Strategic Management in Practice: A Tesco Case Study Analysis

This case study provides an analysis of Tesco's strategic management approach, focusing on its competitive strategies and market position. It explores the theoretical concepts of strategic management, including strategic tools and methods, and offers a critical review of relevant literature. The study examines Tesco's background, its stakeholder involvement in change implementation, and the impact of strategic management on the organization and its stakeholders. Furthermore, it presents a strategic analysis of Tesco using PEST and SWOT frameworks, offering recommendations for improvement and discussing the role of top management teams in the change process. This assignment, available on Desklib, offers students valuable insights into applied business management and strategic decision-making.

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APPLIED BUSINESS MANAGEMENT
Table of Contents
Introduction......................................................................................................................................2
Literature Review............................................................................................................................3
Theoretical concept......................................................................................................................3
Strategic Tools.............................................................................................................................3
Strategic methods.........................................................................................................................4
Critical analysis...........................................................................................................................4
Case Study.......................................................................................................................................6
Background of Tesco and Its Way of Strategic Management.....................................................6
Outline the system used to involve stakeholders in the introduction of the change and the
diverse reactions to change by different stakeholders.................................................................7
Critically evaluate the appropriateness of strategic management and the impact it has on the
organization and the stakeholders involved.................................................................................7
The options available to the organization in implementing the proposed strategy.....................8
Analysis.......................................................................................................................................8
Strategic Analysis of Tesco.....................................................................................................8
PEST Analysis of Tesco........................................................................................................10
SWOT Analysis of Tesco......................................................................................................11
Recommendation...........................................................................................................................13
Discuss the role and importance of the top management teams (TMTs) in the change process
...................................................................................................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................16
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Introduction
Strategy can be described as a plan or a method by applying which, a desired outcome for the
future is achieved. Strategic planning in business organizations, help to flourish and offers the
organization with a competitive advantage in its course of operations. It helps to solve any
existing problems and helps the leaders of the organization to find out the path to success by
offering them a proper direction. Strategic Planning aids an organization to recognize the goals
and objectives that they have set for themselves in order to succeed in the business markets. The
process of Strategic Analysis involves executing the strategic plans in sequential order so that the
organization is able to meet with its pre-set target. Appropriate strategic management is capable
of uplifting the value of an organization.
In the following research, the researcher has shed light on the importance of the theory of
strategy literature and also the factors that affect the strategic planning of an organization for its
future course. The analysis of the macro environment with reference to Tesco has been explained
in the following to understand the strategic management of Tesco and its contribution towards
gaining competitive advantage by accomplishing the goals the company has set for itself.
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Literature Review
Theoretical concept
In this section, the author of the study has described the importance of all the tools and
techniques related to strategic management. In recent times the business development is much
dependent on the strategic management of the company. Strategic Management basically means
the planning of the organization in order to imply new plans and processes in the company.
These plans are mainly introduced in the company's management body that helps to achieve the
goals further. In order to describe these strategic plans, the author of the topic also described the
strategic tools and strategies related to this. This method of strategic management has become
one of the complicated and costly processes in the market. The techniques of strategic
management are divided into three parts, such as organizational strategies, strategic planning
techniques control techniques (Inkinen, 2016).
Strategic Tools
The tools mainly mean the key elements that run the whole purpose of any strategic development
of the companies. In addition, these strategic plans are mainly implied in order to develop the
company’s business. The tools used in the section when the company is trying to imply the
organizational strategies in order to develop the company’s business prospect. All these tools in
the strategic concept are connected with another. In deciding these tools which can be useful in
the company’s growth is developed by the managers of the company. The most used tools by the
managers in the company’s development are, analyzing all the important questions associated
with the topic, analyzing all the gaps of the company, analyzing all the aspects of the industry,
matrix or calculation related to the market and the products of the market, describing the life of
the product and discussing the cycle of each products and also the analytical descriptions of the
frameworks in the management such as SWOT or PEST analysis, also the Porter’s five forces
model.
