Strategic Management Report of Tesco

This assignment is based upon strategic management report of Tesco in order to advise them for their future strategic direction. Tesco is a British multinational retailer that was founded in 1919 in England. This assignment will focus on strategic Direction that company has followed, detailed analysis of the industry Business Canvass Model to portray and describe core logic of how the company creates, delivers value within its industry, possible strategies that the company could follow to defend its core business resource implications of Tesco that the company has to address.

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAINBODY...................................................................................................................................1
TASK 1.......................................................................................................................................1
TYPES OF STRATEGY IN RELATION TO THE SCHOOLS OF STRATEGY AND
STRATEGIC CONCEPTS..........................................................................................................1
TASK 2............................................................................................................................................1
EXTERNAL ENVIRONMENT OF TESCO..............................................................................1
COMPETITIVE ADVANTAGE.................................................................................................1
TASK 3............................................................................................................................................1
STRATEGIC DRIFT...................................................................................................................1
VISION & MISSSION................................................................................................................1
CANVAS MODEL OF TESCO..................................................................................................1
TASK 5............................................................................................................................................1
RESEARCH BASED VIEW MODEL (RBV)............................................................................1
CRITICAL ANALYSIS..............................................................................................................1
VRIO MODEL............................................................................................................................1
REFERENCE..................................................................................................................................1

INTRODUCTION
Strategic management can be defined as a type of management technique used for
implementation and formulation of major initiatives and goals taken by an organization in order
to analyse competitive environment, evaluation of strategies, assessment of external and internal
environment of the organization in which they operate (Sharifi, Fathi and Vahidinasab, 2017). It
is extremely important for organizations in order to identify necessary processes, allocation of
resources so that they can achieve their desired goals. This assignment is based upon strategic
management report of Tesco in order to advise them for their future strategic direction. Tesco is
a British multinational retailer that was founded in 1919 in England. This assignment will focus
on strategic Direction that company has followed, detailed analysis of the industry Business
Canvass Model to portray and describe core logic of how the company creates, delivers value
within its industry, possible strategies that the company could follow to defend its core business
resource implications of Tesco that the company has to address,
MAINBODY
TASK 1
TYPES OF STRATEGY IN RELATION TO THE SCHOOLS OF STRATEGY AND
STRATEGIC CONCEPTS
There are lots of strategies which follows by Tesco in the past years and these strategies
support’s company to makes position in global market. Through this strategic planning Tesco
wants to take competitive advantage and growth of business. Tesco is American retailer
company which operates around the world. Strategies such as-
PESTLE Analysis: This strategy uses by Tesco to analyses external environment of company
and how it can give impact on decision making and profitability within organization. This
strategy keeps five factors such political, environmental factor, sociocultural factor,
technological, legal and environmental factor etc (Rothaermel, 2017). which gives impact on
organization and within organization. This model supports Tesco to lift organization’s position
above in market.
Porter’s five force analysis: it is second strategy which uses by organization. This strategy
supports organization to analyses competitive environment. Through competitive environment
Tesco enable to get power of competitive rivals, customers, power of new entrants, supplier and
also supports to analyse profitability of substitute products of company in market. This strategy
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different from pestle environment because it introduces organization about competitive situation
and supports organization to take competitive advantage in business market. On the other hand,
pestle analysis address company to identify macro environment which can give impact on
organization. Porter five forces model consist five strategies such as competitive rivalry,
bargaining power of suppliers, bargaining power of buyers, threats of new entrant’s and threats
of substitute products or their services. Through these strategies Tesco enables to take
competitive advantage in digital market.
Critical success factors: To achieve organization’s mission in global market, Company uses this
model it is a management term which guides organization to follow up so that Tesco enable to
get organization goals. In this strategy covers five factor such as strategic focus where
leadership, management and planning are played role in company. Another factor peoples in
which concludes personnel, staff learning and development of employees. third factor operations
in which involves organization operations and work force. Marketing is one of the important
factors for organization where involves customer relations, sales and responsiveness etc. fifth
factor is finance in which involves assets of organization, facilities at workplace along with
customers services and equipment which uses for products (Ansoff and et.al., 2018). Thus, Tesco
uses this strategy to achieve organization mission.
