Consultancy Report: Tesco's Organisational Strategy Framework Analysis

This report provides a comprehensive analysis of Tesco's organisational strategy. It begins with an introduction to global competition and the challenges faced by companies. The main body delves into the analysis of strategic frameworks, specifically applying SWOT and VRIO models to assess Tesco's internal and external environment, identifying strengths, weaknesses, opportunities, and threats. The report then explores different business strategies using the Ansoff Matrix, focusing on market penetration, market development, product development, and diversification. It examines marketing options and concludes with strategic recommendations for Tesco's future direction. The report highlights Tesco's competitive advantages, challenges, and potential growth strategies, providing a detailed assessment of its resources, capabilities, and market position.

Consultancy Report
On Organisational
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Analysis the strategic frameworks for both organization...........................................................1
Different types of business strategies..........................................................................................4
Marketing Options......................................................................................................................6
Recommendations.......................................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Global competition is the services or products provided by the competitive companies in
order to provide services to international customers. During to provide services companies face
several challenges in competing globally, become successful, companies have to pay attention to
cultural differences (Algesheimer Dholakia and Gurău, 2011). In present time competition
increase days by days that impact on the performance of the organisation. For this required to
develop effective strategy after analysis the internal and external factors of the company. These
factors impact on the efficiency in direct manner. To face problems required to prepare effective
strategy and analysis the external activities where consist of economical, political, social,
technological factors. For further assessment selected two organisation, Tesco which is UK
based organisation. It is mainly dealing into groceries and merchandise. The company founded in
1919 by Jack Cohen. Along with apply the implication of external analysis. Provide report to
board of directors regarding to strategic framework to analysis the resources and capabilities of
the company. Additionally, evaluate the strategy, marketing option then make recommendations
in terms of strategic direction.
MAIN BODY
Analysis the strategic frameworks for both organization
After analysing the external environment of both organisation after that set strategic
framework to analysis the resource and capabilities of the both organisation. For this apply the
strategy that help to understand the internal activities and identify resources. There are applying
SWOT analysis that helps to know strength, weakness, opportunity and threat.
SWOT analysis of TESCO
Strengths
 Tesco is leading organisation in retail sector and get third position for retail excellence,
customer service and overall shopping experience.
 It provides various options to product selections to customers and different variety (Batra,
Singh and Sharma, 2017).
 The company has good cash flow that supports to invest in further activities in its
portfolio. So it provides strong financial position to all kind of economic cycles.
1

 Tesco use advanced technology for its operations, functional activities, developing
greater cost efficiencies and spread out service experience.
Weakness
 The main weakness of company that face competitive pressure have led to price that have
eroded some of the retailer's profit. It occur when company find out another way to
achieve the competitive advantage (Shulman, Coughlan and Savaskan, 2011)
 Due to changing consumer behaviour people does not arrive to store that shows negative
impact.
 Tesco face infringement controversies with different companies such as Varco and
weatherford for violating some of their patents. Tesco subsidiaries are not performing well, advising that TESCO might not have done
much market.
Opportunities
 The company have opportunity to expand their business activities into other countries and
attach with local company through joint venture (Berthon and et. Al, 2012) .
 Tesco has declared the introduction of Jacks a low cost rival to Aldi & Lidl. So company
have opportunity to grow this business and get position it as a low cost rival.
 The company have opportunity to go online and attract to customer to buy products
online with discounts and offers. Rising market provide different opportunities to new entrance market that adopt by the
Tesco after enter into the market.
Threat
 Due to increase price of products that impact on the consumer behaviour due to low
income of people.
 Economic recession and credit crunches influence to market share as well as profitability
around the world that deduct the consumers.
 Labour turnover increase the cost of an organisation, to retain long time with labour
require to increase wages and benefits around the world.
 Government rules & regulations impact on the social responsibility and cultural activities
of an organisation.
2

