Strategic Planning for Tesco: A Critical Assessment of Internal and External Environment

This report provides a critical assessment of the strategic planning process used by Tesco to determine their strategy. It evaluates the impact of internal and external environment on the strategy set by the firm. The report also provides an action plan related to in-store analytics technology for Tesco.

Strategic planning

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Introduction including a definition of strategic management.....................................................3
A critical assessment of the process used by organizations to determine their strategy.............4
Critically evaluating the impact of external and internal environment.......................................6
Organization strategic action plan related to Tesco:..................................................................8
REFERENCES..............................................................................................................................11

INTRODUCTION
The present report is based on strategic management that helps the company to achieve
the organizational goals within the limited time framework. The report will analyse different
processes used by the Tesco to determine the best strategy that can be implemented in the
future. Moreover, the study will identify internal and external environment variation on the
strategy set by the firm. Lastly, organization business plan will provide an action plan so that
strategy can be used appropriately.
MAIN BODY
Introduction including a definition of strategic management.
Strategic management is provides overall direction through developing plans and policies
that are designed to achieve organizational goals and objectives. Further it involves allocating of
resources so that plans can be implemented properly. Strategic management has become crucial
in world of business as it includes innovative thinking, a planning process and operational
stratigising (Barbosa and et.al., 2020). Strategic management is crucial business practice due to
following reasons:
Planning : It helps in predicting the future trends that helps in business in future success. For
this purpose various tools have to be used instead of basic planning by the management.
Forward thinking: Strategic management helps in laying down clear goals and objectives so
that overall idea would be beneficial in organization growth (Wang, and et.al., 2021).
Resource allocation: It also ensures that resources are used wisely and are invested in most
promising opportunities. So that less time and cost is involved and work is done on time.
Strengths and weakness: This strategy helps to identify the weak points of the organization
and suggest ways to overcome it (Ansoff and et.al., 2018).
Environmental impact: Strategy helps in identifying the future potential shifts that are going to
be incurred in a market that will affect operations of the business so that preventive measures
can be taken in advance.
It is observed that flexible company are able to make changes easier in their structure
and plans while inflexible companies may find it difficult. There are various approaches to
strategic management one is prescriptive approach that outlines how strategies should be

developed and other is descriptive approach that focuses on how strategies can be put into
forces (Schilling and Shankar,2019).
Moreover, there are various strategic management strategies that includes general strategy,
corporate and competitive. General strategy is based on how the given objective will be
accomplished. Thus, it is concerned with relationships between the ends and means. Further the
corporate strategy is based on defining the markets and business in which the company is based
and the area in which it requires competing (Fedushko and et.al., 2021). Competitive strategy is
based on the success of company strength, weakness, concerning its competitors.
Further there are various advantages that strategic management helps in achieving the business
goals some of them are been described as follows:
 It helps in giving competitive advantage above all other competitors as it means that
company will always be aware of changing market (Lasserre, 2017 ).
 It also helps in achieving the goals by using clear and dynamic process for formulating
steps and implementation.
 Sustainable growth also helps in efficient organizational performance so that growth is
manageable.
 Organization working in unison towards a particular goal is more likely to achieve
success.
 Managerial awareness can be increased and hence they are more ready to take up future
challenges in the future.
Also, there are various approaches and frameworks for strategic management but the
initial process includes strategy formulation through identification, analysis, formulation,
execution and evaluation (Drnevich,Mahoney and Schendel,2020).. It is very important that firm
carry out the whole process in systematic manner or else one wrong strategy can incur losses to
the firm.
A critical assessment of the process used by organizations to determine their strategy.
Clarifying the vision:
To ensure successful implementation of strategy the organization must define clear goals
and objectives that need to be achieved in specific time period. Moreover, if vision is clearer than
policies and strategies can be formulated in easier way. In regard to Tesco, they have clear vision
to sell the products under their own label and ensured good quality goods at cheaper prices.

