Developing a Competitive Strategy for Tesco Plc: Key Challenges

This report provides a comprehensive analysis of competitive strategies for Tesco Plc, an international supermarket chain aiming to enhance its market position. It examines key challenges such as market competition, changing customer needs, globalization, and evolving legal policies, and contextualizes major strategic approaches like market penetration, product development, differentiation, and market development. The report utilizes Ansoff's growth matrix to explore strategic alternatives, emphasizing the importance of internal collaboration and confidence-building for effective strategy implementation. It also critically analyzes the relationship between organizational structure and strategy, highlighting the need for a flexible structure to adapt to changing business environments. Furthermore, the report synthesizes theoretical and practical knowledge to diagnose strategic issues and formulate effective strategies, addressing concerns like resource limitations and the need for strategic alliances. The ultimate goal is to equip Tesco with the insights needed to overcome strategic challenges and achieve sustainable growth and competitiveness.

Competitive Strategy
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Table of Contents
Introduction................................................................................................................................3
Examine the key challenges faced by companies and contextualize the major approaches
companies apply as they formulate a strategy........................................................................4
Analyse complex strategy environments and develop confidence in working with others to
develop and apply strategic alternatives................................................................................6
Critically analyze the relationship between an organization's strategy and its structure.......8
Synthesise theoretical and practical knowledge of strategy in the diagnosis of strategic
issues and the formulation of strategies.................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11
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Introduction
The business strategy helps organization in accomplishing its desired goals and objectives in
an appropriate manner. There are various growth strategies through competitive advantage
can be achieved but Ansoff's growth matrix is a most effective model which would be
discussed in this business report. This report would be focused on the Tesco Plc. which is
international supermarket chain and currently wants to develop a competitive strategy. The
current report will include the challenges which are faced by the organization while
formulating a competitive strategy. Also, it will discuss the relationship between business
strategy and structure. At last, theoretical and practical knowledge of competitive strategy
will be given to the organization can overcome its strategy issues and formulate competitive
strategies in most effective manner.
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1. Examine the key challenges faced by companies and contextualize the major
approaches companies apply as they formulate a strategy.
The strategy is that business concept which is used to accomplish organizational goals in an
effective manner. In a business enterprise, competitive strategy plays a most significant role
as it helps the organization in accomplishing competitiveness over competitors (Armstrong,
2013). There are various challenges which are facing Tesco which are followed as under:
Market competition: In the present time, there are many companies which are entering into
retailer industry; this is creating huge competition in the market. For competing with the
market, competitor, Tesco needs to develop a competitive strategy so that it can compete with
its market competitors (Bentley, et. al., 2013). ALDI, LIDL, Coles are some major players in
the retail industry which creates a huge problem for Tesco and its future growth. There are
various negative consequences of market competition on Tesco such as low market price,
decreased customer base and poor business performance. With the help of competitive
strategies, a business enterprise can easily beat its competitors and also can grow their
business in most effective as well as in a systematic manner. Differentiation is a major
competitive strategy which can be used in this situation. By making business products
different from a competitor, Tesco can easily achieve a competitive advantage in the
marketplace.
Changing customer needs: The changing business environment also influences the needs
and wants of customers. All the successful companies have determined that customer is key
people on which their success depends. So, it is highly essential for Tesco to produce its
products as well as services as per customer needs (Bereznoi, 2015). For becoming customer
oriented, the business enterprise has to develop effective strategies so that they can satisfy
customer needs and demands in most effective as well as in a systematic manner. Also, to
cooperate with customer needs, the organization has to make customer-oriented products
which can attract a huge number of people and add extra value to a business image. For
cooperating with this challenge business enterprise can take help of product development
strategy which allows the business enterprise to attract a huge number of customers.
Globalisation: This international trend is providing huge advantages as well as
disadvantages of retail companies like Tesco, Aldi and many more (Bharadwaj, et. al., 2013).
The positive impact of globalization is that it provides an opportunity to an organization to
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operate its business activities across the world. The negative impact of this international trend
is that it increases the level of competition in the same marketplace. Apart from this, it creates
conflict among same market players. To deal with this challenge, Tesco can take help of
market development strategy which is basically a
Changing legal policies: There are various rules and regulation which are made by legal
authorities to control the profit of large business enterprise like Tesco. For dealing with legal
frameworks it is very much important for the business enterprise to follow market penetration
strategy which allows the organization to generate profit through its existing products and in
exiting marketplace (Blackburn, et. al., 2013). The biggest advantage of following this
strategy is that it helps the organization in understanding the exact needs of its potential
customer. Also, it does not require huge investment for product development. Apart from
this, market penetration allows the organization to serve the same market which is servicing
from last few years.
Hence, these are some major business challenges which are facing Tesco Company, but with
the help of above-mentioned strategies, these business challenges can be easily removed.
Market penetration, product development, differentiation and market development are major
approaches which can be followed by the business enterprise for dealing with particular
market challenges.
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2. Analyse complex strategy environments and develop confidence in working with
others to develop and apply strategic alternatives.
While developing new business strategies organization have to deal with different problems
as well as complex environments (Brewster, 2017). There are various factors which create a
problem in strategy making such as political, economic, social, legal, environmental and
technological. There are various organizations like Tesco and other retailer companies which
get fails in developing successful business strategies only because of complex environments.
By cooperating with different macro-environmental factors, an organization can develop
successful business strategy and also can achieve competitiveness over market competitors
like ALDI, Coles and so on (Chiteli, 2013). With the help of Ansoff's growth matrix, Tesco
can easily develop the most successful growth strategy and also can cooperate with complex
strategy environments.
Moreover, there are four strategic alternatives which can be adopted by Tesco, these are
followed as under:
Market penetration: It is one of the most significant growth strategies of Ansoff’s growth
matrix which helps the business enterprise in growing its business through delivering existing
goods into existing marketplaces (Dhliwayo, 2014). By distributing products and services in
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Ansoff's
growth
matrix
Differenciation
Market
penetration
Market
development
Product
development

