Importance of Change Management in Strategic Management

This article discusses the importance of change management in strategic management, focusing on the complexity of the transformation process, its costs, risks, and sustainability. It explores how Tesco, a leading multinational supermarket outlet, effectively manages change to remain competitive in the market.

Strategic Management

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................4
1. Strategic management..............................................................................................................4
2. Process used by an organisation to determine the strategy......................................................5
3 &4. Evaluate critical model as well as tools along with their application in real organisation
to determine effective strategy.....................................................................................................6
4. Critically appraise the importance of change management based on the complexity of the
transformation process, its costs, risks and sustainability...........................................................9
CONCLUSION..............................................................................................................................10
REFRENCES.................................................................................................................................11

INTRODUCTION
Strategic management refers to the comprehensive plan that is made by an organisation to
allocate the resources and achieve the objectives successfully. It involve the entire process of
planning and executive the decision making process that help to manage the pursuit mission by
sustaining the relationship of firm with an environment. Thus, this process presents the aims
which are associated with both present as well as future environment. For the better
understanding Tesco company has been selected which is the leading multinational supermarket
outlet of United Kingdom. The company has effectively managed its consistent position due to
its wide distribution network and long retail chains. This report covers topics like critical
analysis of the concept as well as model which are related to the organisational strategy. Along
with that critically appraise of the importance of change management are cover in this report.
1. Strategic management
Strategic management refers to the formulation of plan as well as strategy that help to
develop the systematic structure which is necessary to plan out the functioning of an organisation
effectively. It is necessary for all type of companies irrespective of their sizes as it provide the
stable framework to carry out the logical approach to study internal as well as external
environment of business (Ansoff and et. al., 2018). Based on this the manager attempts to match
the functioning of an organisation with the changing environment. In context to the Tesco
company the manager effectively develop resources to pursuit the objective for different
functional area like manufacturing, technological, manpower, manufacturing and so on. As it
operator globally so strategic management is the vivid concept that formulate the objective as per
the changing environment. Along with that as per this process the company can make the logical
decision and keep pace by using the evolving innovation as well as business condition. The real
example of it is Tesco, which in the initial stage realised the significance of digital media so it
created its website and invite the prospectus via appealing offers and free home delivery of the
selected items. They even build the supplier supply relation so that the customer does not find
the shortage of inventory. So all this technique or analysis of environment helped the business to
gain the advantage of fast and effective mover that leads to core competency and sustainable
accomplishing of the vision (Bryce, 2017).

2. Process used by an organisation to determine the strategy
Strategic plan encompasses the necessary steps which an organisation is planning to map
out the required actions used to achieve the goal effectively. The process which is undertaken by
the manager include multiple steps that help to clearly build the passion and business strategy for
the success of company. Thus, the explanation to develop the strategic plan is defined below:
Prepare Vision statement: The role of preparing vision statement is to display the
mental picture that helps to understand what the company really hopes to achieve and become in
future. It is essential to give the workforce a shared goal and leadership to perform the roles and
responsibility of the company effectively. Tesco's vision is be highly values organisation by
offering quality products and services to maintain the loyalty or trust for internal as well as
external shareholders. It facilitates the personnel to perform the actions and operations in the
right direction as they are well versed with the long term objective of an organisation (Evans,
Stonehouse and Campbell, 2012). So based on this the manager can determine the effective
strategy which further maintain the clarity between the employer and employee. Along with that
the investor as well as supplier of company can determine the functioning of company based on
its vision. Thus, even if they build innovative or risk strategy such as introduction of new product
line retain the trust of employees and customer.
Articulate Mission statement: Mission is the path that helps the internal members to
collective work and attains the predetermined vision of an organisation. These missions are more
specific as well as shorter but the whole process positive contribute in the whole process. To
facilitate the vision of Tesco, its mission is enhancing the customer support services to sustain
the interest of existing customer and reach out to potential market effectively. As mission is
prepared for the future, so based on this the top level management can build the strategies for
present to reach out the vision. Like, to reach out the potential customer or increase the footfall
of each and every outlet the company need to focus on the promotional sources. It includes the
intervention of traditional and digital media to spread the awareness among customer and help
them to realise the USP of company. It is not necessary that the targets are set equally for the
entire outlet, as it is affected by various factors that affect the sales like forecasted demand,
purchasing power of local residence as well as different economic phases. Hence, based on this
the manager plan and implement the decision for the smooth business functioning.