Value Chain Analysis: This strategy analyses internal firm activities and helps to recognise
activities which can supports to achieve goal of company. Through these activities’ organization
enables to take competitive advantage in business market.
SWOT Analysis: It is strategic planning technique which supports organization to identify
organization strength, weakness, opportunities and threat relevant competition in business
market.
TASK 2
EXTERNAL ENVIRONMENT OF TESCO
PESTLE Analysis
PESTLE analysis is a framework that helps the organization to identify external environment of
Tesco in which they operate.
Political Factor: These factors can affect Tesco in many ways as it operates in more than
countries. Increment in VAT rate by UK government can affect their business. As due to these
high VAT rates customer spending’s have reduced. As a result, sales and revenue of Tesco has
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reduced. Financial instability in world is decreasing availability of jobs as a result most of the
nation’s government are encouraging retailers to create jobs for domestic population. This has
helped Tesco to diversify their workforce.
Economic Factors: Tesco need to remain continuously updated with the changing policies
of each country in which they operate as it could affect their financial accessibility especially on
change in policy of UK because more than 30 percent business of Tesco is dependent upon
market of UK (Carter, 2019). Two most important strategies that Tesco focuses upon are
presence in international market and diversification which is helping them to enhance their
financial stability.
Social Factors: As Tesco is a retail organization, they need to focus on changing Social
trends like today most of the people prefer to either shop in bulk or to shop in one stop or shop
online. Not only this today people are becoming more and more aware about their health and
because of this their food habits are also changing (Wang and Mogi, 2017). Tesco need to adopt
all of these changes and should focus on adopting organic food products in order to increase their
sales and revenue.
Technological factor: Today due to advancement in technology competition is increasing
but opportunities to expand business is also increasing. For this they can focus on developing
their online shopping websites or applications so that they can increase their customers
convenience of shopping. They should start home delivery option for their customers. Tesco is
focusing on investing sufficient amount on energy efficiency products in order to reduce carbon
foot print. This is helping Tesco to attract more customers and is also helping them to increase
their efficiency.
Environmental factor: Due to continuous increasing environment issue, pressure on large
organizations is increasing because of which they need to bring changes within their operations
so that they can participate in benefiting the society. Tesco is focusing on reducing their carbon
footprint at least by 50 percent till 2020.
Legal Factors: It is one of the most important factors which is required by the organization
to focus on as it can affect their overall performance in many ways. In 2016, 17 workers of Tesco
took legal action against them because of gender and sex discrimination. They also faced a legal
action for accounting fraud and for misleading information.
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COMPETITIVE ADVANTAGE
Porters five force analysis
Porters five force will help them to analyse their competitive advantage and their direct
competitors.
Threat of New Entrants: threat of threat is quite low and is a weak force for Tesco as
economies of scale in this industry is extremely difficult to achieve. Investment for starting a
new business is quite high which makes it difficult for new entrant to enter into this industry
(Sharifi, Fathi and Vahidinasab., 2017). Other than this government policies for organizations in
this industry are quite difficult as there are various kinds of legal and licencing requirement
because of which difficulties for new entrants increases.
Bargaining Power of Suppliers: It is a weak force for Tesco as availability of suppliers in
this industry are lot more as compared to buyers because of which control of suppliers of prices
decreases. This provides a competitive advantage to Tesco as they can switch from one supplier
to another easily.
Bargaining Power of Buyers: It is a moderate force for Tesco as overall business of Tesco
completely depends upon purchases done by their customers (Carter, 2019). Product
differentiation within this industry is quite high because of which it becomes quite difficult for
customers to switch from one organization’s product to another’s. Quality of products provided
by Tesco is quite good which help them in attracting more and more customers and makes it
difficult for buyers of Tesco to switch to their substitute product.
Threat of Substitute Products or Services: It is a moderate force for Tesco. There are very
few substitute products available in the market for the products that are produced by Tesco but
most of the substitute products available in the market that are of high quality are available at
high prices because of which threat to substitute product decreases.
Rivalry Among Existing Firms: It is a high force for Tesco as they faced Direct
competition from organizations like Asda, Morrisons, Waitrose and Sainsbury’s. Competition of
Tesco with these firms is quite high in terms of quality, price, promotion of their products and
services. Tesco need to continuously focus on their competitors and their actions and bring
changes within their operations in order to gain competitive advantage.
