Report on the Business Context of Tesco: Strategies and Practices

This report provides a comprehensive analysis of Tesco, a multinational retail company, examining its business context, history, vision, leadership style, management practices, and strategies. The report delves into Tesco's democratic leadership style, supply chain management, cost leadership strategy, and digital marketing initiatives. It explores how Tesco implements its vision through online services, customer-oriented approaches, and various strategic drivers. Furthermore, the report offers recommendations for improvement, including the potential use of autocratic leadership in specific situations, strategies for product acquisition, and the implementation of price skimming. The analysis highlights Tesco's commitment to customer satisfaction, employee engagement, and strategic adaptation in a competitive market. This report is a valuable resource for understanding Tesco's business operations and strategic decision-making.

Context of Business

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................2
PROJECT 2......................................................................................................................................2
1. History and summary of Tesco................................................................................................2
2. Vision, leadership style, management practice and strategies used by the Tesco...................3
3. How vision, leadership style, strategies and management practices are implemented or
achieved.......................................................................................................................................5
4. Recommendation to Tesco for improvement...........................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
Business context is an understanding the factors that are impacting business which
includes decision making, objective etc (Oldman and Tomkins, 2018). it is used to identify the
factors and formulate various strategies. Present report is based on Tesco company which is a
multinational groceries and merchandise retailer. Report will include the history of Tesco, its
leadership style, management practices and how it is been achieved and implemented by the
company. Lastly report will include various recommendations and improvements for leadership
styles, management practices and strategies which company should use to run its business
smoothly.
PROJECT 2
1. History and summary of Tesco
Tesco was founded by Jack Cohen in 1919, it is a 100 years old company whose
headquarter is in Hackney, London, England. It is a multinational groceries and merchandise
retail company. Company started to sell groceries from stall at well street market. Name of the
company came when Jack brought a tea from Thomas Edward Stockwell. The initials of the
supplier name (TES) and 2 letters of his surname (CO) become TESCO. The third largest retail
company in terms of revenue in the world is Tesco. Jack opened his first Tesco shop at 54
Watling street in 1931 September (Raghunath and Rose, 2017). Company was registered on
London stock exchange in 1947 named Tesco stores Ltd. The first self service shop was opened
in 1956 which was in operation till 2010 and than there was a large premises on the street. The
first supermarket of Tesco was in Maldon.
During 1950's Tesco began to grow through acquisitions until company has owned 800
shops. Company has purchase 70 Williamson's shops, 200 Harrow outlets and 201 Irwins shops.
The objective of the company was to reach the top of the world by offering products at low price.
Firm also motivates its sales force in order to increase sale and profitability of the business.
Tesco completed its hostile takeover of 40 supermarkets in May 1987. Tesco has expanded and
take over many supermarkets after fighting with Sainsbury (Fowler, Gajewska-De Mattos and
Chapman, 2018).
In 1995 company introduces a loyalty card called “clubcard” and also started internet
shopping service. Company has also diversified its business and products range including
household goods and clothing. In 2001, company has started its online grocery retail business in
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US. Firm was growing rapidly by acquiring many companies and increasing number of shops.
Further company announced the plan to enter in US with a chain of small groceries. In 2013,
company announced that it is selling its business to Ronald Burkle's as company was going in
loss. Company is further taking cost cutting initiative and will close 90 stores of food counters
which will affect 9000 workers.
The rationale or reason behind choosing Tesco is that it is third largest retail company in
terms of revenue in the world. It is easy to get information about the company which is beneficial
for completing the project. Their leadership styles and management practices will help other
companies in using those practices (Nylén and Holmström, 2015).
2. Vision, leadership style, management practice and strategies used by the Tesco
Vision
To be the highly valued company in term of customers they serve, communities in which
they operate business, loyal employees and shareholders.
There are 5 elements in their vision such as fulfil the needs of customers around the
world, grow its business with more and more opportunities, innovative, modern and creative
ideas, inspiring and earning trust from customers, staff so that they retain for longer period. Their
vision statement will help company in achieving their objectives by formulating strategies and
tactics.