Perform the gap analysis: It is the vital process that needs to be carried out by the
organisation in order to identify the chances of gap within the current as well as standard state. It
simply determines the existing place of the organisation and what standard it needs to achieve in
the upcoming duration. These gaps are identified on the basis of market share, customer
satisfaction as well as profit margin (Hill, Jones and Schilling, 2014). Like, with the help of
group discussion and brainstorming method the strategies are prepared to improve the
profitability by 5% and market share by 10% within 8 months. So it makes easier for the firm to
measure the data and determine the effectiveness.
Prepare smart goals and monitor the progress: It is one of the most prominent
process that help the firm to formulate the strong strategy either for the shorter or longer tenure
depending upon the functioning of business. Planning as well as execution of the organisational
goal is the sound practice but the manager need to determine these processes at the right time
otherwise they may forgone the opportunity. Smart objective helps to maintain the transparency
and it is quite easier for the employee to understand as it completely transmit the whole meaning
(Hill, 2017). For instance, the smart objective prepared by the sales manager is to widen the
customer base by increasing the footfall of company relatively by 15% within one year. So based
on the smart objective an organisation can prepare the strategy to achieve the target like by
distributing the free samples of new product. Along with that they can measure the individual as
well as group performance on the quarterly or monthly basis. Based on performance evaluation,
constructive feedback is given to enhance the existing performance of employees that leads to
achievement of the target.
3 &4. Evaluate critical model as well as tools along with their application in real organisation to
determine effective strategy
Tesco corporation produces, design as well as assemble the technology on the basis of
upcoming services provided to the customer. There are different methods that are used by
company in order to analyse the internal capabilities as well as external pressure that perhaps
restrict the functioning of company in order to attain the desirable outcome (Hitt, Ireland and
Hoskisson, 2012). Thus, adequate information about the surrounding help to determine the
sustainable strategy that leads to desirable outcome. Explanation of model for the micro and
macro environment is explained below:

Micro Environment: It refers to the environments which are in direct contact of
company such as customer, employee and supplier. This helps the firm to bring significant
chances in order to exploit the opportunity and gain the capabilities effectively.
SWOT analysis: It is the framework or technique which is used by the entire
organisation or an individual to determine the functioning of an organisation effectively
(Klingebiel and Rammer, 2014). It consist of the strength, weakness, threat and opportunity that
help to closely overview the business process and prepare benchmark and strategy to ascertain or
explore the opportunity prevails in the market.
Strength
 Tesco being global company
effectively serve and fulfil the various
requirement of customer due to which
it suitably gain the loyalty from wide
range of customers.
 Tesco hold various patent as well as
licences on the technology due to
which it gains the advantage of long
term sustainable development.
Opportunity
 Strategic alliance is the opportunity for
company to sustain within highly
competitive regions.
 Use of digital media and constant
innovation is the effective strategy that
assists company to enhance the
customer base and identify changing
trend and preferences (Moutinho and
Vargas-Sanchez, 2018).
Weakness
 The majority of the revenue comes by
operating in the developed countries
like US and UK. Still there are various
economies like India where company
profitability is still at stake.
 During certain economic condition like
inflation the customer buy few or basic
necessity items that leads to the high
cost inventory (SWOT Analysis of
TESCO, 2019).
Threat
 The food prices constantly changes,
especially in the recent time it is rising
which is the threat to company as affect
the profit margin of company
 Rising law and different legislation
confined the growth of an organisation
with put immense pressure on its
functioning.

Macro Environment: It refer to the wide surrounding which are beyond the control of
an organisation but somewhere it may either positive or negatively affect the functioning of firm.
So based on the external market firm makes the effective strategy to control the affect of these
external factors in the adequate business functioning.
Porter's five factor model: This analysis is used by business or strategic planner to
understand the different viable that can hamper the profitability of industry. It may wither
include the string force that affect firms operations and leads to low profitability or the weak
force that leads to generation of enormous profit. Thus, deep analyses can help Tesco to
determine effective strategy.
Threat of new entrant: Tesco is the multinational brand due to which most of the people
from different countries recognises this brand and rely on it as compare to the other retail outlet.
This depict that the threat of new entrant is low for Tesco as it gain the benefit of its economies
of scale due to which it can further decreases the cost of product and fight with new rivalry.
Bargaining power of buyer: Within the retail sector due to increase in number of
alternatives the bargaining power of buyer is high. This lead the Tesco to constantly adopt the
innovate strategy in order to differentiate its services and attract the customers. They run the
loyalty programme and offer huge discounts to retain the existing customers of company and
maintain brand equity.
Existing rivalry: Tesco makes effective differentiated strategy that helps the company to
win the new customers rather than loosing existing ones. As the participation of existing rivalry
is high so they constantly engages the customer by giving them substantial offers (Tesco Plc
Porter Five Forces Analysi,. 2018). Further, it conduct the research so that they gain the
knowledge about forecasted demand and supply that help to prevent the issue of over production
or lack of stock. This finally led to the consistent performance of firm.
Bargaining power of supplier: Similarly like other brands Tesco too depend upon the
supplier to get the raw materials and refill the inventory of supermarket. So they require the
quality material delivered in the store at low price, if company don’t find suitable relation with
the particular supplier they can switch to other due to low bargaining state of supplier. The main
reason is due to the complex and expanded size of the selected stores due to which multiple
supplier want to be the part of company.

