Strategic Planning and Management: A Critical Assessment of Organizational Strategy
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This report provides a critical assessment of the process used by organizations to determine their strategy, evaluates the impact of internal and external environmental variation on organizational strategy, and reviews an organization’s business plan. The report focuses on Tesco, a British multinational groceries and retailer.
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Table of Contents INTRODUCTION...........................................................................................................................1 Strategic management.................................................................................................................1 A critical assessment of the process used by organisations to determine their strategy.............1 A critical evaluation of the impact of internal and external environmental variation on organisational strategy................................................................................................................3 A review of an organisation’s business plan...............................................................................6 CONCLUSION................................................................................................................................7 References:.......................................................................................................................................8 Appendix..........................................................................................................................................9 Business Plan..............................................................................................................................9
INTRODUCTION Strategic planning is considered as road map for the organisation. It isdescribed as the art for developing certain business strategies, executing them as well as analysing the outcomes of the implementation of the plan in respect to the organisation's entire long term goals and desires. It is the idea which concentrate on interlinking several departments such as finance, human resource and marketing in the organisation for reaching their strategic goals. Along with this, strategic management is the synonym of strategic planning. Tesco is taken as base company. Tesco is a British multinational groceries and retailer which was established by Jack Cohen in 1919 in UK. The organisation is specialised in the selling of clothing, electronics, software and many more. In this report, it covers the term strategic management with the process of the strategic planning for identifying their strategy. Along with this, it also includes the internal and external environment factors variation of the organisational strategy. At last, areview of an organisation’s business case is mentioned in the appendix. Strategic management Strategic management is describes as the determining and details of all the strategies which a manager could carry over so that, the organisation could able to carry better perform as well as competitive edge. The firm could have the competitive edge when the income generation is much higher than the average profitability in that industry in which the firm belongs to. It can also be stated as the bundle of all the acts and decisions that a manager takes and finalise the outcomes of the performance of the company(Bernadus and et. al., 2020). This includes planning of forecasted as well as unfeasible contingencies and this could be applied to both small and large organisation. It provides a broader view point to the personnels and so that they could comprehend their job which is fit in the firm and also how it is interrelated to the members of the organisation. A critical assessment of the process used by organisations to determine their strategy Strategic planning process is a technique that firms utilise for creating plans for reaching the long term goals. This process assists in developing a path for which strategic objectives are put into effective for reaching and where the initiatives would be much less helpful to the organisation(Balyuk and Balyuk, 2021). Incontext to the selected organisation, the strategic planning process is mentioned below: 1
Missions and objectives:The mission statement includes the long term vision of the company in regards to what the firm wants and whom they wanted to serve. This states the purpose, products or services, customers, market and technology of the organisation. The mission statement describes the vision which encompasses the unchanged values and purposes of the company as well as the future goals which would assists for pursuing the upcoming opportunities(McDavid, 2021). The mission of Tesco is to be the leading organisation in regards to their grocery commodities and services. The vision of Tesco is to be the leading store in terms of grocery across the world by minimizing the extended good as well as delivery of the services. Objectives referred as that ends which the firm seeks to reach through functions and existence. This includes long range aim, detailed goals of the department as well as the individuals assignments. Through vision, leader of the firm defined the financial and strategic objectives. These strategic objectives are interlinked to the position of the organisation as well as comprised of the measures such as brand image and market share.The objectives of Tesco is mentioned below: To expand their consumer base To assure of the satisfaction of customers To make sure of