Strategic Management: Tesco Case Study

This article discusses the strategic management process in Tesco, including the strategic planning process, evaluation of critical models and tools such as SWOT analysis, PEST analysis, and Porter's five forces. It also highlights the importance of change management in achieving strategic goals. The case study focuses on Tesco, a British multinational groceries company, and its strategic position, application of tools, and the challenges it faces in the retail market.

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Strategic planning process to determine strategy........................................................................3
Evaluation of the critical models and tools..................................................................................5
Application of these tools in Tesco.............................................................................................6
Importance of change management...........................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategic management can be defined as the strategic approach which involves in setting
goals, evaluating competitive environment, examine internal environment and analyses
effectiveness of strategies. It is important for company because they play various role i.e.
planning, supervising, analysing, assessment of overall strategies, resources which are necessary
for a business to achieve it’s vision and mission over the time. To continues changes in business
environment requires to access overall strategies where strategic management act as assessment
management who analyses its strategies constantly so that organization gets success in business.
There is an example of Tesco company to understand role of strategic management within
business. It is a British multinational groceries company which is headquartered in Welwyn
garden city, England, UK. The brief study of the report supports to understand critical
assessment of the procedures which is used by organization to identify its strategy.
Strategic planning process to determine strategy
Strategic planning refers as a management activity which often used by organizations to better
focus on its resources, energy, implemented priorities and effectiveness of operation for
achieving targeted goals. It is vital tool for a business because it provides measurable objectives
which aids in daily decision-making process (Rothaermel, 2016). It enlists five process such as
identify strategic position, gather people and information, perform SWOT analysis, formulation
of strategic plan, execution of plan and continue monitoring performance. Tesco apply strategic
planning process to determine its strategy.
Identify strategic position
Tesco initially clarify it’s vision and mission to determine strategy. vision statement of
the Tesco is “To be the most highly valued business” by serve to customer and community in
which while they operate and establishes loyalty of customer on brand. It is long-term goal of the
company which is developed by management. While mission statement is to “We make what
matter better” or in simple mean they want to give expression of the general purpose to the all
stakeholders either they are internal or external (Stouten, Rousseau and De Cremer, 2018).
There are three values which apply by business daily basis such as no one create hardship for
customer to achieve private gain. Second value they will treat people how they want to be
treated. Tesco believes every little support can lead big different in their operation. According to

Tesco values can put its core purpose into practices which can help lead high growth in business.
By the mission, Tesco wants to gain short-term goal of the company over the period. Thus,
organization identify it’ strategic position by clarifying it’s vision and mission.
Gather people and information
When organization identify its strategic position by the help of management then
involves other staff who will involve in the plan further. To give involvement of people in the
strategic planning process by organization reason behind is to gather up to data information.
When organization has people and information then becomes easy to examine any external and
internal issues which can affect its objectives. Thus, Tesco access it’s objectives by examining
business environment issues.
Perform SWOT analysis
Tesco uses SWOT analysis to determine its strength, weakness, opportunity and threats
so that easy to develop Smart objectives. These objectives can help business to face their
capability which Tesco can use in more positive way (Gamad, 2019). The main goal to perform
SWOT analysis model within company because it supports company to lead in right direction
and towards common goals.
Formulate strategic plan
When organization identify its strategic position and develops it’s goals which can align
with business mission. In addition, organization have sets it’s SMART objectives which can help
to measure progress and goals. Thus, organization develop strategic plan to meet it’s vision over
the time.
Execute strategic plan
When organization develop strategic plan then organization involves stakeholders who
will support to convey the plan. Management describes importance of the goals and objectives
and implements plan by assigning different task between stakeholders. Even company involves
different department who perform different task to execute plan. Tesco clarify to overall

