Strategic Problems & Opportunities Faced by TESCO in Malaysia

This report discusses the current strategic problems and opportunities faced by TESCO in Malaysia, including employee turnover, brand positioning, and diversification. It also provides recommendations for strategic improvement.

STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION................................................................................................................................3
1. Explain current strategic problems & opportunities faced by TESCO in Malaysia....................3
2. Analyse Tesco marketing & innovation strategy transformation designed to position the
company on cutting edge of consumer trends.................................................................................4
3. Examine TESCO’s strategy of developing healthy lifestyle or go green concept in Malaysia...5
4. Contrast performance of TESCO with nearest competitor in Malaysia......................................6
5. Provide recommendations to management of TESCO on ways to improve strategically in
Malaysia...........................................................................................................................................6
CONCLUSION....................................................................................................................................8
REFERENCES.....................................................................................................................................9
Books & Journal:.............................................................................................................................9

INTRODUCTION
Strategic management is the concept of making decision making in organisation which
leads to growth as well as development of position of firm. Each and every firm uses strategy in
market to deal with competitors as well as rivals. TESCO, a multinational corporation
headquartered in UK. It is a diversified company which deal with variety of products and services.
This report includes strategic problems & opportunities, TESCO marketing and innovation strategy,
firm strategy for developing healthy lifestyle & comparison of TESCO with competitor in Malaysia.
1. Explain current strategic problems & opportunities faced by TESCO in Malaysia
TESCO has expanded its business at wider level and in Malaysia with strategic alliance
between TESCO PLC UK & local conglomerate. The first store of corporation was established in
2002 February, opening its first hypermarket in Puchong, Selangor. In 2004, enterprise acquire
Makro Cash and Carry in Malaysia which was local merchandiser and brand was renamed to Tesco
Extra. Current strategic problem faced by Tesco is mentioned below-
Employee high turnover rate (Retention Strategy) - Main issue faced by TESCO in
Malaysia is that turnover rate of employee is high in firm and it is becoming difficult for entity to
prepare proper retention strategies for employees. This has leads to low profit and higher expense of
business. It is seen that mostly front departments (cashiers) are leaving the job which contributes
firm around 80% of the profit. Thus, HR manager of enterprise is not able to the deal with situation
in proper manner. In Malaysia, retail industry provides highest percentage to their economy GDP.
Thus, they need to develop effective retention strategy so that turnover rate reduces (Wood, 2016).
Brand positioning- Another issue faced by enterprise is creating brand positioning in
Malaysia is difficult task. This is because most of products and their advertising is prohibited in
Malaysia and makes it challenging for business to market their business in appropriate manner.
Brand positioning is vital for business because it creates image in the eye of customers. In relation
with chosen firm, due to well brand positioning of brand across the globe they have been able to
survive in market but not for linger period of time (Teh, 2016).
Strategy opportunity-
Diversification- Main opportunity for TESCO is to be that they have opportunity to adopt
the diversification strategy because of profit earned by firm in Asian countries 6% larger than the
UK d which is 3%. Thus, enterprise is now opening around 760 more new stores in Thailand
combining Malaysia. So, company has chance to do the business and introduce more new product
in market.
After a brief analysis of above matter it is stated that strategy is important for every firm to