Hence, this vision is communicated clearly to all the employees working so that they remain
focused and motivated all time.
Gathering and analysing information:
It is very important that to implement a particular strategy information need to be
gathered from various sources so that better business plan can be developed by the marketers. In
context of Tesco it needs to gather information regarding the current market trends and changes
so that goods can be manufactured accordingly (Barney and Mackey, 2018). Information can be
collected either from primary sources or secondary sources depending upon the resource and
budget the firm has. On the other hand it can be analysed through graphs, charts, excel sheet etc.
to have realistic and accurate data results.
Formulating strategy:
The strategy that has been identified by the firm need to be formulated in proper manner
so that chances of errors are very less. Formulation of Strategy is done by top management and
is communicated later through various channels within the organizations (Meyer and et.al.,
2017). Tesco can formulate the best strategy using PESTLE and SWOT analysis and also
identify whether additional resources are required or not.
Implementation:
This stage requires action for earlier strategy formulation. Management should provide
additional employee training to meet the required objectives during this stage as success depends
on employees who would carry out the tasks in appropriate manner (Tonelliand Cristoni, 2018).
Tesco should ensure that all goods are manufactured with minimum wastage and employees are
motivated to work with the given tools so that conflicts do not occur and also product quality is
maintained.
Evaluation and control:
With continuous change in external and internal environment it is very important that
proper control is done by the top management so that corrective actions if required can be taken
on time. Tesco must develop key performance indicators and specify the measurement criteria
so that expected and current results can be calculated (Newburry,Deephouse,and Gardberg,
2019). Moreover, Goals must be re-examined and personnel may be shifted to other duties so
that if any losses than it can be minimized. The firm can also identify the area that have not
performed well and hence choose either to take immediate action or take decision to completely

shut down so that no further inefficiency is occurred in the future. Corrective actions are always
taken by the top management to lower levels of the firms.
Critically evaluating the impact of external and internal environment
The internal factors refer to anything that are within the company and does not affect
whether they are tangible or intangible. These factors are been grouped into strengths and
weakness of the company as positive effects of the company is considered as strength and if it
prevents development of the company than it is considered as weakness (Trigeorgis and
Reuer,2017). Some internal factors that will affect the organizational strategy are :
Plans and policies:
There might be some cases where the firm need to alter the policies so that they can
remain competitive in the market. Policies promote consistency and ensures fairness in actions.
Moreover, positive impact of policies is that it helps in avoiding confusion and
misunderstanding so that task can be accomplished on specific time period whereas on the other
hand if plans and polices are formulated in rigid manner than they cannot be revised to
changing business environment (D’Cruz, 2018). In regard to Tesco systematic policies has
helped in achieving the desired goals and objectives over the years. Furthermore, it also ensures
that there is no duplication of work. But with certain changes in environment the firm need to
make sure that strategic plans are made flexible and fragile so that they can be change easily
that will further help in improving the productivity whenever required.
Human resource:
It is the most important factor of various organizations as they are considered valuable
asset to the firm and HR department need to ensure that proper training and resources are been
provided to employees so that certain tasks can be accomplished on time that is beneficial for
the growth (David,David and David,2017). If human resource is not utilized (efficiently) than
resources would be wasted and employee turnover would be higher. For example : Tesco has
hired efficient employees both good in skills and technical knowledge that continuously provide
innovative ideas and increase organization creativity.
Financial and marketing resources:
Goals need to be updated timely so that any changes in market does not impact the
financial and marketing resource of the firm. Hence, continuous availability of such resources
ensures that firm will be able to manufacture its products timely without any disruption.

Negative impact of such factor on firm strategy is that increase in cost of these resources
means that firm product price will also increase and therefore it may lose the market base.
Hence, Tesco ensures that both requirement of total resources is analysed and implemented
efficiently so that there are zero or minimum changes in costs and prices of the products.
Some impact of external factors on organizational strategies include:
Political:
Various changes in government policy, political stability, trade and tax policy etc. may
affect the strategy that is already been developed by the quoted firm. Such political changes are
major cause of variation in strategies as non-compliance may cause shut down of the company.
E.g. In Tesco political instability in the country due to some reasons may impact the working of
the firm as strategies need to be revised through collecting necessary information from the
markets. Moreover, the firm would not be able to export goods to certain regions due to tariff
and trade barriers thus creating a negative impact on expansion policies.
Social :
Changes in social trends, attitudes, patterns etc. may affect the organizational strategy as
all the activities and tasks are based on capturing particular market segment and if people choices
and opinions regarding the purchase of any product is changed than organization strategies have
to be revised which is demerit as it is time-consuming process. On other hand developing unique
products different from the competitors can be merit factor for various firms (Phillips and
Moutinho, 2018). This can be linked to Tesco where it started selling more of organic products
when there was growing concern among the people in UK to consume more of healthy food
products. Therefore, result of it was that spending of the people increased that help in
generating large amounts of profits to the Tesco. Thus, if impact of factor can only be turned out
in positive manner when management is aware of market conditions.
Technological:
Technology is important in current era as it keeps on changing with the advancement of
human knowledge. This factor also largely impacts the activities and strategies of the firm as
resources, budget and people need to be closely identified and employed by the management so
that they are able to carry out the tasks in efficient manner. Technological change can be positive
on organizational strategy if used correctly. It can be understood with example of Tesco where
innovative processing and payment methods were introduced in the outlets so that it saves time

