Stakeholder Engagement in Strategic Management

This assignment delves into the crucial role of stakeholders in strategic management. It emphasizes that understanding and effectively engaging with stakeholders are fundamental to developing and implementing successful strategies. The document discusses various theoretical frameworks for analyzing stakeholders and their influence on organizational decision-making. It also explores best practices for stakeholder engagement and communication, aiming to illustrate how organizations can build strong relationships with key stakeholders to achieve their strategic objectives.

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2...........................................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Strategic management is defined as a process of planning in advance on the basis of
available resources after evaluating internal and external environment of the organisation. This
involves formulation of different strategies which increases firm's competitive advantage and
performance of employees. Strategic management intends to protect the venture from various
expected and unexpected events, so that firm can handle the situation by preparing plans in
advance. Further, strategic management applies to every size of organisation, whether it is small,
medium or big enterprise (Freeman, 2010). The present report is focussed on strategic
management's concept and its necessity in the organisations. For understanding its practical
approach, TESCO PLC has been taken as it is one of the biggest retail firms in UK. It provides
services in diverse products worldwide which makes it more sensitive towards competition.
Through application of various models on above mentioned firm, problems faced by company in
strategic management and its solution will be explained.
TASK 1
Strategic planning is done for making firm competitive and it involves number of steps.
Tesco has its branches in other countries as well which makes it more sensitive towards
competition existing everywhere. To take a stand against this competition, firm has to do
strategic planning. Before going for making any plan, it is the first pre-requisite for the company
to analyse its internal and external environment (Hitt, Ireland and Hoskisson, 2012). For the
purpose of conducting internal investigation, SWOT analysis is done, while for external
assessment porter's five force models are applied.
SWOT is an acronym of strength, weakness, opportunity and threat which a venture has
in its surrounding environment. To evaluate these factors affecting TESCO internally, SWOT
analysis will be done as described below: Strength: The main strength of the company is its brand name which already has a very
big impact in customer's mind. It provides large number of products worldwide of good
quality as it helps in building great image in front of customers (Hill, Jones and Schilling,
2014). Besides this, it has increased its store at particular locations to increase its
customer's base as shopping has become more convenient from there. Furthermore, firm
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has gained continuous growth in comparison to its rival firms at both local and
international level as well. Weakness: Firm is providing its services in many commodities which acts as a strength
of firm, on other hand it has created some limitations also for organisation. Mentioned
firm has a large amount of bad debts which has affected its cash position. Besides this,
firm is intending to expand the business in other products as well like smartphones which
needs a lot of investment and experience as well (Wheelen and Hunger, 2011). Opportunity: As stated earlier, the company intending to expand business in smartphones
and the manager of organization can hire any expert who can advise regarding how to
grow in this field. Moreover, company provides services online as well which can be
developed by surveying customer's needs. The mentioned venture has a very big
opportunity to expand business in other countries like Australia; India etc. where people
are brand conscious.
 Threat: As Tesco is a leading firm in the retail business, its competitor's continuously
trying to snatch the position of organisation as a leading firm. The high competition
among same industry of retail business reduces customers as they get diverted towards
other firms (Hodgkinson and Healey, 2011). There is a large part of cash reserve in the
form of bad debts which is limiting organisation to invest huge amounts in the expansion
plans.
The mentioned organisation's external analysis can be done by applying Porter's five
force model presented as under: Threat of new entrants: The threat of new entrants is lower for Tesco and firms are
engaged in similar industry. There is a big barrier for new markets to enter as it will
require a vast amount of investment for paying fixed costs and other expenses. Besides
this, mentioned firm has already the advantage of differentiation in context of products
and costs which makes it more difficult for new markets to enter and develop (Hair and
et.al., 2012). Another challenge for new firms will be to achieve economies of scale in
their operations. So, new markets can enter only if they come up with new innovations
with a large amount of investment and can bear losses at the initial stages. Threat of substitutes: Though new firms pose less threat of entering into the industry yet
they can be a threat for organisations like Tesco through other manners. New industries
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may come up by opening small chain stores at the convenient locations and lower price
levels as well (Ackermann and Eden, 2011). This can cut down the customer base of
large firms as consumers have better choice of purchasing almost same products at the
low price. To handle this situation, cited organisation has opened express and metro
stores at the small level. This strategy helped company to overcome problem of
substitute's threat. Bargaining power of buyers: Mentioned firm has a strategy to keep the track of
consumer's needs and providing best services by maintaining quality in commodities.