Leadership style
Management of Tesco company uses democratic leadership styles which is also known as
participative style. In this leadership styles a group of people participate in decision making
process (Dobni and Sand, 2018). Manager of Tesco give equal opportunity to everyone to
participate, discuss, exchange their ideas in order to take strategic decisions. It mainly focus on
flow of ideas, group equality but there is a control and guidance of leader. Effective management
and good leadership makes company run smoothly. Board of directors are leaders of the
company as they formulate vision and mission to be achieved. They guide all the departments
and provide relevant information. They make sure that leadership and decision making is
balanced. All the decisions whether it is challenging or easy, stakeholders are considered while
making decisions. BOD allocates responsibilities to various departments and lead them to
achieve organisation goals. They take risk and motivate employees to innovate and use new
technologies to meet the goals by providing training to employees.
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Management practices
Tesco uses various management practices such as supply chain management. It is one of
the most important practice which has made Tesco market leader in retail industry. Company
introduces lean management in supply chain (Amran and et.al., 2016). Firm has adopted
different techniques and systems in order to track supply chain effectively and efficiently.
Another management practice followed by Tesco is giving employees promotion based on their
performance. Company perform reward management as a practice in order to motivate
employees so that they perform better. Reward management will increase profitability of
business and employee engagement. Training and development sessions are also provided by the
management of the company so that employees learn new skills, knowledge and are updated
with the changes in the external environment. By following these management practices
company will motivate employees, engage them and make them committed towards their work
in order to achieve organisational goals.
Strategies
As Tesco is a customer oriented company which means company want to fulfil the needs
of customers and make them loyal towards its brands. Tesco business strategy is cost leadership
which aims at producing products and services at lower cost so that it is affordable to customers
and at good quality than its competitors (Ghezzi, Cortimiglia and Frank, 2015). This benefit
company in retaining loyal customers.
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llustration 1: Porter's generic strategies
(source: Porter's generic strategies, 2019)
Cost leadership strategy is a part of porter's generic strategy which focus on maintaining
competitive advantage over its competitors by offering products at low price in good quality. As
Tesco has vast business operations, company has experimented various other strategies in retail
industry but among all the strategies cost leadership is the most suitable.
Company has also shifted to digital marketing in order to attract large customer base
through various social media platforms. It has reduced the cost of marketing. Through social
media marketing company identify the pros and cons of its competitors as well as itself and
improve its products and business strategy (Oldman and Tomkins, 2018). They also focus on
specific shoppers and provide them with customization services as a marketing approach. This
power marketing strategy has increased the profits and sales of the company. Creating its new
product line is also one of its business strategy, firm introduces farm-style products which were
more expensive, company identifies the problem and offered those products are reduced price.
This strategy has increased the sales of farm products.
3. How vision, leadership style, strategies and management practices are implemented or
achieved
Vision
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Tesco has achieved its vision by providing electronics, groceries, clothing and other
services online (Raghunath and Rose, 2017). The main aim of company is to develop online
shopping experience, and if firm is successful in online business than it will attract large base of
customers. For example, Tesco business model is customer oriented and to achieve the vision
company has open online food shopping and delivery, online groceries, clubcards and recipes to
attract customers. Organisation is passionate in serving customers better and innovative things
through store and online.
Leadership styles
As Tesco uses democratic style to operate business, it is beneficial for company in
decision making. Management of he company hear the voice of employees during the process of
decision making. Employees feel valued, motivated and they are interested in the organisation.
For example, Tesco implements democratic leadership style by effective management. BOD
clearly divides responsibility between various departments. The role of director is to ensure that
there is no restriction of power and decision making. Chairman of the company is responsible for
promoting openness in the culture, effective and open communication between non-executive
and executive directors. Chairman of company creates healthy environment where all the
directors and comfortable and involve in discussions and debate. Company secretary ensures that
BOD has all the necessary information , resources to make effective decisions. This type of
leadership reduces communication gap (Fowler, Gajewska-De Mattos and Chapman, 2018).
Management practices
Company perform various management practices such as reward management, training
development sessions and supply chain management practice. These practices has helped
company in increasing employee morale, enhance their skills and knowledge. For example,
Tesco has implemented supply chain management techniques and system in order to track the
activity of supplier. Company has adopted path-breaking techniques such as point of sale,
distribution, radio frequency identification has make its supply chain efficient. These system has
helped company in maintaining relations with the suppliers (Nylén and Holmström, 2015). There
are some rewards and benefits given to employees by the company in terms of flexible work
hours, competitive salary, life insurance, holidays, long service awards, discounts, clubcards,
promotions and appreciations. Company has implemented reward schemes i.e. maternity
package, increase in per hour wage rate etc. Tesco also offers employee on-the-job and off-the-
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job training. Company provides training related to customer service, team leading, business
administration, information technology, learning and development. Implementing these
management practices has benefited company in its expansion and growth.
