Strategic Management: Tesco's Models and Decisions for Growth

This presentation explores Tesco's strategic management models and decisions for growth. It covers topics such as Porter's five forces, SWOT analysis, competitive advantage, and more.

Strategic management

Slide 1
Introduction
Strategic management is the process of making efforts for effective management of all
the operations that are performed by the enterprise for meeting the long-term objectives. It is
very important for all the companies to make sure that they are paying attention towards it as it
will facilitate the accomplishment of difficult tasks. In order to make sure that all the
predetermined plans are being implemented successfully it is very important for all the entities to
pay attention towards it. It will help them to analyse the steps that should be taken to meet future
goals and objectives. This presentation is based upon Tesco which is one of the largest
multinational supermarkets around the world. It is operating its business in various countries.
This presentation is mainly based upon the value of different models and decisions that were
taken by the enterprise to attain growth. For this purpose, various frameworks are discussed in
this presentation. These are porter’s five forces, SWOT analysis, mission, vision, strategic
direction of the enterprise. Apart from this, VRIO model, competitive advantage of company,
Ansoff matrix, resource implications of recommendations are also covered in it.
Slide 2
Strategic directions followed by Tesco in previous years:
Tesco is one of the largest retailers which are operating business at global level. It is very
important for the organisation to analyse all the strategic directions that are followed by it so that
their impacts could be determined. Some of them are human capital strategy, strategic planning
and technology strategy. All of them are the strategic directions that were followed by Tesco in
previous years. Human capital strategy helped Tesco to enhance the profits by 20% which
provided growth to business. With the help of strategic planning Tesco tries to analyse suitability
of the strategy which will be implemented in future. With the help of it, Tesco recorded a profit
of 3.8 billion from sales. Technology strategy is used by Tesco to make changes in the
technology which is used by it. It helps it to attain growth.
All the strategic directions are valuable for the enterprise because with the help of all of
them the managers can decide that their decisions are able to provide growth to business or not.
By analysing all of them the management can make future decisions on the basis of success of all
of them. As the human capital strategy helped to improve profits so Tesco can make specific
changes to it and follow it again for future so that profits could be increased.
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Slide 3 & 4
Porter’s five forces:
Porter’s five force analysis is used by companies to analyse the impact of five different
types of forces upon functionality of business. These are threat of new entrant, threat of
substitute, bargaining power of supplier, bargaining power of customer and competitive rivalry.
According to the analysis the threat of new entrant for Tesco is moderate and for the
purpose of dealing with it, Tesco is required to pay attention towards the quality of all the items
that are sold by it to the customers. It will help to reduce the possibility of negative impact of
new entrant on business.
The analysis of threat of substitute shows that the power of this force is very high for
Tesco as the clients are buying different items from local grocery stores. In order to deal with it
the enterprise is required to make sure that it formulates effective strategies so that it can attract
the customers.
The assessment of bargaining power of buyers demonstrates that their power of is very
high because of end number of options to them. The number of retailers in UK as well as around
the world is very high so it provides various alternatives to them to choose best from all of them.
The bargaining power of suppliers for Tesco is low because of the large number of them
in the industry. It helps the organisations to choose the supplier which is offering the goods on
lowest price so that funds could be saved for future.
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Competitive rivalry in the supermarket industry is very high because of end number of
competitors for Tesco. Some of them are Sainsbury’s Asda, Walmart etc. Due to this Tesco have
to face very huge competition from other organisations. In order to deal with it is very for the
organisation to attract large number of customers by setting competitive prices for all the items
that is sold by it.
Porter’s five force model is very valuable for Tesco because with the help of it, the
managers can analyse impact of different forces upon business. Apart from this, it also facilitates
the formulation of effective strategies for future by analysing current situations of business. By
using it Tesco will be able to formulate effective strategies for future which can help to attain
growth for business.
Slide 5 & 6
SWOT analysis:
In all the organisations a specific model for the purpose of identification of all the
strengths, weaknesses, opportunities and threats is used. It is known as SWOT analysis. It can
help to analyse actual position of business and facilitate the managers to formulate effective
decisions for betterment of business. Tesco is using it to determine all the key elements of entity
which are resulting positively as well as negatively for it.
The main strength of Tesco is that it offers its products to around 18 nations so it captures
a very large market. It is having strong customer base by offering good quality items to them.
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Apart from this, it is one of the productive grocery stores on the planet which helps it to establish
positive market image.
One of the major weaknesses of Tesco is that it is dependent upon European and United
Kingdom market which shows that most of the revenues are generated by it from these markets.
