Strategic Management: Theory and Practice

The assignment examines core principles of strategic management, drawing upon prominent theories and case studies. It covers various aspects such as contingency planning, financial strategy for nonprofits, and the psychological foundations of dynamic capabilities. The provided readings offer insights into strategic management's role in achieving organizational excellence and competitive advantage.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
CONCLUSION ...............................................................................................................................9
REFRENCES...................................................................................................................................9

INTRODUCTION
Strategic management refers to the creation and execution of major objectives and
initiatives taken by the top management of the company on the behalf of owners, by considering
resources and external and internal environment in which the firm competes. Strategic planning
defines the strategies of an organisation which provides direction and assists in decision making
regarding allocation of resources to pursue that strategy. In the present assignment, given
company is TESCO Group which is a global retailing portfolio and powerhouse of retail brands.
It offer non food and food items in all the countries of the world in various formats, including
online retail stores (Ackermann and Eden, 2011). Report covers strategic planning process and
its appropriateness for an organisation in its operating environment. It also covers the way in
which firm determines its functional objectives in order to accomplish the planned strategy.
TASK 1
Question 1 : Assessing the appropriateness of strategic planning process for an organisation in
its operating environment
Strategic planning refers to a process that ensures profitability of an organisation. It is the
basic requirement of every firm and is implemented by management team. It is a systematic
process of planning which involves various steps that determines current position of the
company, including its vision, mission, needs, goals and objectives, prioritized strategies and
actions & monitoring plans. Strategic planning process provides a clear vision to TESCO and
gives an idea about future position of the organisation. It is necessary for every firm to formulate
strategic plan in order to ensure success of the company.
TESCO is the largest supermarket in UK (Boyd and et. al., 2012). It is an international
general merchandising and grocery retail chain and is a British retailer by its domestic market
share as well as global sales. Planning process needs to have an overall goal and vision. It is
required by top management of the firm to formulate appropriate strategy that provides the
direction to attain predetermined goals and objectives of TESCO. Strategic planning is
systematic procedure of envisioning desired future, translating vision into defined objectives and
goals & process to accomplish them. It is a long term planning which lays down a platform and
assist to meet calculated future needs.
1

Strategic planning process
In today's competitive business environment, forecasted and budget oriented planning
methods are not sufficient for an organisation to prosper and survive. So, it is necessary for
TESCO to engage in strategic planning that defines clearly, the purposes & evaluate internal as
well as external environment in order to formulate strategy, execute it, assess the progress &
make appropriate adjustments if necessary to keep on track (Bryce, 2017).
The process of strategic planning has several steps which are as follows: Mission and objectives Situation analysis Strategy formulation Strategy implementation Evaluation and control
Mission and objectives
Mission statement of TESCO defines the vision of the company which includes purpose
& unchanging values and visionary goals that provides directions to pursuit future opportunities.
It conveys a purpose to projects and employees of a firm. In the process of strategy formulation,
mission statement provides a vision, where the firm should go in future. Directed by this vision,
manager of TESCO are able to define measurable strategic and financial objectives. These are
concrete goals that the firm seeks to reach. The objectives related to finance includes measures
like earning growth and sales target and strategic are related to business position of the company
and may involve measures like reputation and market share (David, 2011). These objectives
should be achievable and challenging. It should also be measurable so that referred firm can be
able to monitor its progress & make corrections as required.
Situation analysis
Once a company has defined its objectives, it initiates with its current position to
formulate a strategic plan to attain these. Any change in external surroundings often exist new
opportunities and ways to achieve the objectives. Environmental scan is conducted by the firm in
order to identify the present opportunities from the market. It is necessary for the company to
know its own abilities and limitations to grab the opportunity that provides a firm with higher
possibility of success. Situation analysis involves scanning of both internal as well as external
environment of TESCO.
2