the modern motivational strategies assuring about their workers are retained and satisfied by their jobsTo develop green environment as well as sustainable firm finances Environmental scanning:It is the second element of the strategic planning process where the strategic objectives are related to the environment of the organisation and they should know the form of the environment in which they have to function. The environmental analysis comprises of the collection of the related data, interpreting the future influences of the working of the organisation and identifying which are opportunities and threats that are provided by the environment(Steiss, 2019). These environmental data could be gathered from several sources such as verbal information from multiple individuals, spying and predicting. This process would work more effectively on a constant basis and it is makes an intrinsic element of the strategy formulation.Environmentalscanninganalysestheinternalandexternalfactorsofthe organisation. 2
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Strategy formulation:The data from the environment scanning must get along from strengths to opportunities which is determined which working for the weaknesses and external threats. Strategy implementation:The strategy is implemented through budgets, procedures and initiatives. The implementation includes the organisation of the assets and encouragement of the personnels of the company for reaching the objectives. This could create a significant influence on the successful of the firm(Chirima, 2018). In big firms, the strategy that implemented would be distinct individuals from those who formulated that. In regards to this, a proper care should be taken for communicating the strategy as it may not be successful if the strategy is misunderstood or if the managers at the lower level resists the implementation as they don't understand why a certain strategy has been chosen. Evaluation and control:The strategy needed to be monitored and modifications which is vital has to be taken care. The implementation of the strategy should be evaluated and adjusted as per the requirements. The evaluation and control comprises of various steps such as stating the parametersthathastobemeasured,definingthetargetsfortheparameters,doingthe measurements, compare and contrasting the outcomes for the pre-defined standards and making the vital changes. The outcomes of the implementation could be compared and contrasted in the light of the set objectives and control procedures operates(Berisha Qehaja, Kutllovci and Shiroka Pula, 2017). A further analysis would take place if the outcomes and the objectives become different. For this, a suitable actions would be needed to overcome the gap. It would also required alteration in the strategy if an issue occur. Acriticalevaluationoftheimpactofinternalandexternalenvironmentalvariationon organisational strategy SWOT analysis SWOT analysis is a framework for evaluating the organisation and their environment which assists in concentrating on the major concerns. This could supports in making focus to the limited assets as well as the abilities to the competitive environment. Strength and weaknesses are considered as internal factors which could be altered while opportunities and threats are the external factors which could not be change but can be modified(Konovalova and et. al., 2018). In context to the selected organisation, SWOT analysis is mentioned below: 3
Strength: Tesco is considered as one of the top retail grocery and supermarket in the United Kingdom. They are implementing a very simple business model and this assists in reduction of the costs by having an effective waste management system. This creates an outcome ofhavingasuccessfulrelationshipwithitsvendorsthatassiststhemindeliveringthe commodities in a timely manner. Along with this, they have won awards for the British favourite supermarket and also awarded Grocer's Label Food for 25 times. Moreover, Tesco is also popular as they have created many job opportunities for the individuals. They gave employment to 500,000 people across the globe and offered more than 700K job opportunities which makes them a job provider in the United Kingdom. Weaknesses:Oneofthemajordrawbackisthat,theyareunabletoestablished themselves in the markets of Japan and US as the company could not export their operations and implement their plans effectively offshores. In 2018, Tesco suddenly changed their Clubcards without informing the customers which makes them furious as the consequences. Also, the organisation has faced accounting fraud scandal where the selected organisation has shown a less profit in their accounting ledgers for avoiding the taxation(Sumiarsih, Legono and Kodoatie 2018). There was a sever impact on the performance of the company because of Brexit which in return, the market prices fall to 9% and this figure could not capture the investors. Tesco is following a low cost strategy that provides commodities and services at a lower price for their customers. Opportunities: Tesco has introduced a new discount stores which is known as Jack and recently are perform well in the industry. In regard to this, the organisation must invest as it has the potential to grow and has the ability to compete with its competitors. Along with this, the organisation has the opportunity to penetrate into new and emerging markets such as Turkey, South Korea and so on. Tesco is not able to perform well in some nations and in regard to this, they could make a strategy to make partnership with the local businesses and educate itself about the local markets(Sadeghpour, Motahari and Nejatbakhsh Esfahani, 2021). This would assists them in elevating their sales and making an effective presence in the markets. Threats: Tesco has encountered with Christmas scandal where the advertisement was supposedtobefunnybutinstead,itoffendmanyindividuals.Peoplesaidthatitwas disrespectful and a direct attack on the Christmas faith. Also, the economic factors such as taxations,governmentrulesandlegislationsrepresentsasaseriousthreatstowardsthe 4
