Strategic Management in Tesco PLC

Strategic Management
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Issues faced by Tesco with respect to emerging e-commerce and internet culture.....................3
Various models of strategic management....................................................................................2
Risk management issues related to E-Commerce........................................................................4
Strategies to resolve the risk........................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9
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INTRODUCTION
Strategic Management refers to formulation and implementation of objectives which
company wants to achieve. This is done by the top management of an organisation or the owner
who wants to achieve objectives of a company. The present report is based on Tesco which is a
multinational British company who deals in selling of groceries and general merchandise. It was
found in 1919; today Tesco is a leading company in retail industry with the ninth position in the
world in terms of revenues earned by company and the largest retailing store in UK. In this
report, we will see the Risk Management in relation to an emerging E-Commerce and internet
culture. In this report will present the manner in which strategic management will be applicable
to the problem of e-commerce facing by Tesco. Further, it also entails risk management in
relation to emerging e-commerce culture and internet which can be used by Tesco for effectual
management.
Issues faced by Tesco with respect to emerging e-commerce and internet culture.
The e-commerce concept has brought a revolutionary change in the field of retail
industry. The retail industry initially shows boom in the starting period of this trend but slowly it
became a threat and starts reducing the profits of a company (Mathur, 2011). With emergence of
e-commerce business, European retailers’ faces problems like deteriorating external
environment, increasing fixed cost which leads to increased capital expenditure and eventually
brings down margins of these retail companies'. More-over companies are pushed to make huge
investments to develop new channels to keep in pace with updated technologies and to
effectively compete new entrants in these markets.
Tesco is a leading brand in the retail market, having huge size of business and varying
range of markets from Super markets to Hypermarkets and Convenience shops, it served in many
areas of the world. Unlike others, Tesco does not remain untouched by the e-commerce trend and
internet culture due to which the company has adopted to a policy of developing an online for
competing with the rival firms (Ferrell and Hartline, 2010). Tesco launches an official website
stating as Tesco.com in 2000. Even, though company is facing certain issues in relation to e-
commerce and internet culture.
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Some of them are:
 The security is the main motive when a customer’s shop online, it requires security for it
password details, account details and it transaction procedure. These security issues are
faced by the company as Tesco online mechanism is not as strong as it is other
competitors. This hampers the sales of the products/ services of company on these online
platforms.
 Products which are selling through website often do not match quality standards. This in
turn places negative impact on the satisfaction level of customers and thereby influences
brand image (Hyde, 2014). Tesco is a leading brand and have the finest quality products
for it sales, but the product which is sell off on online channels lacks the quality standards
of what Tesco offers to it customers due to this company suffers the sales. In addition,
products are been altered when due to shipment of them to other places or countries.
 Many parts of the world is still unaware of internet technology and do not use them for
their shopping needs. This issue creates a barrier for Tesco to reach these places and
expand its business over there.
 People in underdeveloped and developing nations suffers from band with, and internet
speed, they lack access to hassle free internet (Kiptoo and Mwirigi, 2014). This makes
loss to company as people will switch to local and tradition stores over online websites or
online shopping.
 The emergence of e-commerce in retail business has reduced needs of human resource as
brick, mortar shops are converted into official’s websites and here the company need not
required the staff which it requires in traditional shops. Tesco operation through online
platforms has created unfavourable environment within organisation has labourers in
organisation are on strikes due to their job terminations and increasing unemployment in
the economy thus leading a threat to working and production of company.
 Delivery issues are not new problems in the internet shopping. Customers must wait for
more than 6-7 weeks to get there ordered delivered. Tesco is a grocery retailer thus the
product ordered on websites is of daily use and needed to be delivered on time before
they get damaged (Njeru, Stephen and Wambui, 2014). These issues affect operations of
Tesco and demand a strong network for distribution channels.
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