Internal analysis includes the condition within the company itself. It consist of culture
and image of firm, its organisational structure, key staff, position on experience curve,
assessment to natural resources, operational efficiency and capacity, brand awareness, exclusive
contracts, brand awareness, patents & trade secrets, financial resources, etc. Number of factors
are considered by the firm while conducting internal analysis (Eden and Ackermann, 2013).
With increasing competition and emergence of global corporation, the business of
TESCO is now confronting cut throat challenges. The changes in internal and external
environment force company to re access its organisational capability, weaknesses, strengths,
opportunities and threats.
Situational scanning includes SWOT analysis by the help of which firm is able to identify
its strengths, weaknesses, opportunities and threats (Goetsch and Davis, 2014).
SWOT Analysis of TESCO
Strengths  Innovative organisational structure and culture
 Its major strength is its highly skilled manpower
 Strong return on earning
 Strong return on investment
 Excellent operation management system
 Management leadership style
 Skilled sales department
Weaknesses  Discrepancies in finance
 Cut price competition
 Reliance upon UK market
Opportunities  Strategic alliance with admired companies and other brands
 Joint venture
 Grow online business
 Provide home delivery service to customers
 Expansion in overseas market
 Pursuance of international market expansion strategy
 Increase presence in financial service industry
 Enhance effectiveness of marketing strategy
3

 Increasing non food retail chain
Threats  Increasing price of food across the world
 Increased benefits and wages of labour
 Government regulations and political landscape
 Pressure by stakeholders
 Economic recession
PEST Analysis of TESCO:
Political factors: For starting operations, political environment should be analysed
thoroughly. Foreign direct investments are encouraged by many countries which help people by
administering job opportunities. TESCO has high turnover of workers and offer high level of
trust worthiness (Hill, Jones and Schilling, 2014).
Economic factors: In TESCO, business operations are influenced by economic factors.
Due to recession, increase in unemployment rate is uncontrolled by the firm. Therefore, it could
be anticipated that expansion will assist to reduce unemployment level in UK.
Technological factors: The firm pays high attention to constant technological changes as
it impacts growth and expansion of TESCO. Technological advancement is benefited bot both
company and customers. The company is technologically efficient but use of other technology
such as EFTS, EPS, electronic scanners etc. also assist to enhance distribution services &
activities related to inventory (Hitt, Ireland and Hoskisson, 2012).
Socio cultural factors: This factor impact shopping behaviour of customers of TESCO so
the firm expanded its non food item stock.
Strategy Formulation
After conducting SWOT analysis, TESCO has clear picture about internal and external
environment which includes strengths, weaknesses, opportunities and threats. It assists in
developing strategic alternatives. Generic strategies are also exist that can be applied by the firm.
Focus, differentiation and cost leadership are 3 generic strategies that can be considered while
specifying strategic alternatives. One of these strategies are choose by the organisation and on
the basis of that strategies are defined. From situation analysis, company match its strengths with
the opportunities, while addressing weaknesses and threats. To achieve superior profitability,
4

TESCO seeks to create competitive advantage over its competitors. It can be based on
differentiation and cost (Hodgkinson and Healey, 2011).
Strategy implementation
Selected strategy is executed by means of procedures, budget and programs. It includes
organising resources of firm and staff motivation in order to achieve predetermined objectives of
the business. The way of strategy execution can have significant influence on its success. For
implementation of strategy in effective manner, TESCO requires to be translated it into more
elaborated policies that can be understandable at functional level of the firm. Strategies should be
communicated properly so that it can be executed effectively otherwise, it might not successful
and goals and objectives of an organisation can not be accomplished. Strategies should
translated into particular policies for functional departments such as:
 Research & developmental
 Production
 Human resource
 Marketing
 Information system
 Procurement
In addition to formulating functional policies, implementation step involves determining
needed resources and put into place for necessary changes in organisation.
Evaluation and control
Once the strategy is implemented, results need to be monitored & evaluated and changes
should be made as required (Keupp, Palmié and Gassmann, 2012). Control system must be
developed and executed in order to facilitate monitoring. Performance standard are set and
actual performance is measured with the set standard and proper actions are taken by the
company in order to ensure success. Following are the steps of evaluation and control:
 Define measuring parameters
 Define set value for parameters
 Perform measurements
 Compare measured outcomes to predefined standard
 Make necessary changes
5

