Strategic Management Report: Tesco's Strategies and Market Dynamics

This report offers a comprehensive analysis of Tesco's strategic management, encompassing its historical strategic directions, competitive advantages, and market dynamics. It begins with an introduction to strategic management principles and then delves into Tesco's strategic choices over the past five years, examining its international expansion, product diversification, and service enhancements. The report utilizes frameworks such as SWOT and PESTLE analysis to evaluate Tesco's internal and external environments, assessing its competitive advantages and industry scenarios. It further scrutinizes the alignment of Tesco's mission and vision statements with market demands and identifies the company's strategic capabilities. Finally, the report explores potential strategies for defending Tesco's core business and evaluates the resource implications of these recommendations, culminating in a conclusion that summarizes the key findings and implications for Tesco's future strategic direction. The report is a valuable resource for understanding the complexities of strategic management in the retail sector and provides insights into Tesco's approach to maintaining its competitive edge.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Strategic direction that the company has followed in the past and ways in which strategic
thinking has developed within past 5 years.................................................................................1
TASK 2............................................................................................................................................2
Choice and use of framework for strategic analysis...................................................................2
Discussion of the company’s competitive advantage among its direct competitors...................3
Industry scenario facing the company within its existing market domains ...............................3
TASK 3...........................................................................................................................................4
Analyse if the mission and vision statement are aligned to the demands of the marketplace....4
Strategic capabilities of business................................................................................................5
TASK 4............................................................................................................................................5
Discuss possible strategies that the company could follow to defend its core business.............5
TASK 5............................................................................................................................................7
Analyse and evaluate the resource implications of recommendations that the company has to
address.........................................................................................................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
The concept of strategic management is concerned with series of strategies and policies
which needs to undertake for the purpose of reaching towards the goals of organization (Hitt,
Ireland and Hoskisson, 2012). It also consists of the analysis, decisions and actions an
organization undertakes for the purpose of creating and sustaining in competitive advantages.
With the help of effective strategic management, organization can take corrective decisions for
managing business operations and at the same time, it also assists in changing the scope of
success and profitability. The present research study has been focusing on Tesco which is a large
retail business organization in UK.
The business entity serves all sort of services to the customers and to acquire customer
satisfaction, organization focuses more on strategic and corporate management. Further, in the
study, discussion has been made on framework that is adopted by Tesco for the purpose of
strategic analysis. Similarly, in the research work, information has been included about
company’s strategic capabilities and along with that, researcher has also covered a few possible
strategies through which Tesco could defend its core business aspects.
TASK 1
Strategic direction that the company has followed in the past and ways in which strategic
thinking has developed within past 5 years
From the last five years, Tesco has been managing its business aspects in prominent
manner and this is the prime reason for which Tesco is acquired maximum attention of clients
and business organizations (Hill, Jones and Schilling, 2014). The business seems to be highly
focused towards enhancing the competitiveness and thereby it adopts numerous strategies and
approaches to create competitive edge over the rivalries. External and internal business
environment is continuously analysed for the purpose of ascertaining all the factors that could
impact business decisions. Strategic thinking is an extremely effective and valuable tool that
helps the competitive business entity to undertake all the business decisions as per strategic
aspects. From last five years, the degree of competition has been increased and many new
entities have entered in the retail market. This has not only generated competition; but also it
gives more opportunities for growth and success. Considering the strategic facets, Tesco has
extended the product line and also depicted more concern towards customer oriented approach
(Ward and Peppard, 2016). There are many organizations that provide their customers with
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similar products are services. They all make use of different set of strategies so that they will be
able to attract more and more customers. Among all these Tesco is one among all which has
adopted diverse strategies which is helpful for the cited firm to achieve their goals and
objectives. In this context, below given are few of the strategic directions that has been followed
by Tesco:
International expansion: There are many markets around the world in which cited firm
has made their business expansion (Swayne, Duncan and Ginter, 2012). This is an effective
strategy in which organization aim at attracting more and more customers. However, there are
different type of issues that firm has to face and still there are many potential markets in which
Tesco has to make their business expand. In this context, it includes potential markets like India
and China. As per the past strategic directions, firm has focused on expanding their business to
new markets and this has helped them to raise their sales and profitability.