adopt in proper way. This is because firm can use these strategies as competitive advantage in
market for growth as well as development. Implementing them is not easy task so proper analysis is
to be done when adopting and applying them in business.
2. Analyse Tesco marketing & innovation strategy transformation designed to position the company
on cutting edge of consumer trends
In business, marketing and innovation are essential part of organisation so that sustainability
of firm increases for longer period of time. Thus Tesco also uses marketing as well as innovation
strategy to position the company in country for example in Malaysia they introduced club cards and
green club cards to customers in which points were given to end users in which customers can earn
points while shopping. Green club point’s cards are earned by customers when firm bags are re-used
by end user. These are equal to normal points, but are being considered as separate when they are
listed to accounts and statements. Also to transform their position they have started green club card
League to advertise positive behaviour in business environment (Haddock-Millar, 2015).
Further, brand value of TESCO is being considered as best way of maintaining position of
company in Malaysia because it provides cheap products and goods as compared to their
competitors as well as rivals.
Customer focus- TESCO main objective is to earn customer loyalty by providing them
quality of products and services. So they adopted customer focus strategy in Malaysia to attract
more and more customers for their product. With help of this strategy, Tesco is able to position their
brand value in market. Customer focus is essential as it helps to understand their switching
behaviour and needs as well as changing demands. This strategy is important so that advertising of
product is done accordingly (Fatricia, 2017).
Market & product development- Green club cards- In Malaysia, firm has introduced
green club cards league as well as sports and champions because TESCO Malaysia are more
focused towards the green agenda of environment. This motivates customers to use their own bags
and collect points which can be further used at the time of shopping. This is the innovation and
marketing transformation that they used in business for their business position.
TESCO Application & Club App- Another innovation done by firm is that have
implemented their own online app through which same day deliveries are done to customers also
with club app they can manage theory earned points (Lau, 2019).
After a brief analysis of above matter, it is analysed that marketing and innovation both play
vital role in business and is to be carried out in appropriate manner. These strategies assist
enterprise to manage customers and deal with market uncertain situations in effective manner.

Further, when changes are to be adopted manager of firm ensures that everything is done in
appropriate manner. Because a wrong decisions in such tactics might affect the business at depth &
infrastructure at wider level.
3. Examine TESCO’s strategy of developing healthy lifestyle or go green concept in Malaysia
In organisation, firm focus on earning profit but besides this they also maintain and
manages as well as use strategy & tactics for business. In relevance with TESCO, they also have
contributed towards healthy lifestyle and go green concept in Malaysia. Firm is developing healthy
lifestyle of people in Malaysia by establishing green campaign at various locations in the country.
Also, they are providing more energy drinks and soft drink with less sugar as well as without sugar.
This attracts more customers who are health conscious and prefer gym products and goods. Go
green concept is being started by TESCO with motive of protecting environment and creating
positive energy in country amongst the people. Moreover, strategy has been used by firm for
developing healthy lifestyle such as Green Club Cards has been introduced by entity so that fewer
resources are used in packaging, bags, distribution etc. Through this process and strategy customers
re-use bags for shopping and earn points (Ghaffarkadhim, 2019).
Further, to develop healthy lifestyle they deliver most of products with high sugar and have
removed by taking out 4100 tonnes of sugar. This makes them customer focused brand at broader
scale. They are also able to develop go-green concept in Malaysia by doing and packing of product
and good with minimisation of plastic. Moreover, with establishment of go green campaign
everywhere customers also support them in their operations appropriately. Also it has been found
that WWF- Malaysia has rated TESCO as most sustainable retailers in Malaysia by scoring about
74 % which is mainly because of contribution towards firm for development of green environment.
(Leiblein, 2019).
4. Contrast performance of TESCO with nearest competitor in Malaysia
TESCO Malaysia and Fresh cart both are one of the most well-known retailers in country
who deals in variety grocery and other variety of products as well as services.
Comparison
BASIS TESCO FRESHCART
CEO SCORE Score of TESCO CEO is more
than Fresh cart which is
70/100.
CEO of fresh cart has score of
67/100

PROFIT MARGIN As TESCO is a brand and due
to its cheap products and
services it has been able to
generate more revenue than
Fresh Cart which is more than
$982.2000.
Fresh cart also deliver door to
door service in Malaysia but
generate less profit margin
than TESCO which is 5% less
from Tesco generating scale.
Network Chain
TESCO has larger network
chain as compared to TESCO
and which helps them to
acquire more resources in
effective manner.
Network chain of Fresh Cart is
within the region and limited
outside the region.
After a brief overview of above paragraph, it has been stated that both firm contribute profit
to economy. Performance of both firms is different from each other but deal in the same industry;
retailing. By comparing both the organisation, it depicts that TESCO is performing better than Fresh
Cart in terms of business. This is because of developing new strategies & tactics in enterprise (Hitt,
2017).
5. Provide recommendations to management of TESCO on ways to improve strategically in
Malaysia
After reading the above report it has been seen that TESCO need to improve their ways of
strategic and tactics in their management so that business grow as well as develop at rapid level. So,
few recommendations has been given below which will assist corporation to manage functions &
operations of business appropriately-
 It is recommended that TESCO need to adopt proper market research so that decision
making id done properly in managementWDD(Meyer, 2017).
 Another recommendation is that, to develop more new strategies towards go green concept
they should implement more and more green campaign so that people get motivated
towards environment and optimistic energy takes place.
 Further, when marketing strategy & innovation is developed needs and demands of
customers should be identified in proper manner so that conflicts as well as errors do not
arise in near future.