development of the selected organisation in some parts of nations. In 2017, another threat of Tesco was about the fake food product Woodside Farms where no farm was identified in their lists of assets. Another threat is the Brexit exit from the Europe which leads in having serious impact on the selected organisation as they were having their businesses in several European countries. PESTLE analysis PESTLE analysis is a tool which is utilised by the organisation for tracking all the external factors which creates impact on the operations of the firm as well as the planning for introducing a new product or service in the industry. In context to the selected organisation, PESTLE analysis is mentioned below: Political factors: As Tesco is operating in many countries such as Czech Republic, China, Slovakia and many more, they have make sure about their different political environment. The United Kingdom has a stable political environment which supports the organisation being the top retailer in the local market. Another one is the COVID 19 which create impact on many industries in such a manner that it also leads in shutting down of many organisations as no person was allowed to step out of their houses which leads employees to start work from their homes(Jamalifar and Salehi,2020). As Tesco has maintained its e-commerce platform, they were able to rescue themselves from becoming the victim of the outbreak. Economic factors: Tesco was able to survive in the COVID 19 pandemic with the help of its e-commerce platform but there were many organisation which shutdown due to pandemic and several people lost their jobs. The higher unemployment rate creates an unstable financial situation. Tesco has expended their businesses in many nations butthey are still depend upon the British markets as the majority of revenue is generated from here. If the local government launches new laws on e-commerce platforms, this will creates influence on the sale, profitability, cost of the organisation. Social factors: Tesco is following the local social and cultural trends of distinct communities and then sell them accordingly. For example, the organisation is selling Halal meat in the stores of UK for Muslim customers. Along with this, the organisation also came up with its own halal meat label in Thailand and Malaysia(Osborne and Strokosch, 2021). Also, now a days, people are switching more towards plant based vegetarian food. Tesco make sure to sell vegan product to their customers which it make a revenue of 4.1 million pounds in 2020. As 5
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Tesco is aware of the chaining trends, they could assures to make vegan food products by 300% in 2025. Technological factors: Tesco has been using latest technology which make sure to provide a better customer experience which is he main reason for being a successful firm. They also provide facility to pay for the commodities using mobile applications, m-commerce as well as barcode scanning systems. As COVID 19 as created an impact on every individual in some manner, the e-commerce platform of Tesco has boosted the trend and pattern of online shopping experience. People started to order groceries online and avoid getting infected by the virus. The organisation was able to survive the outbreak due to their online platform(Sotiriadis, 2018). Also, Tesco has partnered up Amazon Go for developing of cashier-less billing facilities. This provides shoppers with an experience in saving of their time. Legal factors: As the legal structure and government rules and legislations of distinct government differs and in such case, the firm should follow local and international laws. Before Brexit,EUhasintroducedwith a lawthatrestrictorganisationfor performingany anti competitive activity which means that the selected organisation cannot acquire and merge with a large firm of its size in Europe. After Brexit, the law is not applicable in UK but it is active in EU. Also, the organisation cannot recruit people and offer them less than required wages(Yusefi and et. al., 2017). Along with this, the organisation cannot sell alcoholic drinks to young underage teenagers. Environmental factors: Tesco has recently launch their phase 2 of the recycling plan and it encompasses of remove, reduce, reuse and recycling of the plastics. This would assists the firm in decreasing as well as removing the non-recyclable plastics. Also, the organisation is working on the project for recognising the illegal fishing boats which are endangering sea life with the non seasonal hunting. A review of an organisation’s business plan Business plan is stated as written documentation which describes how an organisation define their objectives and strategies for achieving the goal. It outlines a path for the organisation for marketing, operations and financial points. This documentation is considered as vital as it is used to capture the investment prior the firm has launched its proved record(Carayannis, Ilinova and Cherepovitsyn, 2021). The business plan for Tesco is mentioned in the below Appendix. 6