Non-food products: There are number of products that Tesco delivers to their customers.
As per the recent strategies, cited organization has focused on providing non food products
(Eden and Ackermann, 2013). With this respect, it includes clothing, consumer electronics and
health products. These are diverse range of products and has enabled to grab attention of new
and potential customers. Customers visit Tesco with an aim to buy a particular product but wide
range of products are helpful enough to grab attention of these customers and they tent to
purchase. Even this strategy of delivering non food products has proved to be highly beneficial.
Retailing services: In recent time, there are many different type of services that has been
introduced. These improvements are done in order to deliver high and better quality services to
customers. In this context, it includes services like online shopping which make customers to buy
products without having physical presence to store (Hair, Sarstedt and Ringle, 2012). Further, it
includes banking and financial services, energy price comparison, etc. All these services has
helped the firm to make sure that services users gets satisfied and their requirements are fulfilled.
TASK 2
Choice and use of framework for strategic analysis
Strategic analysis is termed as the procedure that ensure proper research of the
environment in which the Tesco operates their activities and operations. There are different
framework that is used by the management of the retail organization for engaging in the strategic
analysis of the company it mainly include analytical models such as SWOT, PESTLE as well as
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Porter's five forces, value chain analysis etc. that is used in strategic analysis of the giant retail
firm. The appropriate framework that include SWOT and PESTLE analysis with the help of this
management can easily analyse the internal environment as well as external environment within
the retail industry (Vogel and Güttel, 2013). The justification for choosing SWOT analysis
include that with the help of this company can easily strengthen their activities and operations.
Along with this it also assists in grabbing the opportunities that are present within the retail
industry so that they may easily attain the market share.
On the other hand, PESTLE analysis has been chosen for analysing the factors that present in the
retail industry that directly impact the activities and operation of retail firm in the market. For
instance, with the political factor it might directly affect the strategies that are framed by the
Tesco to operate in domestic market.
Discussion of the company’s competitive advantage among its direct competitors
Tesco has been operating its business in highly competitive market place; however even
after that the business has the ability to develop itself as a competitive entity. In order to meet the
competition, Tesco has been coming up with several products and services which also aids the
business entity to grow more in competitive market place (Evans, Stonehouse and Campbell,
2012). Tesco is having high competency within environment which helps in sustainable
development so that goals and objectives can be accomplished in desired manner. High level of
skilled workforce allows to improve the work place productivity so that better opportunities can
be attained effectively. Moreover, the business firm is also well focused towards diverse strategic
principles so that goals and objectives can be accomplished in desired manner. Application of
modern and digital equipments has improved the work performance (Mellahi and Frynas, 2015).
It assists in meeting business development standards so that better competition can be offered
within market. In order to gain the competitive advantage the entity is well focused towards
consideration of customers needs and new product development. It also allows to improve sales
and profit effectively as compared to others players in the market. It can be said that brand
identity of Tesco is the major factor that helps the entity to survive in long term market place.
Industry scenario facing the company within its existing market domains
Ultimate aim of any firm is to gain maximum profit. This is only possible when they will
be able to satisfy their customers. The needs and requirement of customers changes frequently
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and it is important that companies understand these changes (Keupp, Palmié and Gassmann,
2012). Accordingly, steps should be taken with the help of which aim and objectives can be
achieved. As there are organizations that deliver their customers with similar products and
services like Tesco. There are many changes and challenges that this firm has to face. Further,
there are different industrial scenarios facing Tesco within its existing market domains and these
have negative impact over the business. As per the finding, it can be stated that there is high
decline in sales in the market of UK. One of the main reason for this decline is due to high
competition. More specifically, price and quality of any product affects the buying behaviour of
customers (Rahm and Riha, 2012). Competitors like ASDA and Sainsbury deliver their products
at low price because of which customers shift on their services. This can be determined as one of
the main reasons due to which the sales of Tesco at UK market is declining.