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TASK 3
STRATEGIC DRIFT
It refers a strategy of organization which no longer applicable for the external environment. In
simple term a strategy which uses by organization to gain competitive advantage but after
sometime it leads decline of competitive activities, in that state organization failures to change
business environment (Camisón and et.al., 2016). Tesco gets strategy drift when organization
unable to keep position along with changes which occurs in external environment as result
organization growth rate becomes slow. Tesco uses Pestle analysis strategy to take competitive
advantage, in starting organization enables to take competitive advantage but later gets negative
impact on company due to fail of strategy (Noe and et.al., 2017). Strategic drift divides into four
phase such as-
Incremental change: organization uses pestle strategy but unable to apply on business products,
such as technological factor which gives negative impact on company because Tesco unable to
operates new technology for selling goods along with services to customers. Thus, kind
incremental changes give impact on economical scale.
Strategic drift: main reason of strategic drift is that Tesco is US company where united states
government focuses on product standardization. And makes some policies regarding product and
their services such as low-cost goods, similar product offering etc. main purpose of these policies
is to manage companies so that company enables to follow culture in business market. Due to
this organization unable to differentiate their products quality along with services. It declines
market share of Tesco and profit of organization in existing market.
Flux: It refers poor ability of management in decision making where management incapable
understand gap between that what market expects and what organization supplies. Tesco suffers
this issue where human resource unable to provide appropriate resources to company and
employees so that organization uplift from this situation.
Transformational change or death: Management follows autocratic leadership to handle
workforce in organization so that organization enables to meet organization objectives. Through
this strategy organization unable to get long-term goal of company and retain employees for long
time. That why organization uses democratic leadership to retain employees in company so that
organization gains long term goal. Management becomes successful to retain student but unable
to take competitive advantage.
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VISION & MISSSION
Tesco vision is to meet on customers objectives by offering desire products along with
good services while mission is to supplies long term sustainable growth by ensuing customers
into wide intensifying market. For example, financial facilities such as online transaction,
verities of goods such as non-food and foods material and telecoms. Beside of this operates
retailing stores in each country so that number of customers enables to get services of
organization.
STRATEGIC CAPABILITIES
Strategic capabilities refer an organization ability to tackle all the skills, capabilities and
resources. These all are supports organization to gain competitive advantage and raises value of
company in overtime. Tesco has six strategic capabilities which supports company to gain
competitive advantage in retailing market and also enhance values of brand (David and David.,
2016). Organization focuses on brand differentiation so that organization unable to cover large
number of customers in global market. Through this strategy retains existing customers and
attract new customers. Another strategy is reduction in operation cost where Tesco takes help
supply chain management so that customers gets product on times and employees turnover
reduces at workplace. Through strategy organization gets cost benefit. To obtains £9bn cash
from retailing operation is a third strategic capability where Tesco offers lot of products with
different varieties. It expands profitability and improve working resources. Tesco operates in
global market along with Tesco subsidiaries. The main goal of these operation is to maximizes
values of brands from organization assets, so that organization brand becomes number one brand
in global market.
CANVAS MODEL OF TESCO
It is documentary strategic management which is specially designed to develops new or
current business model. it represents by flow charts along with resources such as goods value
position, infrastructure, customers and finances etc. Tesco canvas model is based on three factors
such as-
customers: Tesco gives first priority to customers where organization offers unique varieties of
products along with standard quality so that customers gets values of their money. Beside of this
Tesco invites customer in customer loyalty programs so that customers become loyal to company
and gives values first to Tesco (Thompson, Strickland and Gamble, 2015). Organization also
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focuses online services where company delivers their products to customers in wide scale, thus
Tesco covers large number of customers.
Channels: Tesco also uses supply chain management so that organization enables to bring best
product in company and supplies products to customers in minimum time. Tesco also operates in
various countries so that customers purchasing power enhances and organization meets their
objectives.