Further, people prefer to purchase everything they need from a single place. In this sense,
above mentioned organisation has advantage as it is a place where everything is available
under one roof (Noland and Phillips, 2010). This strategy helps the organisation to make
brand loyal customers who prefer to buy products from cited venture despite of higher
prices. Some consumers who are not brand conscious tend to shift towards other stores as
they supply products at the lower prices which make their bargaining power strong.
Aforesaid venture has introduced a strategy of 'Clubcard' which provides some benefits to
customers on buying from Tesco stores. Bargaining power of suppliers: The supplier's bargaining power against retail
organisations like Sainsbury, Walmart etc. is low. In context of Tesco, suppliers are in
weaker position to bargain for the lower price. They are afraid of losing contracts with
the big organisations which leads mentioned company to attain the strong position against
suppliers (Keupp, Palmié and Gassmann, 2012). Moreover, if supplier does not provide
material at rates fixed by the organisation, firm can set off the contract and move towards
other suppliers.
 Competition among rivalry firms: The cited organisation operates in area where
competition is high among firms engaged in the similar industry. Though firm has the
advantage of vast diversified business in various fields, yet organization like Walmart
pose a great competition. In such case, Tesco has made various strategies which can
make customers more satisfied with its services. Moreover, firm is focussing on
developing its technological ability to keep the database of customer's choices,
preferences and their feedback as well (Priem, Li and Carr, 2012). Further, aforesaid
company needs to focus on recovering amounts of the bad debts. This will improve
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organisation's cash position and investments can be made in useful plans like expansion,
innovations, modernisation of technologies etc.
The above analysis of both external and internal environment of Tesco will help to make
powerful and effective strategies considering strong and weak points as well.
TASK 2
Blue ocean strategy was introduced by W. Chan Kim and Renee Mauborgne. According
to this strategy, any firm can become competitive and gain product differentiation by innovation.
If firm succeeds in bringing any product which has some unique feature, then its position will
rise in the market (Audebrand, 2010). Despite of high price, customer will be induced to buy it
and the firm will be able to defeat rival firms. In a nutshell, this strategy suggests a different idea
from traditional approaches of competing with rival firms, rather it advices to make innovations.
Such innovation will give strength to stand in the competitive environment successfully.
Moreover, this strategy provides greater opportunities and more profitable position.
In context of Tesco, firm is already performing great in various diversified markets in
both local and international markets as well. To introduce any innovation, cited organisation has
to think something unique which can draw maximum attention of its customers (Strategic
framework: understanding Blue ocean strategy, 2015). Organisation can introduce different new
systems in their operations which will make them much more effective and they will be able to
get the upper hand over its rival competitors. Blue ocean strategy covers the same concept for the
mentioned firm for making it competitive.
Tesco possess the advantage of cost leadership with the benefit of wide range of
products. It supplies everything from baby clothes to petrol and also banking services. The
mentioned organisation use blue ocean strategy to create value. Further, it adopts strategy to
maintain the cost of products and maintain quality at the high level (Cinquini and Tenucci,
2010). Besides this, company deals in different products which increase sales and revenue of the
firm. To boost the sales and profitability of company, mentioned organisation has launched
various plans. By advertising the products at a wide level firm was able to manage productivity
of the organisation.
Recent competition faced by aforesaid company from Aldi which is also a retail firm as a
result it decreased the revenues of Tesco. The strategies made by Aldi for segmentation and
positioning of products was very efficient which snatched the customers of Tesco. The operating
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income, assets and equities of company went down which induced the firm to bring some
innovative changes. Further, blue ocean strategy suggests some measures to create competitive
position for the business (Keupp, Palmié and Gassmann, 2012). Some of the criteria according to
this strategy for mentioned organisation are as follows: Create: Strategy advices to create some factors which are unique in the market and have
less scope of replicating it fast. In case of uniqueness in product with no alternative or
substitute the consumers will be forced to buy it. Reduce: As the creation of some factors are necessary, in the same way reduction of
unnecessary factors is important as well. These factors can be either reduced completely
or can be separated from the important aspects. This separation will help in
differentiating important criteria from non-important one (Hodgkinson and Healey,
2011). Further, cited firm can go for this reduction and set priorities on this basis as well. Eliminate: This aspect states the elimination of factors which are in competition with
other rival firms for a long time. So, the strategy suggests changes by eliminating old
factor and placing new one in its place. Aforesaid organisation can do this by identifying
products which are outdated and replace it with the less grown products.