So, strategic planning process is appropriate for TESCO as it helps in attaining the
predetermined goals and objectives of the organisation. It helps the firm to face challenges
effectively in competitive environment. Changes in external and internal surroundings provide
opportunities to firm for growth. By conducting SWOT analysis, the firm is able to assess its
strengths, weaknesses, opportunities and threats (Killen and et. al., 2012). Because of its
innovative structure, culture and skilled workforce, company is strategically capable to add value
in organisational performance and provide prompt services to its customers. Proper planning
helps the firm in achieving growth and success. Strategic planning providers direction and a path
through which firm can reach to goals.
Planning process helps TESCO in identifying opportunities through which firm expand
and prosper in overseas market. By using strengths and opportunities, firm is able to overcome
from its weaknesses and threats. By implementation of appropriate strategies firm can easily be
able to increase its profitability and getting advantages from the competitive market.
Opportunities provides ability to TESCO to face challenges in order to maintain strong position
into the market. By evaluating and assessing internal and external environment, strategic
decisions are made by the firm. Therefore, strategic planning process is appropriate for the firm
in its given operating environment as it provides ability to the company to increase its
profitability and ensure growth and sustainability in order to gain competitive edge in the market
(Peteraf, Gamble and Thompson Jr, 2014).
Question 2 : Determination of functional objectives to attain proposed strategy
Functional objectives are defined as those that relate to particular function of business
such as marketing, human resource management, operations and finance. These objectives are
framed to support the accomplishment of corporate objectives. A fully established business will
fragment its activities into different functions. These includes the areas which are as follows:
 Human resource management
 Marketing and sales
 Finance and administration
 Production and operations
 Research and development
All these functional areas needs special expertise. All the departments are interlinked
with each other, their activities are not performed in isolation from rest of the functional areas of
6

the business. It is necessary to consider the manner in which these are connected. Every
functional area have its own objectives which must be consistent with corporate objectives. So,
functional objectives are defined for each major function and are formulated in order to ensure
that corporate objectives are accomplished (Priem, Li and Carr, 2012). Functional objectives are
designed to ensure that corporate objectives are accomplished.
Human resource management: the main objective of this department is to forecast the
needs of human resource that are required in an organisation. The HRM manager of TESCO
needs to forecast its manpower to be able to determine staffing levels in future. After that they
will be able to recruit human resource to accomplish the forecasted sales. Training are provided
by the managers to employees so that they are able to perform well and profitability and
productivity of the firm increases. So, the concern of Human resource department will be mainly
in context of medium term forecast, but for developing management succession plans, long term
forecast will be required.
Financial and administration: Needs of finance should be forecasted by the managers
of TESCO for smooth running of operations of the firm. The main objective of this department is
to establish budgets for each department and its activity which will be performing by the
company throughout the year (Wheelen and Hunger, 2011). It is necessary for the managers to
forecast the financial needs of every department and allocate appropriate budget so that all the
operations are performing well and in appropriate manner and firm will able top accomplish its
predetermined goals and objectives. Inappropriate or incorrect forecast will lead the firm towards
losses. Proper amount of working capital should be present in the firm so that its day to day
operations can be run smoothly. In long term profitability planning, managers need to predict
income flow. Provision for capital needs for long term in terms of assets must be make.
Forecasting helps in production of appropriate products in right quantity.
Research and development: Research is conducted by the firms in order to identify the
trends of market. Research development and design needs technological forecast. Emergence of
new technology and design features of product will influence the sales of the firm. It is
necessary for TESCO to to update products at regular intervals. Marketing department should be
aware of the offerings by competitors and in touch with customers.
Research and development department require to plan and create new product or make
changes in existing one by the help of market research. By this, firm is able to keep one step
7