TASK 3
Analyse if the mission and vision statement are aligned to the demands of the marketplace
In accordance with the vision and mission statement of Tesco, it is aligned according to
the demand of marketplace. Mission of cited firm is to create value to customers in order to earn
lifetime loyalty. In order to achieve this mission, Tesco aims to develop the business into full rig-
maintenance organization (Priem, Li and Carr, 2012). Further, it focuses on delivering healthy
environment in which the products are safe and no life is put into danger. They maintain the
safety and quality standards. In this modern world, people are very much health conscious and
Tesco make sure that the products and services delivered are with high quality. Moreover, they
also understand the importance of their employees and develops relationship with them by
making sure that all their requirements are satisfied. On the other hand, the vision of Tesco is to
be the most valued business. In order to achieve this vision, they focus on delivering cost
effective product. For this purpose, they make sure they have negotiations with suppliers and
deliver the products at low price (Goetsch and Davis, 2014). The changes in taste and preference
of customers take place frequently. Further, cited firm is well known for their implementation
and invention. They make frequent changes in their services in order to deliver variety of
products. In addition to this, employees of Tesco are trained in such a way they take part in all
the activities and promote health, quality, safety and issues related to environment.
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Strategic capabilities of business
Each and every organization have their set of strategic capabilities which are helpful for
the management to make sure that business operations are undertaken effectively and efficiently
(Dobbin and Baum, 2014). As per the case there are different type of strategic capabilities which
enable to firm to achieve their goals and objectives. In this context, below given are strategic
capabilities of Tesco:
Developing relationship: They focus on creating value towards their customers. This is
generally done by identifying the issues that are faced by them. In this context, cited firm has
after sales services in which all the problems and issues that are faced by service users are
considered and step are taken in order to over come them.
Price: Price can be determined as one of the effective factor that high impact over the
buying behaviour or perception of customers towards the product. As per the strategic
capabilities, when new product is introduced in the market by Tesco, then they deliver it at low
price. This is done in order to develop trust and confidence over the product (Harrison and John,
2013). When customers get to know about the product, then price is reduced.
Innovation: Changes in taste and preference of customers take place frequently. As per
the change, it is essential that firm make improvement in their products and services. With this
respect, Tesco conduct market research in which they aim at identified the requirement of service
users. Accordingly, products are developed or changes are make in existing product.
Training to workers: Employees are the face of organization as they have direct
interaction with customers. They are the one who present the services and products to customers
(Boyd, Haynes and Ketchen, 2012). In this context, training is provided to workers so that they
will be able to understand their set of roles and responsibilities. This way it helps management to
attract more and more customers.
TASK 4
Discuss possible strategies that the company could follow to defend its core business
For any industry, there will be particular organization that will hold up all the market
share and strong customer base. However, if the firm do not make improvement in their
strategies, then they will not be able to hold upon for long time. In this competitive world, there
are organizations which make use of strategies to develop profits by creating strong customers
(Vogel and Güttel, 2013). As per the case, there are certain defence techniques that is used by
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Tesco with the help of which they defend their core business. As per the finding, it has been
found that cited firm was the leading in general merchandising but when Wal-Mart entered into
market, they delivered their products at low price. Analysing the strategies used by Wal-Mart,
Tesco started reducing the price for their product as well. This way Tesco was able to improve
their sales in which they also used personalization of promotion and coupons. With this respect,
cited firm make use of defensive marketing campaign in order to defend its core business
(Defensive marketing, 2014). There are various type of strategies involved in this marketing
campaign which are as follows:
Advertising: In this Tesco will invariably respond towards the new entries in this as
campaigns. Organization make investment in brand awareness and to raise the perception of
people towards the products and services which are delivered by the firm (Hubbard, Rice. and
Galvin, 2014). These are helpful to provide customers with proper information about the services
and products that are delivered by the firm (Hill, Jones and Schilling, 2014). In addition to this,
marketing strategy also includes some improvements in the product.
Distribution: In accordance with this strategy, it is possible to block the distribution of
competitors and this is done by creating incentives for distributors who do not agree to carry it
out. However, this is only possible when the leading business is ready to provide incentives. In
addition to this, profit is retained by Tesco by reducing the investment for distribution and by
keeping defensible market.
Pricing: Price of the product play vital role in preventing customers to shift to
competitors. This is important as the price for a product is low when compared with same
product that is delivered by Tesco, then customer will prefer to purchase the product which is
comparatively low (Ward and Peppard, 2016). In some of the cases, price of the product is raised
as it must be sold on the basis of quality, quantity, feature, etc. In such condition, the price can be
raised and profit can be gained by the organization.