Products: Tesco invests more funds in product developed team so that team offers high quality
products along with verities at workplace. Tesco focuses on customers demands so that enables
to meet customers expectation. Through this strategy organization gets many profits in company
such as economical profit due to enhancing selling of products, brand positing, customer
retaining, competitive advantages etc (Morden, 2016). thus, Tesco enables to enhance revenue of
company in global market.
TASK 4
Strategies that Organization can uses
Ansoff matrix
It is consider as a tool that can be used by the firms to evaluate and plan their growth
strategies. Thus this shows that there are four strategies that can be utilized to assist an
organization to grow and also analysis the risk that are associated within each strategy.
Market penetration
This strategy can be used by the Tesco firm to utilize its products within current market. The aim
of the Organization is to enhance the market share. It can be done in carious ways that is
mention below
To attract the current as well as new costumers they have to decrease prices of the product.
They also enhanced the promotion as well as distribution efforts.
To obtain a competitor within same marketplace (Shaw, 2016).
Product development
Here the Tesco develops a new product to serve within the existing market. It includes
extensive research as well as development and in addition to this also leads the expansion of the
product range. The strategy of the product development is employed when the organization has
a strong understanding of their existing market as well as also able to give innovative solutions
to fulfill the requirements regarding existing market (Loredana, 2016).
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It can also done in various ways that can be mention below
Obtaining a product of the competitor as well as merging resources so that it creates a new
product that can better fullfill the requirements regarding the current market.
With other organization there is a strategic partnership to gain access regarding each and every
brand and partner's distribution (Shaw, 2016).
Market development
Here the organization enters within the new market with the help of their current product. Here
there is an expanding of the new market that means expanding into new customer segments,
new geographies and many more. The strategy of the market is most successful if the Costumers
within the new markets are more profitable. Behavior of the costumers within new markets
unable to stray too far from current markets (Loredana, 2016).
Diversification
It means that Tesco can take entry within the new market with a new product. It is a strategy that
is considered as the riskiest mas product and market development id needed and also the risk can
be mitigated by related diversification (Shaw, 2016).
There are two kinds of diversification Tesco can implement.
Unrelated diversification
There is no particular teamwork between the current product and new product or market.
Related diversification
There consider to be potential team work to be realized among the current business as well as
new product of the Tesco.
Porters Generic strategies
There are four strategies that can be used by the firm can pick from such as Michael porter
believes that Tesco should choose a clear course to beat the competition
Mention below strategies
Cost leadership
As the name suggests ,it enables a competitive edge through manipulating cost of the production.
It can be done within two ways.
By reducing cost to increasing profits
It can be done through casting the firm as a low cost alternative, that enhances both sales as well
the profile of the Tesco (Omsa, Abdullah. and Jamali, 2017).
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Charging lower prices
Reducing costs to enhance profits
With only few business on the books Tesco can moves money into the other avenues such as
product research and salaries.
Differentiation
For attracting costumers price is consider as a crucial consideration while attracting employees.
However, Differentiation method is considered to develop attractiveness and Uniqueness to
engage the consumers. Also there are various concepts that includes within this framework and
each one is pointing out playing the perceptions of the consumers (Lotayif, 2016).
For applying differentiation strategy ,a firm needs
Delivering products that are high quality
Consumers unable to stay loyal if Tesco doesn't meet the promises .
Promotional teams and Marketing
These are the people on the front lines regarding a brand as well as focusing its uniqueness.
By successing these strategies Tesco needs good research and development, also able to deliver
the high quality goods and services. Here also effective marketing is needed as market can
understand the advantageous for uniqueness of the product (Omsa, Abdullah. and Jamali,
2017).
Cost focus
While Targeting a less focused market as well as offers the lowest possible price. Here Tesco
within this strategy focuses a target that is low focused market as well as understanding the
activeness of the market. It also focuses on the wishes of the consumers as well as also assures
that he cost of the product of the Tesco remains low.
Differentiation focuses
Here this strategy focuses on to target a niche market and also the product or services of the
Tesco have Unique Features. It also includes strong brand loyalty between the costumers. It is
very crucial to assure that the product of the Tesco possesses some unique features,in order to
stay competitive within market (Lotayif, 2016).
Cost leadership
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Here in this strategy includes choosing one or more criteria that can be utilized by the users
within a market. It is usually depends on the premium price for particular product. It often
highlights the production costs as well as extra added feature that can be given to the costumers.