Strategies
As Tesco is using cost leadership strategy and digital marketing strategies to
communicate its products and attract customers. These strategies has assist company in
increasing the sales of the products, profitability and productivity (Tesco annual report, 2019).
For example, Tesco has implemented cost leadership strategy by focusing on its 6 strategic
drivers they are becoming a differentiated brand, reduce operating cost, generate 9 billion cash,
maximise mix to achieve 3.5%- 4.0% profit margin, maximise property value and innovate
products and services. Tesco has also changed its market strategy and introduced every little help
campaign.
Illustration 2: Marketing strategy of Tesco
(Source: Marketing strategy of Tesco, 2017 )
This campaign was launched 2 years ago and main aim was focus on activities and
environmental challenges that affect customers, employees and stakeholders (Amran and et.al.,
2016). Under this campaign company provides affordable and sustainable products to customers,
help staff to succeed by providing flexibility, skills and rewards and assist communities by
contributing in CSR activities (Ghezzi, Cortimiglia and Frank, 2015).
4. Recommendation to Tesco for improvement
From the above research following are various recommendations given to Tesco:
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 Tesco should use autocratic leadership style in some situation where there is less time,
company also need to follow democratic leadership style when there is time foe decision
making. In some situations Tesco top management need to take decision in short period
thus in this case company need to follow autocratic style.
 Company should purchase raw materials from suppliers whose products are not popular
or preferred by customers, company need to acquire those products and sell them under
its brand this will help company in increasing its profit margin and sales of the product.
 Tesco should also implement price skimming strategy in order to attract high class
customers so that company can sell products to their target segment and increase the
profitability of firm.
CONCLUSION
From the above report it can be concluded that business strategies, leadership styles and
management practices plays an important role in running business effectively and efficiently. In
the report it s find that Tesco company uses democratic leadership style which has helped
company in building team and motivate employees in decision making process. Company uses
reward management, supply chain management and training and development practices to
motivate employee, enhance their skills, knowledge and build relation with suppliers. It also
concludes that company has implemented these styles and practices in the company by
implementing campaigns and reducing operating cost. Lastly there are various recommendations
given to the company for improvements such as using autocratic leadership style, acquiring
suppliers and implement skimming pricing strategy to attract customers. This will benefit
company in increasing its market share, productivity and profitability.
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REFERENCES
Books and journals
Amran, A. and et.al., 2016. Business strategy for climate change: An ASEAN perspective.
Corporate Social Responsibility and Environmental Management. 23(4). pp.213-227.
Dobni, C. B. and Sand, C., 2018. Strategy shift: Integrating strategy and the firm’s capability to
innovate. Business Horizons. 61(5). pp.797-808.
Fowler, R., Gajewska-De Mattos, H. and Chapman, M., 2018. Adapting adaptation: Expanding
adaptive strategy theory to account for the East Asian business context. Journal of World
Business. 53(3). pp.323-336.
Ghezzi, A., Cortimiglia, M. N. and Frank, A. G., 2015. Strategy and business model design in
dynamic telecommunications industries: A study on Italian mobile network
operators.Technological Forecasting and Social Change. 90. pp.346-354.
Nylén, D. and Holmström, J., 2015. Digital innovation strategy: A framework for diagnosing and
improving digital product and service innovation. Business Horizons. 58(1). pp.57-67.
Oldman, A. and Tomkins, C., 2018. Cost management and its interplay with business strategy
and context. Routledge.
Raghunath, S. and Rose, E. L., 2017. International business in the context of emerging markets.
In International Business Strategy. (pp. 1-14). Palgrave Macmillan, London.
Online
Marketing strategy of Tesco, 2017. [online]. Available through
<https://www.smartinsights.com/online-pr/reputation-management-online-pr/tesco-turned-
marketing-strategy-around/ >
Porter's generic strategy. 2019. [online]. Available through
<https://www.tutor2u.net/business/reference/porters-generic-strategies-for-competitive-
advantage >
Tesco annual report. 2019. [online]. Available through
<https://www.tescoplc.com/media/754477/tesco_ar_2019.pdf >
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