Strategic methods
The concept of strategic management is a vast one and it also has so many layers to it. To further
describe the strategic tools of the company’s planning regarding the strategy also has so many
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methods associated with it. In addition, all the models associated with these tools and techniques
of the strategic management help to determine all the possible concepts of this planning that can
be helpful in the part of developing the process. However, in recent times all the models
associated with the process are advanced in a way to serve the purpose with a more accurate
approach. It is seen that all the important models of strategic development have some important
elements or keys for further improvement such as,
 Analysis of the environmental cause needs to be done in the company for better
improvement
 The company needs to establish more direction regarding the needs of the company
 The companies need to develop and introduce some strategies that are beneficial for the
company's development
 The company needs to imply more plans that are beneficial for the company's growth and
development in the long run
 The company needs to control the strategies and evaluate them in the company policies.
The strategic management has some models regarding these elements, such as,
 Glueck's Model: It is an important plan that deals with the planning and implementation
of each strategy in the company.
 Andrew’s Model: This method mainly focusing on the part of choosing the plans but
totally ignores their implementation.
Critical analysis
To evaluate all the theories, tools and models related to the strategic management the author of
the study has described the important articles from various authors in this study. These articles
help us to set some accurate and prominent knowledge regarding this.
As stated by (Inkinen, 2016), in this study the author of the study has described the knowledge
management that is now one of the most used techniques of companies. The relation between the
knowledge of the company and the performance of the company s associated with each other, the
gap in them can create a major issue in the future of companies. This research paper focuses on
the gaps and describes how knowledge determines the performance of the company.
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As mentioned by (Bozic, Siebert and Martin, 2019), the research paper presented by these
authors describes how the strategic actions of the company and influences the trust factors of that
organization. In this section, the author uses the tool of strategic question analysis in order to
determine and investigate the company issues and how it is affecting the company, and further
provide solutions to all of that.
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Case Study
Background of Tesco and Its Way of Strategic Management
The Multinational retail company was founded by Jack Cohen, in the year of 1919 and its first
store opened in the year of 1929. In the present situation, the company has over 6351 stores
worldwide along with 537,784 employees working for them. Tesco is one of the leading retail
organizations in the UK along with Asia, central Europe, and Ireland. The company has almost
2300 supermarkets, expediency stores, and hypermarkets. The company is the retail giant in the
Food industry of the UK. The other operations of Tesco include Tesco Metro (small community
stores), Tesco Express (gasoline and convenience retailing), Tesco Extra (hypermarkets) and
Tesco Personal Finance (financial services). Tesco is the leading grocery retailer in the global
market and owns 35% of the share market in the grocery chain Safeway's Grocery Works in the
US (Ansoff et al. 2018). The business market of Tesco is expanding with time. The latest annual
revenue of Tesco in recent times has been 65 billion pounds and operating income is
about£3.074 billion.
Figure 1: Share of Tesco in the Food retail market of UK
(Source: Noe et al. 2017)
However, the requirements and needs of the consumers are changing with the change in time and
trend. With fierce competition in the UK food retail industry, consumers are always in search of
fresh produce. Also, the growth of the key competitors in the retail industry is increasing every
day in both the international national market as well as the domestic market of the UK. The
competitors are always in the opportunity of attracting customers from the other brands by
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providing similar products within low prices. Tesco if not gets adapted to the ongoing change of
trends in the market and fails to satisfy its customers; it can cost them their customer base
(Hanson et al. 2016).
Outline the system used to involve stakeholders in the introduction of the change
and the diverse reactions to change by different stakeholders
With the change of market needs and demands and the rate of growing competition in the retail
industry, the analysis of the strategic management of Tesco is being carried out to assist the
company in achieving greater competitive advantage. Gaining a competitive advantage in the
market is always the key target of any flourishing business organization. However, to
competitive advantage depends on the operational and marketing strategies of a company and the
quality of products or services it produces to its customers. Stakeholders are the people
associated with a business and hence to make the business successful, they have a significant role
to play (Wheelen et al. 2017). The stakeholders must be involved in the process of change and
their way of outlook or suggestion also must be considered.
Critically evaluate the appropriateness of strategic management and the impact it
has on the organization and the stakeholders involved
Strategic Management helps any organization to focus on the possibilities it can grab and plan
the steps in an organized way to help the company maximum profit. As stated by (Lasserre,
2017), Strategic management helps the company to enhance its performances by improving its
operational activities and helps the company to gain a competitive advantage in the market.