stakeholder to check back with individuals or group of members to ensure that they are going on
right track.
Constantly monitor performance
To define goals and objectives, develop strategic plan and execute plan by assigning task
is not enough to get success in the business. Without monitoring and assessment of overall
procedures can’t get effectiveness on planning (Silahtaroğlu and Alayoglu, 2016). So, Tesco
involves performance management strategy which is implement by management. Management
analyses each stakeholder performance at the workplace. Even they repeat strategic management
process whenever any correction requires in their action. Even management continuous gather
new and relevant information or data which supports with any future planning.
Evaluation of the critical models and tools
There are several models which supports business to determine its strategy. Models are
described below:
SWOT analysis
It is a strategic planning technique which supports business to determine it’s strength,
weaknesses, opportunities and threats that involve in business activity. By the Swot analysis
model can capitalize on business strengths by applying opportunities. It supports to minimize
effects of weaknesses which can give impact on the business objectives. Impact of threats can
reduce by model to apply strength opportunity (SO) strategy. it assists business to know
customer perspective when develop strategic plan and decision as well. SWOT analysis is
specifically designed to analyse internal environment of the company (Stretton, 2018). It is quite
effective model which can lead effectiveness on business operations.
PEST analysis
It is a framework which is used to analyse the macro environmental factors which gives
impact on organization performance. it includes key factors i.e. political factors, economical
factors, socio-cultural factors and technological factors. This technique is specifically use when
starts an new business or entering into emerging market. most of the business applies this
framework to analyse its external environment so that easy to understand impact of external

factor on the business activity. In addition, it is used to evaluate market growth or decline rate.
Political factors include government regulation, tax policy, employment rate, trade restriction
political stability which gives impact on business operation. Economic factors are economic
growth, interest rate and currency exchange rate which helps business to understand how to
implement strategy to take advantage of these strategies. While social factors give impact on the
consumer’s need and premium market size. So, organization can reduce impact of the social
factors by improving quality of its products and services (Matano, 2016). Social factor includes
population, growth, age demographical and people attitude towards its health. Technological
factors rate of technological changes and investment in innovation i.e. automation which gives
impact on customer buying decision. PEST analysis model is more effective for the business
because it is not supports to analyse external factors but also assist to influences effectiveness of
strategies by turning threats into opportunity.
Porter’s five force analysis
It is a strategic framework which is used to evaluate organization’s competitive
environment. It is based on the concept which contains five forces i.e. supplier power, buyer
power, competitive rivalry, threats of substitution and threats of new entry. These forces help to
identify the competitive intensity and attractiveness of business market. it supports business to
understand it’s new product or services which can potentially profitable and lead competitive
advantage in business market. Porter five forces theory use to determine strength of areas, to
improve weaknesses and reduce impact of threats. Overall is quite effective technique which
organization can use to identify strategy (Ataş and Kasımoğlu, 2018). Pest analysis, Swot
analysis and Porters five force are critical models which are applied by companies to identify its
strategy.
Application of these tools in Tesco
SWOT analysis
Strengths
 Tesco has high brand image globally and reputation in the retail industries amongst their
competitors due to good organizational culture.

 Organization has high global presence because organization has been eligible to expand
its business overall countries across the world in order to enhance it’s market shares,
productivity and profitability.
Weaknesses
 Organization have to face price war because most of the retail companies trades similar
products to the customer. Due to high price war unable to generate profit margin on
product that gives impact on economic infrastructure negatively (Amelia and et.al.,
2019).
 Organization has been unsuccessful in past large number of attempts for merging and
acquiring other business to lead high growth in their operations.
Opportunities
 Organization has immense opportunities for growing and expanding their business in the
global market. Organization gets opportunity to expand its business operation in the
Asian and African market. Tesco can diversify its operation profitability and productivity
that can help company to capture larger market share.
 Organization gets opportunity to do online marketing of their products globally.
Organization can improve purchasing behaviour of customer by offering online stores
facilities and provide choices of scheduled delivery time, gift vouchers, club card
membership and refundable policies as well. It helps organization to improve
productivity and profitability positively. This type opportunity would permit organization
to enhance retainability and loyalty of customers and enhance its current market shares.
Threats
 Tesco have to face high competition in the retail market with the availability of other
substitute products which poses high threat to business operations and profitability.
 Tesco’s employees and labour demands to increment in operational wages which poses a
threat for organization operation and its profitability (Cameron and Green, 2019).
Pestle analysis

Political factors
The political stability from few years in the UK can influence on organization operation,
profitability and productivity because they don’t have to change in their policies while trading
products to other countries. But current political instability in the UK due to Brexit can get
negative impact on the business operation (Spear, 2017). Brexit leads complexity and uncertainty
by changing norms in international trading law which directly gives impact on business growth
negatively.
Economical factors
Recently UK’s government announce that they decrease corporate tax level on the profits
which is acquired by organization from 19% to 18% onward 2020. It definitely leads profit in
Tesco’s operation because they can enhance demand of product in the consumer market by
improving productivity of products as they have to pay less tax.
Socio-cultural factors
UK has goof technology performance and people are highly updated for new technology
like E-commerce, engine and online shopping which can give golden opportunity to organization
to capture its large market share, increment in selling infrastructure and profitability in the
business market. Organization can take advantage of online trends if they start to develop online
stores capability and sells it’s product through digital channel in term to cover whole new market
and puts pressure on their competitors and attracts customers towards business operation.
Technological factors
The current emerging ne technology also offer better opportunities to company for
enhancing its operational performance and brand power. Self-checkout counter is latest
technology in UK which organization can install in their physical store (Aithal, 2016). It posse’s
high installation cost but will decline staffing cost and leads high profitable for organization to
run long in the market.
Legal factors