Without defending market share, defending profit: There are many products that are
delivered by Tesco and with an aim to protect profit, management divest itself of losing product.
Then the money is taken which was invested in the product and that money is used to make
improvement in another product. As per the case, there are many products that has been divested.
Product improvement: There are different type of qualities which a product has and some
them even as more than one quality. As per this strategy, management of Tesco focus on making
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improvement in the product by adding up the quality. This is helpful to develop positive
perception and they tent to buy the product (Swayne, Duncan and Ginter, 2012). In this context,
the strategies that are implemented by competitors are also considered and implemented.
Below given are the strategies that can be implemented by the cited firm in order to make
improvement:
Blue ocean strategy: This is a type of strategy in which organization aim at focusing on a
product that is not delivered by any other companies or few firms. Tesco should identify such
product and accordingly take steps with the help of which they will be able to develop strong
customers base. This is effective strategy for defending in core business environment.
Porter's Generic Competitive strategies: As per this strategy, there is two different
variables involved these are differentiation and cost focus.
Cost leadership: In this strategy, firm will sell their products and services at low cost
compared with the price that is kept by other organizations. It is helpful enough to make sure that
strong base can be developed.
Differentiation: There are companies that deliver their customers with similar products
and services. However, customers prefer to make use of goods that satisfy their needs. In this
context, differentiation should be made in products so that more and customers can be attracted.
Focus: In this the focus is made over cost and differentiation. It is an difficult task for
management to consider.
Ansoff Matrix: This can be determined as growth strategy that focus over different areas
with the help of which business can be improved. Below given are the four different growth
strategies:
Market penetration: As per this strategy, management will aim at raising profitability by
improving existing products or services.
Market development: New market will be selected in which products and services will be
sold by the organization.
Products development: New product will be introduced in the existing market.
Diversification: In accordance with this strategy, new product will be introduced in new
market.
Among all these, Tesco should make use of Market development and market penetration
strategies as it will be beneficial for the firm to defend its core business.
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TASK 5
Analyse and evaluate the resource implications of recommendations that the company has to
address
As per the analysis made, it can be stated that there are different areas in which Tesco
needs to make improvement. Below given are the recommendation which will enable to compete
effectively:
Improving quality: There are different type of factors that are considered by customers
when they are to buy a product. However, among all the factors it is important that organization
consider quality of product (Eden and Ackermann, 2013). As there are firms which deliver
similar products and services but by making sure that quality is not affected, then it will enable to
develop positive perception among mind of customers. Quality of product can be determined as
an effective factor which will enable to attract more and more customers.
Employee training: Tesco spend highly on providing training to customers. However,
there are cases in which management do not get the expected result. With this respect, one of the
main reason for this is that organization do not identify the issue because of which workers are
not performing effectively (Hair, Sarstedt and Ringle, 2012). In this context, management should
identify the areas in which improvement is required and then they should be provided with
training. This will enable to save money and this will also help in raising profit.
Spending less in advertisements: In accordance with the finding, it has been found that
Tesco spend highly on advertisement. In this context, they make use of television, radio,
newspaper, etc. to promote the services and products that are delivered by the organization.
There are different set of products that are delivered by cited and it increases the cost as they
spend highly on advertisement. With this respect, Tesco should reduce the expenses that they
incur in advertisement. This way they will be able to make use of that money for improving the
quality of products.
Business expansion: There are potential markets like India and China in which Tesco
make their international expansion (Evans, Stonehouse and Campbell, 2012). Cited firm should
develop plans so that they will be able to enter into these potential markets. This will enable to
increase the sales and profitability of the organization.
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CONCLUSION
Summing up the entire research work, it can be said that Tesco has been operating the
business in competitive market place; hence the business needs to emphasize more on
developing effective business strategies. Hence, it can be said that corporate strategies are
essential for Tesco because that aids in creating more competitiveness of the business in external
market place. Further, Tesco is required to emphasize more on strategic analysis so that factors
which affect the business practices can be ascertained. Moreover, in order to protect the business
practices, it is required for Tesco to develop alternative growth strategies so that success
elements of the retail giant can be encouraged. As per the mission statement of Tesco, it is vital
for the business organization to focus more on better service provision which is also essential in
terms of enhancing profitability aspects.
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