common organizational targets of
efficiency in business operations and obtaining of a competitive advantage in the market
(Samantara and Sharma 2015). The achievement of optimum customer loyalty and customer
satisfaction would reduce their potential to switch to other brands. Furthermore, the strategy
of expansion and thereby increase of customer base and market share also helps the company
to achieve a competitive advantage in the market.
Strategic Options for TESCO
The dynamic nature of business environments requires the business organizations
operating in it to strategize means to efficiently adapt to the changing scenarios so that they
may be able to utilize the opportunities available to them and prevent the threats from
affecting their business operations in a severe manner (David and David 2016). The retail
market has changed significantly due to the rise of e-commerce facilities, and accordingly the
organizations operating within its scope have adopted different strategies to gain a
competitive advantage over their rivals. In this regard, there are several strategic options
available to TESCO plc, which can be recommended on the basis of an evaluation of its
internal and external business environment as provided in the following sections.
PEST Analysis
The PEST analysis provides a strategic framework for the evaluation of the political,
economic, social and technological factors that may affect the business operations of an

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organization (Pan, Chen and Zhan 2019). The PEST analysis of TESCO plc shows the
following results:
 Political factors – The political factors affecting the operations of TESCO plc include
the political stability of the countries in which the company operates. Furthermore,
other factors such as legislation regarding the standards of quality of the products and
services, tax rates, excise duties and health and safety regulations also need to be
adhered to by the company (Kotsanopoulos and Arvanitoyannis 2017).
 Economic factors – Economic factors affecting the operations of TESCO plc include
the gross domestic product, employment and wage regulations, availability of skilled
and unskilled labor, taxation policies, accessibility of finances, disposable income of
the consumers and the availability of resources at low costs for production processes
(Song, Sun and Jin 2017).
 Social Factors – The social factors influencing the operations of the company include
the tastes and preferences of the targeted customers on the basis of their demography
and behavior (Tirawatnapong and Fernando 2019). Furthermore, the existence of
cultural or linguistic differences among the employees of the company and the
customers also plays a major role in determining the business operations of TESCO
plc.
 Technological factors – Technological factors affecting the operations of TESCO plc
include the availability resource efficient and cost efficient technology, digital and
mobile accessibility along with efficient internet connectivity (Heller 2017). These
factors significantly determine the opportunities available to the company for the
successful conduction of their business operations.

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Porter’s Five Forces Analysis
The analysis of Porter’s Five Forces provides and evaluation of the competitive
environment in which a business organization operates. The analysis of Porter’s five forces
on the company TESCO plc shows the threats of new entrants, substitutes, bargaining power
of suppliers and buyers and competitive rivalry as faced by the company.
 Threat of new entrants – The threat of new entrants as faced by the company
TESCO plc is moderate to high. This threat is owing to the rapid growth of the retail
industry throughout the world along with a steady growth of e-commerce facilities,
making the retail industry a lucrative market for investors (Einav et al. 2014).
 Threat of substitutes – The Company faces a low threat of substitutes because of the
wide variety of services and products offered by the company to its targeted
customers. This reduces the risk of customers switching to alternate products.
Furthermore, the company also engages in the maintenance of high quality standards
thereby inducing high customer satisfaction and brand loyalty.
 Bargaining power of suppliers – TESCO plc faces low threat from the bargaining
power of suppliers because of the availability of a large number of suppliers in the
market. The brand image and presence of the company in the global retail market
further provides the suppliers with significantly low control on the prices.
 Bargaining power of buyers – The Company faces high threat from the bargaining
power of the customers due to the presence of a large number of competitors in the
retail industry. The general trend of economic growth worldwide further provides the
customers with higher purchasing powers thereby enabling them to switch between
companies according to their preferences (Manzur 2020).
 Competitive rivalry – The Company faces high threat from competitive rivalry due
to the presence of a large number of organizations operating in the retail industry. The

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significant competitors of TESCO plc include Walmart, Aldi, Woolworths, ShopRite
Holdings and the like (Audu, Danjuma and Habukuk 2014).
Success Factors
According to the above mentioned evaluations of the external environment in which
the company TESCO plc operates, certain success factors can be identified which will help in
the formulation of a strategic plan for the growth and development of the company. The
favorable political factors such as adherence to health and safety regulations, and political
stability in the countries in which the organization operates are important factors that can
ensure the success of the company. Furthermore the company’s adherence to quality
standards of the different countries helps them to obtain the favorable preference of the
customers (Fatricia 2017). The advancements in technology incorporated by the company
also aid them to run their operations in a cost effective manner. The presence of a large
number of competitors is the major threat faced by the company, which must be tackled with
the help of efficient strategizing. The low threat of bargaining power from the suppliers and
buyers also provides opportunities for the company that can be used for its growth and
development in the existing as well as new markets.
Recommendation of Strategic option
The recommendations that can be provided to the company TESCO plc as a strategic
option can be derived from the evaluation of the external and competitive environment. In
this regard, it can be mentioned that the company may adopt the change of expanding its
operations in new regions such as Africa. The company does not operate in the region
presently, but its competitors such as Woolworths, Walmart and Aldi are recognized to the
major retailers in the region. In order to improve their market share and gain a competitive
advantage in the market, they may choose to expand their operations in Africa. This change
will require them to gather adequate funds and resources through investments as well as