 Raise: At final stage, the concept advices the mentioned firm to identify those factors
which are not providing competitive advantage to the firm but have the potential of
placing business at the higher level (Hill, Jones and Schilling, 2014). For this, manager
of Tesco can go through various factors affecting firm in different ways. In this way,
identification of such constituents can be made and new factors can be established on the
basis of customer's needs.
The above mentioned criteria should be applied by Tesco to gain competitive advantage
and raise the position of firm with uniqueness in its products and innovations. Further, to make
the blue ocean strategy successful, mentioned venture has to keep focus on its existing customers
and potential future customers as well. For this, manager has to make sure that whole
organisation dedicate their efforts towards it and employees do the work with the team spirit
(Wheelen and Hunger, 2011). Finally, employees should be motivated to do the job creatively
and try to satisfy customers through best services.
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CONCLUSION
The above report depicts the importance of strategic management in the organisation for
raising the position of the organization at the competitive level. The various analyses done on
Tesco have cleared the importance of this investigation before designing any strategy.
Application of SWOT and Porter's five force modes asserted the strength of organisation with
opportunities available for developing in new and existing markets. Besides this, blue ocean
strategy helped in identifying factors to be considered on the basis of its current position in the
market and company as well. Further, position of aforesaid organisation which was down in
recent years can make its come-back with the help of different strategies as suggested in this
report. Finally, it can be concluded from the present report that strategic management is
necessary in every organisation for making the position of the firm strong and competitive.
Moreover, strategies should be based on providing maximum satisfaction of stakeholder and
consumers because they are the base for deciding failure or success of the strategy made.
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REFERENCES
Journals and Books
Ackermann, F. and Eden, C., 2011. Strategic management of stakeholders: Theory and
practice.Long range planning. 44(3). pp. 179-196.
Audebrand, L.K., 2010. Sustainability in strategic management education: The quest for new
root metaphors. Academy of Management Learning & Education.9(3). pp. 413-428.
Cinquini, L. and Tenucci, A., 2010. Strategic management accounting and business strategy: a
loose coupling?.Journal of Accounting & organizational change. 6(2). pp. 228-259
Freeman, R.E., 2010. Strategic management: A stakeholder approach. Cambridge University
Press.
Hair, J.F., and et.al., 2012. The use of partial least squares structural equation modeling in
strategic management research: a review of past practices and recommendations for future
applications. Long range planning. 45(5). pp. 320-340.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012.Strategic management cases:
competitiveness and globalization. Cengage Learning.
Hodgkinson, G.P. and Healey, M.P., 2011. Psychological foundations of dynamic capabilities:
reflexion and reflection in strategic management. Strategic Management Journal. 32(13).
pp. 1500-1516.
Keupp, M.M., Palmié, M. and Gassmann, O., 2012. The strategic management of innovation: A
systematic review and paths for future research. International Journal of Management
Reviews. 14(4). pp. 367-390.
Noland, J. and Phillips, R., 2010. Stakeholder engagement, discourse ethics and strategic
management. International Journal of Management Reviews. 12(1). pp. 39-49.
Priem, R.L., Li, S. and Carr, J.C., 2012. Insights and new directions from demand-side
approaches to technology innovation, entrepreneurship, and strategic management
research. Journal of management. 38(1). pp. 346-374.
Wheelen, T.L. and Hunger, J.D., 2011.Concepts in strategic management and business policy.
Pearson Education India.

Online
Strategic framework:understanding Blue ocean strategy. 2015. [Online]. Available through:
<https://www.cleverism.com/understanding-blue-ocean-strategy-strategic-framework/>
[Accessed on 4th October 2016].
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