CONCLUSION From the above discussion, it can be concluded that strategic planning is vital for organisation as it develops a route to follow. Along with this, the very first strategic plan is the business plan that outlines the main purpose, goals, financial fields and the mission statement of the organisation. In this report, it includes strategic planning process with evaluation of the impact of the internal and external factors on the organisation with the help of SWOT analysis and PESTLE analysis. Also, a business plan has been mentioned in the appendix. 7
References: Books and Journals Balyuk, I. and Balyuk, M., 2021. Strategic Planning as a Tool for the Economy Efficiency Growth: Foreign Experience and Russian Practice.ISTORIYA, (e20). Berisha Qehaja, A., Kutllovci, E. and Shiroka Pula, J., 2017. Strategic management tools and techniques: A comparative analysis of empirical studies.Croatian Economic Survey. 19(1). pp.67-99. Bernadus, G.S. and et. al., 2020. Systematic Review of the Builder Method and Product of the Information System Strategic Planning at Higher Education Institution in Indonesian. Journal of Advanced Research in Dynamical & Control Systems. 12(6). pp.939-947. Carayannis, E.G., Ilinova, A. and Cherepovitsyn, A., 2021. The Future of Energy and the Case of the Arctic Offshore: The Role of Strategic Management.Journal of Marine Science and Engineering. 9(2). p.134. Chirima, D.T., 2018.Strategic planning practices in manufacturing firms operating in Zimbabwe (Doctoral dissertation). Jamalifar, G. and Salehi, H., 2020. The effects of rehearsal and strategic task planning on L2 Willingness to Communicate.The language learning journal. 48(2). pp.162-169. Konovalova,E.E.andet.al.,2018.Formingapproachestostrategicmanagementand developmentoftourismandhospitalityindustryintheregions.Journalof Environmental Management & Tourism. 9(2 (26)). pp.241-247. McDavid, C., 2021. Strategic Planning and Organizational Performance: A Mixed Methods Study of Strategic Planning Practices in Texas Public School Systems. Osborne, S.P. and Strokosch, K., 2021. Developing a strategic user orientation: A key element for the delivery of effective public services.Global Public Policy and Governance, pp.1-15. Sadeghpour, A.J., Motahari, A.H. and Nejatbakhsh Esfahani, A., 2021. Goal and Goal Setting in Strategic Planning, Case study: Qom Water and Wastewater Company.Journal of Water and Sustainable Development. 8(1). pp.31-40. Sotiriadis, M., 2018. Strategic Analysis and Competition Analysis. InThe Emerald Handbook of Entrepreneurship in Tourism, Travel and Hospitality. Emerald Publishing Limited. Steiss, A.W., 2019.Strategic management for public and nonprofit organizations. Routledge. Sumiarsih,N.M.,Legono,D.andKodoatie,R.J.,2018,January.StrategicSustainable Management for Water Transmission System: A SWOT-QSPM Analysis. InJournal of the Civil Engineering Forum Vol(Vol. 4, No. 1). Yusefi, A. and et. al., 2017. The Barriers against Strategic Plan Implementation from Managers’ Perspectives in Teaching Hospitals of Shiraz University of Medical Sciences, 2016. Sadra Medical Journal. 5(2). pp.87-98. 8
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Appendix Business Plan Business plan is considered as a written documentation that states the core business activities, objectives as well as the strategies to plan and reaching to the goals. In context to Tesco, business plan is mentioned for them to overcome from their weaknesses: Executive Summary: Tesco is a leading retail chain in UK which was founded in 1919 by Jack Cohen. The organisation is facing many issues which have become weaknesses of the firm such as the firm has not able to establish themselves in markets of Japan. Along with this ,the organisation has encountered with the angriness of the people as they changed the Clubcards without informing. Also, the firm has face loss due to Brexit that directly influences in the performance. Various fraud scandal was also the involved. Mission: The mission statement of firm is to be the champion for the consumers and assists them to enjoy a better quality of life. Vision: The vision statement of Tesco is to be the most highly valued organisation through serving the consumers, communities in which they operate, loyal colleagues and shareholders. Objectives: The objective of Tesco is to overcome from their weakness such as they were unable to establish themselves in Japan, Brexit issues and fraud scandals, Competitive advantage: The organisation has its presence across the globe which makes them popular. Along with their excellent suppliers, they are able to cater their customers worldwide. Also, they are offering various types of products and services in many fields which makes its competitive advantage. Financial overview: Particular31/12/15 ($)31/12/16 ($)31/12/17 ($) Production cost4000-- Promotion cost20001200800 Advertisements cost10008001000 Technology cost110010001600 9
Total cost810030003200 Problem: The issue arises in the organisation is about the Brexit issue, fraud scandal issue and the they are unable to operate in markets of Japan. Solution: In order to make Tesco operate in markets of Japan, they could partnership with the local firm of Japan so that they could understand the Japanese markets and the purchasing behaviour of the customers. Also, the organisation could make ethical policies so that there will be no rumours about the fraud cases. Initiative: Tesco could conduct their training and development program for their employees in order to develop their knowledge regarding useful policies and norms. Market Research: The organisation can conduct customer survey in order to analyse their perspectives. 10