Differentiation is all about charging premium price regarding the services and products that can
be offered by the Tesco to the costumers.
It is a premium price that can covers the extra or additional costs as well as about providing clear
Reasons to give product over other that can be products that are less differentiated products.
There are various ways in which this can be included as it is not easy and also needed sustained
marketing investment. It involves
 Branding ( desire, brand loylaty as well as strong customer identification).
 Superior Quality product ( benefits, durability, features, reliability)
 Regular promotional support- Tesco is often dominated by the sponsorship and
advertising (Omsa, Abdullah. and Jamali, 2017).
TASK 5
RESEARCH BASED VIEW MODEL (RBV)
RBV model refers a managerial framework which practisize to control the strategic
resources and it can explore to gain sustainable competitive benefits. This model is specially
designed to achieve sustainable competitive advantage. Tesco applies resources-based view in
which includes various sources such as tangible and intangible. Both factors are based on
heterogenous and immobile. In this model VRIO resource also uses as attribute which specially
applies to gain competitive advantages. Through this model organization enables to higher
company performance.
Tangible assets: theses are physical things such as building, equipment, land and management,
customers etc are assists which supports company to run further and these sources can buy from
market. HR department plays vital role in company where recruits potential employees who
enables to gain competitive advantage at workplace. While technology supports to meet
customers objectives by offering standard quality of products. Marketing department maintains
intangible assets by promoting product in global market (Harrigan, 2017). Finance department
gives target to marketer for promotion of products in business market, thus finance department
save extra spending money.
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Intangible assets: it is not physical assets but it needs for organization such as brand recognition,
trademark, intellectual property, etc are sustainable assets. Tesco focuses on this asset so that
organization enables to raise GDP rate of company in competitive market. Operation department
maintains all operation in company so that organization get profitable outcomes within company.
CRITICAL ANALYSIS
Heterogenous: It refers differentiation among skill, capability and other resources so that
organization can differentiate brand name from other. For example, if Tesco doesn’t follow
different strategy from long time, in that state another organization can follow same strategy.
Thus, organization can unable to take competitive advantage.
Immobile: This second disadvantage of this model can be occurred if organization unable to
move resources organization to another organization and follows same strategies. In that state
also Tesco unable to maintain brand positing, procedure or intellectual property. Thus,
organization profit ration can decline.
VRIO MODEL
TO overcome from above issues there is VRIO model which supports company to use different
strategy so that organization enables to gain competitive advantage. This model concludes
various part such as-
Value: Intangible and tangible both are important resource of organization and this resource is
valuable which supports company to raise value to offer customers. To giving value of customers
organization enhance differentiate product strategy along with low cost of operation. Thus,
organization can meet customers objective but unable to take competitive advantage for long
time.
Rarity: If organization offers compensatory package to employees along with facilities at
workplace. That can lead employee’s turnover at workplace. If Tesco invest more fund on R&D
department then organization enables to differentiate brand from other. In that state this resource
can gain competitive advantage.
Imitability: If Tesco uses different strategies according to situation and offers different varieties
goods as result no company can imitate product or strategy. This resource can help to separate
brand value among various brands. It also led sustainable competitive advantage.
Organization: Tesco uses above resource such as value, rarity and imitability which assists
organization to gain sustainable rivalry advantage and enhance brand value in global market.
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CONCLUSION
From the above study it had been summarized Porter’s five force analysis:enable to get
power of competitive rivals, customers, power of new entrants, because it introduces
organization about competitive situation management and planning are played role in company
which concludes personnel, development of employees Marketing involves customer relations,
sales and responsiveness. Critical success factors: To achieve organization’s mission in global
market. It also focused on the Strategic capabilities which supports company to gain focuses on
brand differentiation his strategy retains existing customers and attract new customers. Canvas
model represents by flow charts along with resource, infrastructure, customers and finances.
Research based view model explore to gain sustainable competitive benefits. Applies resources-
based view uses as attribute to gain competitive advantages. Tangible asset supports company to
run further where recruits potential employees by offering standard quality of products.
Intangible assets such as brand recognition intellectual property enables to raise GDP rate of
company get profitable outcomes within company.
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REFERENCE
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