Strategic planning in the company starts right from the planning of the products, to its supply to
the customers. Strategic planning helps the company to utilize all the available resources to the
fullest. Strategic management also impacts the organization as well as the stakeholders. The
company performs all its activities in an organized planned way, the possibility of risks reduces
and the chances of making profit become more prominent. Strategic planning helps to satisfy the
requirements of the stakeholders and also aids the company to accomplish its organizational
goals.
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Options available to the organization in implementing the proposed strategy
Strategic planning can be implemented in the organization without disrupting any of its methods.
For implementing the proposed strategy, the company must-
 The company needs to include their employees in strategic planning. This way they
would feel more connected with the company.
 The company needs to set up a good communication system so that the associated
stakeholders including the employees can also suggest their ideas and communicate the
problems they are facing
 following up with stakeholders is very important to check the effectiveness of the
strategic planning
 Employees at times face a problem when they are carrying out any changes. Hence to
remove all the barriers in the process is important. The employees if needed must be
provided with developmental programs and training (Jenkins and Williamson, 2015).
Analysis
Strategic Analysis of Tesco
To analyze the competition of a business and its place in the business environment, Michel.E.
Porter’s Five Forces model offers to be a useful tool (Sadler and Evans, 2016). The five forces in
this framework that analyses the position of Tesco are:
 Threats to substitution: The changes in the taste of consumers and the rise of
competition in the retail industry, the threat of getting replaced in the market persists.
Customers search for good products at low prices. Tesco is one of the leading food retail
brands in the UK among its competitors like Wall Mart and Sainsbury. Tesco, to offer its
customers with convenient transportation facilities, has opened new stores in distant areas
and has a huge base of customers. However, with its premium pricing range for the non-
food items can serve as a threat of substitution for the company (Martínez-Ruiz et al.
2016)
 Competition among the preexisting brands: Even though Tesco is one of the biggest
retail brands in the market. Brands like Wal-Mart and Sainsbury’s Morrison, Asda is the
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leading competitors of Tesco. The retail industry of the UK has fierce competition within.
The existing brands continuously target to attract the customers of other brands by
offering them good products and services in comparatively low prices than the others.
 Threats to the new entries in the market: The entrance of the retail market needs a good
capital to be invested and the customers look for popular brand names. So the threats to
the new entrants in the retail market are considerably low. The popular brands like Tesco
and other brands like Wal-Mart, Asda, Sainsbury already holds a good place in the retail
industry (Bober, 2018).
 Bargaining powers of the suppliers: The supplier's power of bargaining is not that strong
in the market of the UK. Suppliers here are afraid of losing their business with the
leading retailers and Tesco has established itself as a strong name in the market.
Suppliers consider improving their business opportunities by satisfying the needs of the
leading retail brands in the market.
 Bargaining power of the customers: Tesco enjoys a good base of consumers. Customers
always have the power to switch from one brand to another if their needs are not pacified.
Hence, the buyers here have a strong power of bargaining. Customers always look for
good products in a cost-effective range so if the other brands offer them with lucrative
offers, they might shift. Tesco, however, aims to serve its customers with quality
products with much lower prices and aims for customer’s satisfaction (Guo and Wang,
2019).
PEST Analysis of Tesco
The political, economic, social and technological analysis of the Tesco analyses the factors of the
macro environment within which the company operates. The strategic management and the gain
of the competitive advantage are also influenced by these factors within which the company
operates.
 Political Analysis: The Company of Tesco operates in the global market and hence is
greatly influenced by the political factors of different places. Tesco's performances get
affected by the acts of legislation, rates of taxes as well as the country's stability in which
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it operates. Tesco had played a prominent role in increasing employment opportunities
which has facilitated its popularity among the customers (Grundy, 2017).
 Economic Analysis: This is one of the key concerns for Tesco as it is influenced highly
by demand, costs, prices, and profits. The company hence needs to be alert of any
changes in their policies that can possibly affect its availability of finance. Even though
the company operates globally, it is still dependent upon the UK market. Additionally, as
there was a decline in disposable income levels, Tesco mainly focuses on marketing
value brands.