the same market, a business enterprise can easily understand its business environment which
will assist it in satisfying customer needs as well as demands in most effective as well as in a
systematic manner.
Market development: In this strategy alternative, business enterprise expands its business
activities into new markets so that it can cover large market share. While using this growth
strategy, Tesco can utilize technological factors in such manner which will provide it huge
profit and future growth. For entering into new markets, Tesco needs to consider the political,
legal, economic and socio-cultural factors of that market so that it can deal with complex
strategy environments (Grant, 2016). If the organization will not consider the political, legal
and economic influences of the new market than it cannot survive in that market or long time
period.
Product development: This growth strategy, encourage the organization to make
development and innovation in its current production process. By making changes in current
products, Tesco can easily increase its customer base. While producing new products, Tesco
needs to consider the taxation rate and other legal rules which can affect its competitive
strategy.
Differentiation: This growth strategy is used by those companies which want to differentiate
their products from market competitors. While making the product different from the market
competitor, a business enterprise should consider the socio-cultural factors so that it can
produce exact produce as per customer preferences.
For applying and developing these strategy alternatives, the business enterprise should firstly
develop confidence in working with others. If business enterprise and it is all employees will
work together than they can develop a new strategy in most effective and appropriate manner.
For working effectively with each other they should share information with each other and
also should disclose the data regarding funds (Hussain, et. al., 2013). If a business manager
does not disclose the data to its people then he can never apply as well as develop above
mentioned strategy alternatives. Apart from this, by increasing level of communication as
well as cooperation within a workplace, an organization can improve working conditions and
also it will result in positive employee relations. Hence, it can be said that by developing
confidence in working with each other, Tesco can develop effective strategy alternative and
also can lead to high level of success as well as growth.
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3. Critically analyse the relationship between an organization's strategy and its
structure.
There is a very close relationship among business structure and strategy. For implementing a
new business strategy, it is very much important for Tesco to create a relationship between its
strategy and structure. If the organization has a flexible structure then it can deal with any
business challenges and also can adopt new business strategies very fast. If there will be no
relationship between strategy and structure then it can create confusion for employees as well
as business managers (Lee, et. al., 2016). The structure of business enterprise helps it in
adopting new growth and competitive strategy so that it can sustain its business for a long
time period and also can survive in the competitive marketplace.
For having better growth and development, it is very much important for Tesco to create the
flexible organizational culture so that it can help the organization in adopting new
competitive strategies. If the organization does not develop flexible business structure then it
may not follow new business strategies and organization will have to choose business
strategy as per the requirements of its organizational structure (Rashidirad, et. al., 2013).
Hence, it is highly essential for top management of Tesco to design its structure to consider
flexibility. The negative consequences of a relationship among structure and strategy are that
it does not all business enterprise to adopt new strategies as per the needs of the business
environment. The normal structure of business enterprise does not allow it to cooperate with
changing business environments. The relationship between business strategy and structure
sometimes influence the profit margins and sales review of business enterprise. Hence, it can
be said that relationship between organizational strategy and structure influence both positive
as well as negative impact on business growth and competitiveness. By developing flexible
business structure Tesco can cooperate with all business needs and also can develop new and
effective organizational strategies.
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4. Synthesise theoretical and practical knowledge of strategy in the diagnosis of strategic
issues and the formulation of strategies
There are various strategy issues like strategic competencies, focus, resource limitations and
strategic alliance which does not allow a business enterprise to produce any new strategy
(Sharifi, et. al., 2013). Apart from this, business enterprise deals with different problems
while formulating new business strategies like resistance from employees, lack of resources
and cooperation among business employees. While implementing Ansoff’s growth strategies
business enterprise does not face any kind of above-mentioned strategy issues or problem.
There are different types of growth strategies like market penetration market development,
differentiation, and product development. All these growths strategies help Tesco in dealing
with business challenges like market competition, changing customer needs, political
instability, and globalization.
With the help of market development strategy, Tesco can easily make strong strategic
alliance by expanding business in new countries or markets. By taking help of market
penetration, Tesco can easily improve its profit margins and business performance (Zingg, et.
al., 2015). Also, this strategy does not require the huge level of business resources which is a
major strategic issue. The product development is that competitive strategy which allows
Tesco to attract a large number of customers which mainly influence positive impact on the
future growth of the business enterprise. Hence, it can be said that practical and theoretical
knowledge of Ansoff’s growth strategy helps Tesco in dealing with strategy issues as well as
helps in formulating most successful business strategies which lead the organization to next
level of growth and development.
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Conclusion
By summering above mentioned discussion, it has been concluded that competitive strategy
helps the business enterprise in improving its efficiency as well as effectiveness. In the
present time, retailer industry has become very much competitive so, it is essential for Tesco
to formulate competitive growth strategies by getting influence from Ansoff’s growth matrix.
There are various challenges which are faced by business enterprise while building and
implementing the new strategy, but with the complete knowledge of strategy, framework
organization can resolve them. Moreover, for having huge competitiveness over competitors
organization should make a relationship between its structure and strategy. If a business
enterprise has flexible structure only then it can formulate and implement successful business
strategies. There are various alternative strategies of Ansoff’s growth matrix but market
development is best for them it helps the organization in competing with market competitors
and increasing market share of business strategy.
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