VRIO Model of Tesco: It is a strategic analysis tool that apply by the company to
discover and secure the resources and capabilities that provide long term competitive advantage
(Bharadwaj and et. al., 2013). It is perfect for the evaluation of resources and better to understand
weakness and competitive advantages. There are consisting of four aspects such as valuable,
rare, inimitable and organised. For Tesco analysis of all four elements are as follows:
Capabilities Valuable Rare Inimitable Organised
Good customer
services
✔ ✗ ✗ ✗
Various product
options
✔ ✔ ✗ ✗
Proper cash flow ✔ ✔ ✔ ✗
Utilisation of
advanced
technology
✔ ✔ ✔ ✔
Valuable: There are consisting those resources which must be valuable for the
organisation and without them company does not apply strategy properly. These aspects of Tesco
such as good customer services, various product options, utilisation of advanced technology &
proper cash flow (Sierzchula, and et. al., 2012) . All of them defined as valuable aspects that
utilise by the companies to conduct different operations of the business. For all the companies
these are important aspects that help to get success and growth for period of time and performed
effectively.
Rare: Good consumer service are not rare for Tesco due to other companies also provide
good customer services to satisfy them and increase their sales. Various product options is rare
because every business does not provide different options to company under a roof. Market share
of Tesco is rare due to cover large market and attract people to visit their stores for product
purchase. It will help to engage with customer for longer period of time and develop good brand
image that has been established after providing good quality of items to the consumers (David,
2011).
3

Inimitable: Various options of products is not inimitable due to different supermarket and
retail store provide these types of facility to customers. Utilisation of advanced technology and
proper cash flow are inimitable use to help to connect with customer and provide several facility
such as payment options, discount facility, offers information etc. The cash flow of the company
helps to maintain liquid position effectively and Tesco easily invest into further activities.
Organised: Proper cash flow is not organised due to many organisation maintain their
accounting books properly and focus on the cash activities for further investment. Use of
advanced technology of the company is organised because every organisation does not afford to
establish all types of digital technology. It shows positive impact on the business performance
and help to get growth & success effectively (Huang, 2011).
Different types of business strategies
On the basis of these resources and capabilities of the Tesco there is applying the
appropriate strategy. It will help to get growth and success for longer period of time in the
company
Ansoff Matrix: The particular strategy has been introduced by the Igor Ansoff in the
year 1957 in an article “Strategies for Diversification”. It is a core business strategy tool that
apply by the organisation according to business activities. This matrix supports to business to
analysis the products and marketing growth strategies. In this matrix consist of several strategies
such as Product development, Market penetration, market development and diversification. It
can help to recognise to best possible strategy that help to get success through different resources
and capabilities basis that already have the organisation (Slack, 2015). Along with company find
out another resources that helps to get growth that may help to accomplish business goals. All
four the aspects of this matrix have been determined for Tesco. There are discussing these
strategies in detailed manner such as:
Market Penetration: It is a growth strategy where business focus on the selling those
products that already have the company into existing markets. For market penetration required to
follow four objectives such as:
 Secure ascendency of growth market.
 To increase the market share regarding to existing product and it can be achieve by a
aggregation of competitive pricing strategies, sales promotion, marketing and may be
more resources related to personal selling (Huo, Zhao and Zhou, 2014).
4

 To sell out existing product in the existing market require to increase usage by existing
customer. Such as by introducing loyalty schemes.
 Maintain of mature market through driving the competitors such as promotional
campaign, design effective marketing strategy to make the products attractive for the
customers.
Tesco apply the particular strategy in order to cover large market share and gain
competitive advantages through decrease price of the products, invest money in the advertising
for the existing products. The particular strategy is focused on the markets and products and
provide all sufficient information regarding to competitors and customer needs. For this strategy
require to much investment in new market research.
Market development: It is a growth strategy where business sell out the existing
products into new market (Killing, 2012). There are defined all the possible ways of approaching
this strategy such as:
 Identify new development countries where economic condition stable
 New product magnitude or packaging of the product to attract customer at new market
place.
 Use different types of distribution channels such as direct marketing, personal selling etc.
 Set different pricing policies to attract customer or develop new market segments.
In this strategy identify several risk after the implementation. Tesco apply the particular
strategy in order to open new store those market where is products are not sold. It will supports
to business to spread out the functional activities at the geographic location because of targeting
of new markets (Wheelen and Hunger, 2011).
Product development: This strategy applied by the mostly organisation to introduce new
product into existing market. For this strategy require to develop of new ability and requires to
develop modified products that can request to existing markets. The product development
strategy is perfect for those business where required to products discrimination to face of
competitive environment. A successful product development strategy consist of several activities
such as:
 Being innovative and first in the market.
 Conduct research about the market trends and customer needs (Morgan, Katsikeas and
Vorhies, 2012).
5