It is not selling natural food items to the clients which are affecting its market image.
From the analysis of opportunities, it has been identified that Tesco can offer natural food
to the customers in future which will help it to capture larger market area and establish a positive
market image. Apart from this, Tesco can also expand in new countries where it has not yet
established its business.
There are various threats for Tesco and the major one from all of them is the competitors
such as Aldi, Walmart, Asda etc. The governmental policies are changing continuously and due
to which Tesco will be required to change its strategies on continuous basis. Ignorance of any of
the policy will leave negative impact upon business.
SWOT analysis is very valuable for Tesco because with the help of it, the organisation
will be able to deal with all the negative situations which may take place in future. Apar from
this, it can also help to determine all the elements that are resulting in failure of operations so
that effective strategies for future could be formulated. By using SWOT analysis, the managers
in Tesco can determine strengths, weaknesses, opportunities and threats which is the base of a
strategy focused with growth of business.
Slide 7
Company’s competitive advantage:
Tesco is mainly focused with price and promotion so that it can attain competitive
advantage for business. With the help of it, the managers try to make sure that the enterprise will
be able to reach the long-term business goals or not. Tesco sells most of the products at very low
price as compare to its competitions which enhances its competitive advantage and also helps to
enhance profits by a very high percentage. On the other hand, all the promotional strategies that
are formulated by Tesco facilitate it to be the first choice of clients. It provides timely discounts
to all its clients so that it can be their first choice it is the main promotional strategy which is
focused by it.
Analysis of competitive advantage is valuable for Tesco because with the help of it the
enterprise can determine that it will be able to reach all its long-term business goals or not. Apart
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from this, its analysis also facilitates the execution of operations in systematic manner because it
can help to formulate effective strategies for future. By determining the level of competitive
advantage Tesco can assess current position of business and the steps that should be taken by it
to be the market leader.
Slide 8
Probable industry scenario:
After the impact of COVID 19 it becomes very tough for the Retail Industry like Tesco,
Marks and Spencer Sainsbury’s and many more to make their comeback and hidden competitive
advantage within the market. In relation with this retail sector face lot of problems and
challenges because of the current pandemic that leads to bring major changes within the
technological and digital line of the company. In terms of this Tesco need to offer their product
through online mode and make everything on the online platform like payment purchasing
selling and so on. In relation with this Tesco adopt new and advanced technology with more
security in order to offer their product within the market and also tries to reach out to their
customers all over the world.
With the help of digital transformation company make suitable initiative regarding
avoiding human contact and also leads to protect people to contact with each other as all the
purchasing and selling is done on the online platform. Despite from this the new management of
the Tesco take suitable structure that leads to focus on the reputation customer service and
develop moral of employees. Therefore Tesco target the international investment in order to
become reluctant in the market.
Slide 9
Mission and vision of the organisation:
Tesco develop their mission and vision by considering the requirements of market and
their potential customers and always try to figure out the mid way to fulfil requirement and
demands of customers and develop prominent strategies according to it. In relation with this the
mission of Tesco is to develop unique products and bring innovative ideas within the market that
leads to attract maximum number of customers towards their organisation and also helps in
maintaining their image within the frequent changing business environment. Tesco also tries to
provide significant satisfaction to their customers by offering products according to their want.
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Moreover the vision of company is to provide high quality and valued products and items
to their customers that help in maintaining healthy relations with customers and retaining them
with the company for the longer period of time. These initiatives of Tesco helps in developing
their image within the market and also try to serve their services to their customers in order to
gain their trust and Faith as it helps in smooth running and operation of the company. Hence
these statements are helpful for the company in order to game competitive edge within the
market.
Slide 10, 11 & 12
VRIO analysis:
VRIO analysis is useful for the company as it helps in implementing the user friendly and
effective reservation system in order to complete their prominent result and also leads to make
the procedure more prominent considering the quantity of time. It is also represented by the
company in order to develop interaction with customers as it leads to increase the income and
revenues of company. In relation with this there are various resources that are valuable rare
imitable and organized by the company.
Resources Valuable Rare Imitable Organised
Products and
services
Yes - - -
Employees Yes Yes - -
Distribution
network
Yes Yes Yes -
Financial
Resources
Yes Yes Yes Yes
Moreover the valuable resources include financial terms employees distribution network
and production services as all of these resources are quite valuable and helpful for the company
in order to deal with the threats that are present in the external environment. Along with this
employees leads to develop the efficiency of the company and increase the profitability of
company.