ahead from its competitors and constantly produce appropriate products for marketplace. The
main objective of research and development department is to conduct market research for the
firm in order to determine the current market trends and needs and demands of customers and
develop new product according to that in order to satisfy them. It also assist the firm in facing cut
throat challenges in the market and cop up with the changes that takes place in internal and
external environment of the firm (Rothaermel, 2015).
Marketing and sales: Main objective of this department is to promote the products of an
organisation in appropriate manner so that message regarding the benefits and value of product is
clearly communicated to the customers and they are aware about the particular product of the
firm. It assist TESCO in increasing its sales. Proper promotional tools should be used by the firm
in order to effectively promote its product. Appropriate business strategy and proper marketing
helps TESCO in brand engagement. It also helps in successful expansion of business. Marketing
and application of appropriate strategy helps the firm to overcome with the threat of cut price
competition.
Production and operation: This department is responsible for all the activities related to
production of product and its delivery to customers. The main objective of production and
operations department is to control cost of production by ensuring optimum utilization of
resources. This function directly influence experience of customer & thereby organisation future
itself. Production function aims to add value to the product of firm which will develop a long
lasting and strong association or relationship with customers. Effective planning & control on
production factors to attain value for customers is production management and to deliver this
value to customers through products is operations management (Vogel and Güttel, 2013). Proper
functioning of production and operations department assists TESCO in increasing its
productivity as well as profitability.
In order to accomplish the proposed strategy, it is necessary for TESCO to determine its
functional or departmental objectives. These objectives are identified by strategic planning
process. Determination of objectives and formulation of appropriate strategies to attain these
objectives leads the firm towards growth and success. Objectives are determined by the firm
after keeping in view the vision of the company. On the basis of these, situation analysis is done
by the company in which internal as well as external environment of business is assessed and
based on that strategies are formulated. After development of strategies, these are implemented
8

and monitored by the managers of TESCO to ensure its efficiency and effectiveness and
modifications are made as required.
As a multinational company, strategic planning process of TESCO is differs from others.
Firm has expanded its business across the world. The company use different strategies for their
expansion in global market. TESCO vision is to attain a valuable position by its stakeholders and
customers. They want to create brand value and earn loyalty of customers. Firm require to make
optimal economic judgement on global basis and need to be responsive towards important host
country differences (Slack, 2015). As a multinational company, their strategies are different.
They have 3 major strategy to implement which are as follows:
 Worldwide integration
 Multi focal emphasis
 National responsiveness
The main purpose of implementing these strategies is to gain the benefits of worldwide
integration. Effective execution of these strategies help in attaining goals and objectives of the
firm.
CONCLUSION
As per the above mentioned report, it has been concluded that strategic management is a
process of formulating and executing major objectives and initiatives of the firm. It includes
strategic management process in which strategies are formulate after keeping in view business
environment of the firm and implementation of these strategies in order to achieve predetermined
goals and objectives of the firm. For maintaining strong position in market, TESCO needs to
make important decisions by evaluating and assessing external and internal environment.
Departmental or functional objectives are determined by the top management of the firm to attain
proposed strategy. Functional objectives of firm are framed to accomplish corporate strategies.
The areas included are finance and administration, human resource management, marketing and
sales and production & operations.
REFRENCES
Books and Journals
Ackermann, F. and Eden, C., 2011. Strategic management of stakeholders: Theory and practice.
Long range planning, 44(3). pp.179-196.
9

Boyd, B. K. And et. al., 2012. Contingency hypotheses in strategic management research: Use,
disuse, or misuse?. Journal of Management. 38(1). pp.278-313.
Bryce, H. J., 2017. Financial and strategic management for nonprofit organizations. Walter de
Gruyter GmbH & Co KG.
David, F. R., 2011. Strategic management: Concepts and cases. Peaeson/Prentice Hall.
Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management.
Sage.
Goetsch, D. L. and Davis, S. B., 2014. Quality management for organizational excellence. Upper
Saddle River, NJ: pearson.
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.
Killen, C. P and et. al., 2012. Advancing project and portfolio management research: Applying
strategic management theories. International Journal of Project Management. 30(5).
pp.525-538.
Peteraf, M., Gamble, J. and Thompson Jr, A., 2014. Essentials of strategic management: The
quest for competitive advantage. McGraw-Hill Education.
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.
Rothaermel, F. T., 2015. Strategic management. McGraw-Hill Education.
Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.
Vogel, R. and Güttel, W. H., 2013. The dynamic capability view in strategic management: A
bibliometric review. International Journal of Management Reviews. 15(4). pp.426-446.
Wheelen, T. L. and Hunger, J. D., 2011. Concepts in strategic management and business policy.
Pearson Education India.
10