 Research & development and innovation
To apply particular market strategy required to leverage its strength and focus on the
target customer in case of new market development. Tesco apply the particular strategy to gain
advantage of competition and easily sell out new products in the existing market. Top attract of
the customer to require provide good quality, acquiring and merging resources as compare the
rivals and apply modification in technology to provide creative and unique products to the
existing market customers.
Diversification: It is defined as most risky growth strategy where consist of both product
development and market development strategy. It may be outside the core ability of the firm. In
this strategy market organisation introduce new product at the new market. In this strategy
business face more risk due to moving into markets in which it has little or no experience (Park
and Searcy, 2012). To select particular strategy require to business had conduct analysis the
market activities of the new country and set clear vision about the product. It expects to achieve
through the strategy and conduct a loyal assessment of the risks. Therefore, for the right balance
in between risk and reward prepare a marketing strategy of diversification that can be highly
rewarding. Tesco can apply the particular strategy in order to enter into new market with the help
of new product. It helps to attract customer and cover larger market area for innovative products
as per the market demands to maintain its profitability.
Tesco can focus on the product development strategy to cover large market and launch
new product in the existing market. It helps to stay in the competitive environment for longer
period of time. It is advantageous for the for the business due to retain current market for longer
period of time and attract those customer who does not arrive in the store.
Justification: Product development strategy applied by the Tesco due to promote their
products and become leading organisation in the retail sector. For this required to conduct market
research after that company set good brand image and loyal customers so it is less risky because
company have knowledge about the customer. So it is easy to handle customer activities and
influence them to purchase products (Pretorius, 2016).
Marketing Options
Tesco has been selected different marketing option to promote their products effectively
these are:
6

 Internet marketing: The particular option select by the most of the companies in order to
increase awareness regarding to their product and about the product specification and its
feature. For this company use social media because in present time mostly people connect
with different types of application and that supports to engage with customers. When
people see ad on the application so they visit on the site. As a result they know the about
different products and purchase goods to Word of mouth: There are sales agents goes to door to door of customers and through
word to mouth define that speciality of the product that influence to organisation to
purchase products. In this provide free sample by the Tesco to the customers to get
success and growth. It helps to get advantages regarding performance of the organisation
(Saunders, 2011).
 Relationship marketing: In this option company contact to customer through mails and
messages and calls. Define about the product speciality and features that attract them and
influence to purchase particular product effectively. Once they use the product so again
use that product happily. As a result increase sales and performance of the organisation
effectively.
These are the different options that select by the organisation to increase sales and
develop good performance of the company in front of customers.
Recommendations
Strategies are an effective marketing plan of action that define the organisation to acquire
to its short term and long term goals in suitable period of time. In the global competitive
environment is that place where different organisations are conducting several business activities
to achieve success and influence to people to purchase product of their company. After all the
discussion, it is recommended that every organisation wants to achieve success and growth in the
competitive environment for this required to apply effective strategies that helps to gain
competitive advantages. Tesco apply different marketing strategies that helps to get growth and
higher success at the market place. To analysis the situation of organisation to idetfy the
resources and capabilities of the company conduct SWOT analysis that helps top identify all the
internal activities and know that which type of elements impact on the performance of the
organisation. To support resources and abilities apply the VRIO model where identify those
factors that helps to get growth such as valuable, rare, inimitable, organise. The resources are
7