 Also, TESCO has to be take competitive advantage in market so that business is able to face
challenges and competitors. This is necessary because it helps in developing making
effective decisions & usage of resources efficiently.
 Another recommendation is they should update their management system so that why and
what changes are needed are identified by manager. So, tactics and strategies are made
accordingly.
 As TESCO is deciding to open new stores in Malaysia, they should take effective measures
& do the promotion as well as marketing of product effectively with under government
rules and regulation (Hitt, 2016).
After a brief examining the above recommendation, it has been stated that using strategy is
easy but implementing them effectively is difficult. Thus, proper measures and decisions need to be
taken while applying them in business and management. Because a wrong use of strategy might
affect the whole business and its operation (Michael, 2017).

CONCLUSION
After a brief analysis of above matter it is concluded that strategic management is essential
for business to achieve goals and objectives in proper manner. Organisation uses strategies and
tactics to be ahead in market and deal with rivals as well as competitors appropriately. Thus, with
help of market research new opportunities and strategies are formulated & regulated. Also, to grow
and develop business firm need to take responsibility towards environment which also results in
increase in goodwill as well as credibility of enterprise. Thus, it also enhances sustainability of
business for longer period of time. Hence, strategic management is the process through which
organisations are able to deal with uncertain situations of market easily and properly.

REFERENCES
Books & Journal:
Wood, 2016. Multi-scalar localization and capability transference: exploring embeddedness in the
Asian retail expansion of Tesco.Regional Studies,50(3), pp.475-495.
Teh, 2016.Tesco Stores (M) Sdn. Bhd.: Employee Retention Strategy To Reduce Cashier Turnover
Rate(Doctoral dissertation, Universiti Sains Malaysia).
Haddock-Millar, 2015. Business Strategy and the Environment: Tesco PLC’s Declining
Financial Performance and Underlying Issues.Review of Business & Finance Studies,6(3), pp.91-
103.
Fatricia, 2017. STRATEGIC ANALYSIS OF TESCO SUPERMARKET.Jurnal Manajemen
Terapan dan Keuangan,6(02), pp.69-86.
Lau, 2019. Regulations, opportunities, and key trends of functional foods in Malaysia.
InNutraceutical and Functional Food Regulations in the United States and around the
World(pp. 561-573). Academic Press.
Ghaffarkadhim, 2019. Hypermarkets in Malaysia: Issues of Expansion, Distribution and Corporate
Social Responsibility.International Journal of Psychosocial Rehabilitation,23(02).
Leiblein, 2019. Foundations and futures of strategic management.Available at SSRN 3396754.
Hitt, 2017. The intersection of entrepreneurship and strategic management research.The Blackwell
handbook of entrepreneurship, pp.45-63.
Meyer, 2017. The entrepreneurship‐strategic management interface.Strategic entrepreneurship:
Creating a new mindset, pp.17-44.
Hitt, 2016.Strategic management: Concepts and cases: Competitiveness and globalization. Cengage
Learning.
Michael, 2017. Discovery and coordination in strategic management and entrepreneurship.Strategic
entrepreneurship: Creating a new mindset, pp.45-65.
Bertoldi, P. and Boza-Kiss, B., 2017. Analysis of barriers and drivers for the development of the
TESCO markets in Europe.Energy Policy,107, pp.345-355.
Evans, 2018.The lean supply chain: managing the challenge at Tesco. Kogan Page Publishers.
Dales, 2019. Variegated national retail markets: Negotiating transformation through regulation in
Malaysia and Thailand.Economic Geography,95(1), pp.90-111.
Vaicondam, 2020. Hypermarkets‟ E-commerce Adoption among Youth in Puchong,
Malaysia.International Journal of Psychosocial Rehabilitation,24(01).

Alam, 2019. Evaluating the Effectiveness of Reward Strategy at Tesco: Evidence from Selected
Stores in UK.Indian Journal of Industrial Relations,55(1).