Besides from this there are various products that are rare for the company like their man
power distribution Network and financial resources as employees are the probable representative
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of the company that are present within the company and also helps in the growth and
development. The distribution network need significant speculation and future time up in order
to arrange their test within the stipulated period of time and the financial resources develop the
power of money of company within the environment and also helps in exchanging there
commodities.
Besides from this there are some imitable resources that cannot be copied and imitated by
any other organization as in relation with this Tesco has some secret strategies and tactics in
order to manage these resources. It include financial resources and distribution network as Tesco
has its suitable strategies to manage their financial resources and make them reserve in order to
deal with the external factors and any other Complex situation where is distribution network is
quite expensive and need proper focus in order to manage it as many companies has same kind
of distribution channel.
Last factor is organized which describe that Tesco has some resources which they keep
more organized as these are the financial resources that are helpful for the company in order to
deal with any risk and protect them from any danger. Therefore it leads to make prominent
difference the assets that are offered by the company and chance to get manageable by the top
authority within the market and Organization.
Slide 13 & 14
Ansoff matrix:
Ansoff matrix is used in order to develop suitable strategies regarding the smooth running
and operation of company by examining the market conditions and also helps in achieving the
competitive advantage within the market. This is strategies varies according to the name size and
scope of company and it carries four major strategies that are helpful for the company in
different situation.
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Market penetration describes that Tesco offer same product within the existing market in
order to increase their profitability and revenues. It is useful for the company when it take
suitable entry within the market and need to acquire a little area in order to make their position
and for this Tesco use their online networking in order to upgrade their deals. Market
development describe that company offer existing product within the new market by conducting
prominent research that is helpful for the company in order to acquire the new market area with
their existing product.
Along with this market development strategy is important for Tesco as it directly impact
on the statistics and sales of the company and also helps in developing the brand reputation
within the new market.
Despite from this product development describe that company offer new product put in
the existing market in which they deal as it leads to increase the image and fate of company
among existing customers. It is analyzed that this strategy can become threat for the company in
terms of dealing within the particular area as it becomes the barrier for company to explore them
outside the new area. In terms of this Tesco adopt this strategy by analyzing and conducting
significant research and development program as it is useful in achieving the competitive
advantage within the market and leads to develop trust customers regarding the product.
Last strategy is about diversification it is considered as the most risky strategy to make
entry within the market as in this the product and market both are new and by adopting this
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strategy company can develop various threats and risk for it for the future purpose and also face
various barriers while smoothening and developing there company. This strategy and offered
product get result when any risk and misfortune happens within the organization as it negatively
impact the profitability and income of the company. In order to adopt this strategy it needs
expertise knowledge and guidance for smooth running within the market.
Slide 15
Resource implications of the recommendations
In this manner, by considering the first data and conversation it is broke down that Tesco
need to address the exhibition of workers so as to build their deals and productivity and screen it
in regards to the general support that helps in accomplishing wanted results and development. So
as to screen the presentation the supervisors of Tesco need to fundamentally deal with the
exhibition of representatives and furthermore direct asset review by considering reasonable
structures like Porter's and SWOT investigation which is valuable in dissecting the huge hazard
factor from the business condition and prompts create appropriate techniques so as to secure the
business too.
Alongside, this VRIO examination is led so as to investigate the skills and abilities of
Tesco by considering the utilization of assets as per the conspicuous components like significant
uncommon imitable and sorted out. Notwithstanding this it likewise locate the appropriate hole
that prompts block the general execution of workers. As far as this association need to consider
and apply appropriate systems so as to protect their centre business and prompts build up the
procedure capacities of Tesco. As far as this the huge supportable technique is Ansoff grid which
is helpful in distinguish the most noticeable system for the dispatch of item and Services inside
the market.
Slide 16
Conclusion
By considering the former data it is broke down to that vital administration is significant so as to
distinguish and examine the critical state of the organization and it likewise prompts give the
huge course to the organization with respect to its development and improvement.
Notwithstanding this there are plausible Strategies and structures that are utilized in the above
report so as to give the critical direction and future vital bearing to the organization. In addition it
is likewise examined that the current crucial vision explanation of the separate organization are
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lined up with the interest of market or not and furthermore create appropriate systems so as to
safeguard the center business. Therefore by considering the preceding frameworks and
discussion it is analyzed that all the strategies are valuable for the company in order to make
their position within the market as every framework and strategies above discussed are important
in order to provide suitable direction and guidance to company regarding their future growth and
success and also helps in achieving competitive advantage within the dynamic business
environment.
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