categorised into different category according to that take initiative regarding to products.
According to that Tesco apply the appropriate strategy effectively and make effective decision.
For this company apply the Ansoff matrix, which is growth strategy and categorised into four
aspects such as market penetration, market development, product development and
diversification. In product development launch new product in the existing market to engage
with customer and conduct business activities for the longer period of time. In the diversification
of products and places is also done by the organisation to increase range of products and market
so that they easily invite more and more customers in respect to fulfil the expectations in
efficient way.
It is suggested that Ansoff matrix is growth strategy that helps to get growth in future
through the product development strategy. With the help of merger and acquisition, Tesco easily
enter into new market where does not open store yet and also spread out the functional activities
at global level to offer quality products. The company have large range of the products in the
market so simply invite more and more customer to purchase products. All these strategy helps
to cover large market and attract to customers to contribute for the entire success of the
organisation at the market place. One of the best advantages to apply these strategies to conduct
activities in the competitive environment and does not require to face problems. In which they
easily compete with the competitors due to selling their quality products at affordable price.
While Tesco use the different marketing options such as in which they contribute in the society
to increase social welfare. Through the different marketing option company select best option
that helps to get growth in the existing market and easily promote their new products to attract
customers for the selling products and increase sales. Internet marketing and word to mouth use
to provide detailed information about the products to the customers. To manage all the aspects
regarding to business strategies to improve economic condition and suitable way. Corporate
social responsibilities and governance is essential to coordinate with different types of strategies
to improve living standard of people by offering good quality items. In this Tesco use effective
marketing strategy to achieve set goals and objectives with the help of different segmentation to
deliver their services to customer and fulfil the expectations to satisfy them. Setting better
segmentation is essential for the organisation to make effective process of selling products with
good services in front of large number of audience.
8

It is recommended that company apply the Bowman theory that apply by the company
when they are facing different types of situation. It is categorised into different aspects such as
low price and low added value, low price, hybrid, differentiation, focused differentiation, risky
high margins , monopoly pricing and loss of market share. These are different situations the face
by the company due to conduct business activities. This are defined in the detailed manner:
 Low price and low added value: In this position defined that competitive position of the
business. It is different from the value, low price and other things. It is mainly based on
the bargaining of the products.
 Low Price: The particular strategy apply by the organisation to become successful that
connected with economies of scale. Due to profit margin of every product are low so at
the high productivity require to generate high profit.
 Hybrid: In this position consist of some factors such as low price, product differentiation.
The objective of this strategy to to make different products to added value with the help
of combination of a reasonable price and acceptable product differentiation at good
price.
 Differentiation: In this strategy provide offer to clients to achieve highest level of added
value. This time branding play significant role due to provide good quality of the
products.
 Focused differentiation: The main aim of this strategy to set position of the product
where set highest level of price and customer buy the products due to attain high values.
It is applied the Tesco when they have luxury brands and aim to attain premium prices
through targeted segmentation.
 Risky high margins: It is high risk position strategy where Tesco provide the high prices
of particular product in terms of perceive values. When customer purchase these
products so company gain high profits.
 Monopoly pricing: In this position only one business provide the product. When Tesco
launch new the product in the existing market so on e business who provide particular
product. This time customer have not choices so purchase to product give set price.
 Loss of market share: In this position set standard price of the product that helps to attain
value to attract customers who will have different alternatives.
9

These strategy must apply by the Tesco in order to face different changes in the market
place because it impact on the performance on the organisation. These position helps how to
connect customer for long time and apply different types of prices in the changing situation.
CONCLUSION
As per the above report it has been concluded that consultancy report provided to
organisation after analysis all internal and external factors of the organisation. These factors
impact on the performance of the organisation and present which type of effect face by the
organisations. To conduct business activities require to apply effective strategies that helps to
improve business performance and analysis that in different situation how to company react. To
analysis the resources and capabilities apply the SWOT analysis and VRIO model that helps to
identify the strength, weakness, opportunity and threat of the organisation. There is company
applying Ansoff matrix to increase customer and beat competition. From different strategy select
Product development strategy. The company selecting different options for marketing their
products effectively.
10