and cost of the firm. Hence, the firm was able to reach different parts of the world in easier
terms. On the contrary this factor can also be a negative factor if firm has not enough resources
and budget to upgrade its technology to the latest version. Hence, using the old traditional
methods by organization may only result in more costs and fewer profits than the other
competitors in the market. Moreover, people would be less interested in purchasing those
products that are not new and advanced according to the current trends.
Organization strategic action plan related to Tesco:
From the above business plan it can be identified that Tesco is lacking in In store
analytics technology that is on the basis of external environment and hence the directors of the
company aims to achieve the desired technology by the end of 2025 (Annual report- Tesco Plc,
2021). Below is the detailed action plan that will help to identify ways in which desired goals
are achieved in proper manner.
Vision:
To identify the ways through which the firm is able to derive meaningful insights from
the customer behavioural data so that better policies and products can be developed in the
future.
Mission:
 Optimizing store performance and enhancing customer experience
 Improving the product services and sales.
 Installing various effective advertising programmes and methods.
Objectives:
 To increase profits by 50% by the end of year 2025.
 Become Cost-efficient and serve the best quality products.
Target :
For successful implementation of the in store analytics technology in daily routine firm
will target audience who are between the age group of 18 -35 that are usually involved in buying
certain small things from the shopping outlets on frequent or daily basis (External factors, 2021)
Also, this category is comprises major population of the country and hence more accurate results
can be collected.
Strategies:

By employing the best technology firm can would be able to solve certain questions
which are been described as follows:
 What: This strategy give an idea to firm by giving the real time look at what customer
do when they visit a particular outlet of Tesco. Hence, a deeper understanding of the firm
will help the firm to make informed decisions.
 Who: This would be used by a sub committee developed by the Tesco who will keep a
close eye on how many shoppers entered a store, how they move around and what are the
key area they have visited. Also, the committee would be able to gather data regarding
the age group so that better products can be introduced in the future.
 When: Tesco will be using this technology in six weeks after deciding and getting
approval of action plan. Further it aims to continue to use this technology as long as
accurate data and results are gathered from it and moreover there is increase in sales in
specific months.
 What resources: The quoted firm can gathered required funds from various sources such
as investors or through any collaboration. Moreover, it will require technical assistants
for gathering and analysing the data.
 Communication: It is very important stage as the Tesco committee should
communicate its results after implementing this strategy to all its members and workers
who have contributed their part in the success. Information need to be shared so that
further changes if required can be implemented as well future opportunities can be
identified. Also, through communication accomplishments can be celebrated that also
keeps everyone motivated and happy.
CONCLUSION
From the above report it can be summarized that strategic management is important to
boost the workplace motivation. Also, setting effective goals for employees can improve overall
organizational objectives. Also in this report significance of strategic management is explained
in detail so that both employee and organizational performance can be improved in specific time
period. Further, firms can assess whether they are performing according to the fast changing
market force or not. Moreover, from the above study it can be concluded that there are various
strategies that are used by the organization to determine growth in the future. Further, impact of

internal factors such as plan, policies, resources etc. and external environmental factors such as
political, social and technological had been critically evaluated to develop proper strategic plan
in the future. Lastly, action plan had been developed on the basis of change the organization wish
to achieve the future.

REFERENCES
Books and Journals
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D’Cruz, J. R., 2018. Strategic Management of Subsidiaries 1. In Managing the multinational
subsidiary (pp. 75-89). Routledge.
David, F. R., David, F. R. and David, M. E., 2017. Strategic management: concepts and cases: A
competitive advantage approach. Pearson.
Drnevich, P. L., Mahoney, J. T. and Schendel, D., 2020. Has strategic management research lost
its way. Strategic Management Review. 1(1). pp.1119-1127.
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Phillips, P. and Moutinho, L., 2018. Contemporary issues in strategic management. Routledge.
Schilling, M. A. and Shankar, R., 2019. Strategic management of technological innovation.
McGraw-Hill Education.
Tonelli, M. and Cristoni, N., 2018. Strategic management and the circular economy. Routledge.
Trigeorgis, L. and Reuer, J. J., 2017. Real options theory in strategic management. Strategic
management journal. 38(1). pp.42-63.
Wang, Z. and et.al., 2021. Strategic management of product recovery and its environmental
impact. International Journal of Production Research. 59(20). pp.6104-6124.
Online
Annual report- Tesco Plc. 2021.[Online]. Available through:
<https://www.tescoplc.com/media/755761/tes006_ar2020_web_updated_200505.pdf>.

External factors. 2021. [Online]. Available through:
<https://www.bbc.co.uk/bitesize/guides/zgfrpbk/revision/1>.