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training of employees (Battersby and Peyton 2014). The strategic option of geographical
expansion to Africa has been provided to the company on the basis of the opportunities of
competitive advantage and increased customer base available to them.
Force Field Analysis
The force field analysis provides a framework for the evaluation of the different
agents that either drive or resist a change in a business organization. The comparison of the
different factors that affect the process of change implementation in a business organization
provides an estimate of the success of the change process and the possible challenges that
may be faced by them (Zand 2015). In the case that the factors driving the change are more
than the factors resisting it, it may be assumed that the change implementation process will
turn out to be successful. An evaluation of the different factors affecting the change process
at TESCO plc shows the following results:
Factors driving change Factors resisting change
 Technological advancements that are
not only resource efficient but also
cost efficient
 Possibility of expansion of customer
base
 High rate of customer satisfaction
 High quality of services provided by
the employees
 Diverse range of products produced
by the company to suit the needs and
preferences of the customers
 High investments required for
setting up business operations in the
new region
 Conflicts or resistance that may arise
among the members of the
organization due to the change
implementation process
 Cultural and linguistic differences
observed among local employees
and customers

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 Availability of resources at low costs
in Africa
 Possibility of gaining a competitive
advantage in the African retail
market
As observed from the table, the factors driving or supporting the change are more than
that of the factors resisting the change. In this regard, it can be said that the company may be
able to successfully conduct the change implementation process by efficiently managing the
challenges that may arise in the process.
Change Agents
Change agents can be defined as individuals or groups of individuals who perform the
role of initiating, stimulating and facilitating the change implementation process within the
scope of a business organization (Campbell 2018). These change agents may operate either
internally or externally of the organization.
The internal agents of change at TESCO plc can be identified to be the Chief
Executive Officer of the company Dave Lewis, the managers of the different departments
operating under him, the employees of the organization and the regional manager who is to
be appointed for the operations of the company in Africa.
The external agents of change for TESCO plc can be identified to be the suppliers,
local partners or collaborators with the company, the government of the countries in which
the company will operate in Africa and promotion agents.

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Change Implementation Plan
The process of change management requires the business organizations to carefully
align the interests of the members of the organization with the purpose and objectives of the
proposed change. The change implementation plan plays a crucial role in this regard, as it
helps the organization to obtain maximum engagement and participation from the employees
and successfully establish the new organizational objectives (Imran et al. 2016). Kurt Lewin’s
change management model provides a useful framework, using which business organizations
may efficiently engage in their change implementation process. Lewin’s change management
model consists of three steps, namely, unfreezing, changing and refreezing (Hussain et al.
2018). This model can be applied to TESCO plc for the change implementation process and
is discussed as below:
 Unfreezing – This first step in the change implementation process involves
unfreezing of the current business operations and activities so that the members of the
organization may be communicated regarding the need and purpose for change
(Hussain et al. 2018). This process involves the establishment of targets and
objectives that are to be achieved from the implementation process. In TESCO plc,
the process of unfreezing would involve the role of the leaders to effectively
communicate the advantages of geographical expansion of the company’s operations
in Africa and aligning them with the personal and professional growth of the
employees.
 Changing – This process involves making the actual changes in the business
activities in the form of gathering of adequate funds and other resources for the setting
up of operations in a new geographical location. This also requires the training of the
employees and allocation of responsibilities and duties among them that they will be

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performing in the new business units. Recruitment of new employees and formation
of partnerships with local suppliers forms an integral part of the change process.
 Refreezing – The process of refreezing refers to the solidifying and stabilizing of the
newly allocated business activities and operations to the members of the organization
(Jabri 2017). This process ensures that the implemented changes are effectively
accepted and adopted by the various internal and external members of TESCO plc.
Risks in Change Implementation
The change implementation process involves certain risks like the possibility of
resistance towards the proposed change among the employees as well as conflicts that may
arise during the implementation process. There are various reasons that may cause resistance
among the employees and managers towards the proposed changes. These may include the
fear of loss of power and authority within the organizational structure, inability of the
employees to adapt to new business environments, lack of adequate skills and knowledge to
execute new business activities efficiently, lack of self-confidence and uncertainty regarding
the outcome of the change process (Dawson 2019). Resistance arising due to these factors
may be managed by the organization with the help of effective means of communication
(Simoes and Esposito 2014). In this regard, the leaders and Human Resource Management
System plays an important role. It is the responsibility of the leaders to remove such
ambiguities regarding the change process from the minds of the members of the organization,
and allocate new responsibilities according to their abilities. The HR system further aids in
the management of conflicts that may arise during the change process by integrating the
interests of the employees with the organizational targets and objectives.

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