Strategic Management Analysis of Tesco
Added on 2020-11-12
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STRATEGIC MANAGEMENT
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3OVERVIEW OF COMPANY.........................................................................................................4TASK 1............................................................................................................................................4Strategic Direction that Tesco has followed in the past and the way in whichstrategic thinking has developed within the past 5 years...........................................................4TASK 2............................................................................................................................................5PESTLE Analysis of TESCO to review the external environment.............................................5Critical discussion of Tesco's competitive advantages among its direct competitors.....................................................................................................................................................8Probable industry scenarios facing by Tesco within its existing market domains......................9TASK 3..........................................................................................................................................10Extent to which the company is facing strategic drift...................................................................................................................................................10Whether their mission and vision statement are aligned to the demand of the marketplace...................................................................................................................................................10Company's strategic capabilities...................................................................................................................................................10Use the Business Canvass Model to portray and describe the rationale and core logic...........11TASK 4..........................................................................................................................................14Discussion of possible strategies that TESCO could follow to defend its core business........14TASK 5..........................................................................................................................................16Analyse and evaluate the resource implications of recommendations that the company has toaddress.......................................................................................................................................16CONCLUSION..............................................................................................................................17REFERENCES..............................................................................................................................18
INTRODUCTIONStrategic Management is concerned with the overall assessment including the designing,monitoring and evaluating of the operations and its relative conceptual framework towards
attainment of the business's objectives and goals. It is necessary for analysing the enterprise'spresent conditions at the global competitive marketplaces to understand prior the cross functionaldecisions. This is done for optimisation of utility of resources that later assist in accelerating thegrowth of implemented strategies. Moreover, its impact helps in formulation of plans actively tomeasure the degree of strategic shift in the business environment of an organisation.This assignment put insights on Tesco's approachability towards this management byemploying various tools and techniques that involves elemental key-points of environmentalscanning with formulation of strategy, its execution and evaluation. It will describe about theusage of tools that has allowed Tesco to mitigate the risks by avoidance of issues throughgrabbing opportunities as per prevailing situations.OVERVIEW OF COMPANYTescois one of the multinational merchandiser and groceries retailer which was foundedby Jack Cohen in the year 1919. Its headquarters is at Hertfordshire, UK which is Tesco's largestmarket, where it is operating under four banners of Express, Metro, Superstore and Extra.Nonetheless, it is operating in 12 countries worldwide with Tesco.com is one of its subsidiaryalliance provides online services (Imrie and Dolton, 2014). This enterprise' strategic planninginvolves reassessing their positive contribution towards the welfare of society with growingmutual businesses to enhance the experience of their shoppers in leaps and bounds. Their drivingforces in gaining competitiveness by strategic management consists of quality, innovation,pricing and variety.TASK 1Strategic Direction that Tesco has followed in the past and the way in whichstrategic thinking has developed within the past 5 yearsTesco has dominated the retailing sector in UK for around 25 years, however it has lostits sheen after the economic recession that impacted the entire industry in negative aspects. Thisimpacted the customers to move towards the other retailers who offered better offers than Teco.Its future was in turmoil state due to rise of its competitors like Asdi, Lidl etc. In the year 2014,then CEO, Philip Clarke announced its resignation from his post, which came sooner thanexpected and thus left Tesco's future at stakes again, which was at the lowest point of the
declination began in 2010 (Vandervelde, 2016). However, before leaving, he implemented manyturn-around strategies to reverse their market positioning at global markets. In regard to their expansion plans in the international markets, they capitalized on its EUintegration as their good positioning shifted them and placed in the single door location to tap theemerging opportunities. However, they employed their domestic planning on their operations atoverseas projects which were not beneficial for them. Thus, they changed their strategicapproach and incorporate concepts based on the regionalism and requirements needed in thespecific location. Along with this, they used a multichannel mix tactic in relation to technologicaladvancements with innovative and enhanced models. They also move to mobile applications andreduced their investments in large superstores for non-food items as their overall relevance issuperseding with emergence of internet and IT.With reference to above, Tesco has improvised their strategic thinking from past 5 yearsthrough making changes in the hope of sustainable sales volume. In addition to this, organicdevelopment was employed to achieve their ambition of reduced costs by £1.5 billion, withgeneration of £9 billion by improvising the operating margins by 2019/20 in between 3.5 percentand 4 percent (Tesco Strategic Report, 2018). Also, they laid a plan for sustainable business interms of customized product of varied ranges with a couple of formats. For internationalismstrategic expansion plan, Tesco collaborated with South Korea's Samsung and also took overHome-plus chain of hypermarkets and the express stores. Moreover, this supermarket seek a dealto buy O2 out of their 50:50 joint venture to gain competitive advantages. Further, this led Tescoto enhance their retailing services of online shopping and assisted in consumption of energyprice.TASK 2PESTLE Analysis of TESCO to review the external environmentThis model encompassed political, economic, social and technological factors forunderstanding the current market positioning of Tesco. It is useful in performing any expansionor launch or application of innovative product or service for better sales and profits generation.Political Factor: This company is operative in more than ten countries and must undergo eachcountry's political scenarios and relative components. It involves employment legislations,stability of political parties, taxation regulations, current and impending rules and legislation.
When import duty gets fluctuated, it affects Tesco's operations as their inventory is imported tocountries like East Asia, China, etc. Also, invention of Tesco Tax has been refused by UK'scouncil to avoid the hiked prices.Economic Factor: Tesco has a major market shares in the UK's market of groceries and is highlydependent on their international expansion with diversification. Also, labour costs has an effecton the supermarkets. As per UK's Minimum Wages Rate which has been increased recently by4.4 percent and has incurred millions of pounds losses. Along with, they are concentrating toenhance the borrowing cost.Social Factor:Demographics of UK indicate ageing population, increased female workers withno home meal preparation concept is in vogue and resulted a shift for Tesco to value added totheir products, especially the non-food items. Additionally, people are becoming healthconscious and thus, this enterprise adopted organic products. They also promoted the provisionof pay-in through cheques with cash payment at checkouts.Technological Factor:This provided that additional boost which gave Tesco a platform forinitiation of ECR (Efficient Consumer Response) with inclusion of EPoS (Electronic Point ofSale), electronic scanners and EFTPoS (Electronic Funds Transfer Systems) that has helped ingaining profits and high revenues. They included self checkout machines, wireless devices andelectronic shelf labelling and more (Hitt and Duane Ireland, 2017). It not only saved time andenergy but minimised the manual workload in keeping records and handling materials atwarehouses etc. Legal Factor: There are many policies and regulations by the government that needed to befollowed. When Food Retailing Commission (FRC) enforced a Code of Practice and put a ban onlist of materials, this affected the working practises at Tesco. Along with, they provided lowprices on purchasing of fuel in relation to the total amount spent on their grocery stores.Environmental Factor: This company is completely devoted to reduce the carbon footprint by 50percent up till 2020. In addition to this, they also adopted few approaches like compositing,recycling, ban on plastic etc. for sustainable decomposition of generated waste so that their loyalcustomer base becomes socially conscience and aware in context to use environmental friendlyproducts.
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