Threat of substitution: Tesco makes effort to differentiate its products from the other
buyer as threat of substitution is high. So with the help of market research the company under the
psychology of customer and offer the unique benefit to them (Hill, Jones and Schilling, 2014).
This has potentially assisted the company to cope up with wider range of products with supreme
quality and at lowest price in comparison to the competitors. Therefore, this leads the company
to gain the prominent position.
4. Critically appraise the importance of change management based on the complexity of the
transformation process, its costs, risks and sustainability
Change management is the efficient process that help the firm to incorporate the new
technique by systematically manage the functioning. It is the transition phase that motivates the
staff to adopt the new and innovative pattern that assist to perform the roles and responsibility of
an organisation effectively. Although the manager of Tesco may face resistance from the side of
personnel but it is their responsibility to make them understand about the significance of changes
to move from the current state to the future state. Therefore, it is the vital process which needs to
especially adopt by the large multinational organisation to remain competitive and explore the
advance opportunity effectively.
Importance of change management
The organisation concentrates both on the micro as well as macro level where the
responsibilities are reallocated by enriching the existing capability of people. It simply require
the whole planning as well as training stage where a firm encounter with the new and advance
tool and technique. To adopt the new practices it is the responsibility of firm make the employee
understand the significance of changes on the basis of factual figures. Such transformation
stage in terms of improving existing practices and using the innovative technology is complex as
it require the huge time and cost of company. Initially the employees of Tesco used to arrange
all information and data manually but the foresight vision of the manager helped the company to
use electronic devices and presence in digital media. With the constant practices and growth
opportunity the employee finally used the customised software and centralised database for the
effective business functioning.
Change management takes place due to the dynamic environment and the constructive
feedback received from the customer. So it requires detail planning and maintaining open
communication to encourage the employees and effective adopt the new practices. The main

complexity for the change is either financial or non financial risk that affect the functioning of
firm. Herein, Tesco changes its structure from one stop selling to the bulk buying area which
require the involvement of manpower that learning how they need to tackle the needs of
customer. Initially, it was riskier for the company because if they would have lack to gaze the
attention of customer then it may affect the long term productivity and profitability of firm
(Ward, 2012). So the manager of Tesco has always preferred the flexible environment where
employees are free to participate and share their option for long term sustainable development.
CONCLUSION
From the above report it has been concluded that strategic planning helps the firm to
determine both internal as well as external factors that can lead the firm to draft and execute
effective plan for the adequate business functioning. To prepare the strategy internal staff need to
go through the various procedures in order to attain final objective. Moreover, there are different
internal and external models whose application assists the firm to gain desirable result. Further,
the whole change management process requires the productive efforts of employee to gain
sustainable development.

REFRENCES
Books and Journal
Ansoff, H. I. and et. al., 2018. Implanting strategic management. Springer.
Bryce, H. J., 2017. Financial and strategic management for nonprofit organizations. Walter de
Gruyter GmbH & Co KG.
Evans, N., Stonehouse, G. and Campbell, D., 2012. Strategic management for travel and
tourism. Taylor & Francis.
Hill, C. W., Jones, G. R. and Schilling, M. A., 2014. Strategic management: theory: an
integrated approach. Cengage Learning.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function.
Macmillan International Higher Education.
Hitt, M. A., Ireland, R. D. and Hoskisson, R. E., 2012. Strategic management cases:
competitiveness and globalization. Cengage Learning.
Klingebiel, R. and Rammer, C., 2014. Resource allocation strategy for innovation portfolio
management. Strategic Management Journal. 35(2). pp.246-268.
Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI
Tourism Texts. Cabi.
Ward, K., 2012. Strategic management accounting. Routledge.
Online
SWOT Analysis of TESCO. 2019. [Online]. Available
through:<https://businessteacher.org.uk/swot/tesco.php>
Tesco Plc Porter Five Forces Analysis. 2018. [Online]. Available
through:<http://fernfortuniversity.com/term-papers/porter5/lse/497-tesco-plc.php>