UK’s government implements labour law and health and safety law for the MNC’s
industries who retails their products and operates in the UK market. So in order to operate
legally in the country, organization has adopted many legally mandated policies related to health
and safety law and labour law that motivates working environment but reduces profitability
within company.
Environmental factors
Government and public concerns over environmental issues which are raised by and by.
To meet their objectives adoption environmentally friendly sustainable business operation by
organization that can prove quite costly for the business when they mandate legally by the
authorities (Islam and Mamun, 2017).
Porter’s five forces
Bargaining power of suppliers (Low)
Bargaining power of the suppliers is low because there has high massive presence of
suppliers in the UK market. so, Tesco doesn’t have to pay high cost to suppliers and can easy to
replace non-compatible supplier to other. it is better opportunity for company because they can
get get good products from suppliers at lower cost that definitely helps company to genre high
profit margin on products.
Bargaining power of customers (High)
Tesco is MNC company who offers wide variety products but faces various difficulties
while retailing product because competitors keeps similar products at same price (Huang, 2019).
So, high availability of similar products become easy for customer to switch competitor shop
who offers similar product on lower cost.
Threat of substitutes (High)
Threats of substitute is too high currently in the supermarket because most of the retail
sector retails groceries item and non-groceries item as similar Tesco. so, organization can face
this issue because other competitive companies i.e. Primark, House of the Fraser and Debenhams
can offer different item except grocery and non-food item to compete with Tesco.

Competitive of rivalry (High)
Tesco has high competition with big four companies i.e. Sainsbury, Asda, Morrison etc.
are supermarket companies which offer similar product like Tesco and give high competition. In
addition Aldi and Lidl offer high discounted products with good quality up to 40% that directly
gives impact on organization market share which captures in the UK market.
Threats of rivalry (Low)
Organization doesn’t have to face threats of rivalry. The reason behind is that big four
companies has already captured large market share up to 69% so there is not chance to enter any
new entrant in the retail market of the UK.
Importance of change management
Change management can be defined as the process, tools and techniques which are used
to manage people of change for achieving the expected outcomes in the business (Gürel and Tat,
2017). Tesco involves change management to improve effectiveness in the strategic operations
so that easy to achieve expected outcomes within company. Changes management plays essential
role in different areas such as complexity in the transformation process, it’s cost and
sustainability. There is an example to understand role of change management such as when
Tesco adapts strategic planning approach to determine strategy and they don’t get effectiveness
in that process due to long process. In that state change management supports company to
analyse overall effectiveness of the process when finds complexity while transforming process
then give alternate option to remove complexity and leads effectiveness in the strategic planning.
Strategic management planning contains six procedure which is quite expensive. It reduces
effectiveness in the profitability ratio where change management changes in several procedures
like monitoring which can be performed by management instead of involving performance
management system. To involve cross checking strategy by individual and group of people on it’
task and strategy will assist to reduce human errors. These kind initiatives can reduce cost of
operation and make liable overall operation to achieve expected outcomes. To lead sustainability
in the business activity or operations change management helps company introduces sustainable
strategies which stakeholders can apply in their practices. It automatically leads sustainability in

the business operation and strategic planning as well (Kukuh and et.al., 2019). Thus, change
management supports company to achieve desirable outcomes in the business over the period.
CONCLUSION
It has been summarized significance of strategic management who ensures organization
for that whatever strategies are developed by management to lead high profitability win business
over the period. The brief study of the report has been concluded strategic planning which is
designed to execute business in the right direction and influences ideas which are exchanged
between people along with common goals. It analysed effectiveness of critical models i.e. Pestle,
Swot and Porter five forces which is used by company to determine its strategy. Application of
these critical models to be Tesco has evaluated in report. Significance of change management on
the basis of complexity transformation process, it’s costs, risks and sustainability has been
concluded the brief study of the report.

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