Figure 2: Tesco’s Business Model
(Source: Heller, 2017)
 Social Analysis: As the needs and requirements of the customers are changing with time,
they presently prefer one-stop shopping and bulk shopping. Following the ongoing trend,
Tesco has also increased its sales of non-food. The beliefs and attitudes of the customers
influence their demands for goods and services, which is influenced further by social
conditioning. Tesco, to sustain in this competitive business league have started
accommodating its customers with organic products (Park, 2017).
 Technological Analysis: With the continuous advancement in Technology, Tesco has
been benefitted a lot. To make the products more available to their customers, Tesco has
developed a platform for online shopping where the customers are offered to buy their
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required products, sitting at home, with just one click. To sustain longer in the market,
Tesco has also taken a responsible step forward. It has invested a lot of amount in
different energy saving projects so that it can reduce its carbon footprint in the long run
(Ahrendsen, Bielik, and Horská, 2016).
SWOT Analysis of Tesco
SWOT defines to be the strength, weakness, opportunities, and threats of an individual or an
organization and serves as a strategic tool.
Strength:
 Tesco is one of the leading retail companies in the market of UK. It almost 30 percent of
the market share among its competitors.
 Tesco has a strong brand name and value which is capable of attracting a huge base of
loyal customers.
 diversified range of services and products
 one of the largest job provider in Europe
 Tesco provides comparative cost-effective food products
 Tesco has a global brand image with its large number of stores worldwide
 The online shopping facility has also offered Tesco with a great competitive advantage.
 Well-organized supply chain (Price and Moore, 2018)
Weaknesses:
 The premium price range of non-food products.
 Competition in the market has affected the profit margin of the company
 Inadequate market research in some places
 Huge dependence on the market of UK and US (Bentham, 2018).
Opportunities:
 Growth of e-commerce
 Emerging new market opportunities
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 Alliance with other subsidiary brands (Suarez, Calvo-Mora. and Roldán, 2016)
Figure 3: SWOT Analysis of Tesco
(Source: Wood, Wrigley and Coe, 2016)
Threats:
 Fierce competition in the retail industry
 Depending mainly upon the UK market
 Global economic crisis
 Christmas Ad controversy (Kung’u, 2017).
Recommendation
The company here enjoys a great brand name and reputation. However, there are certain changes
it needs to make in its strategic planning to cope up with the aggressive market competition in
the retail industry. The company needs to plan its company policies in such a way that it reduces
the risk factors and contributes to the improvement of the company (Baumgartner and Rauter,
2017). Tesco needs to focus on the organizational values as well as the requirements of the
associated stakeholders. The company also needs to include its employees when making
important decisions. This helps them open up to various ideas and engage the employees more
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into the organization. The company needs to take effective steps towards sustainability and work
more towards reducing their carbon footprint. This would help them to sustain longer in the
business. Bureaucratic control also needs to manage its policy uses, rules effectively and
implement attractive reward systems for the employees. They must make sure that the employees
are not facing any problem in the process (Hermano and Martín-Cruz, 2016).
Discuss the role and importance of the top management teams (TMTs) in the change
process
The top management teams act as a guide to the junior employees and they can also predict the
possible outcomes of the strategic planning as they have adequate knowledge and experience of
the operational market. They also must be consulted when implementing any changes in the
organization. The top management teams help the company to solve any possible issues that
might arise in the course of operational activities. They can guide other employees to work in a
better way and help the company to yield a better outcome with their experience in the field.
Evaluate the strategies, skills and competencies and their impact on the organization’s future.
Strategies play a huge role in the business to be successful. Strategic planning provides direction
to the skills and capabilities or competencies of the employees. The productive workforce
improves the performance of the company and helps it gain a competitive advantage by yield
higher profit margins (Christopher, 2016).
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Conclusion
From the above research, it can be concluded that strategic planning plays a great role in
management activities. Strategic management helps a company to improve its operational
activities and provides a step by step guide to the path of accomplishing organizational goals. It
helps the company to yield high-profit margins and helps it gain competitive advantages. In the
above-made research, the strategic analysis of Tesco has been made. Tesco is one of the leading
global retail companies. The researcher here has discussed the importance of strategic planning
and management in the organization and the contributive role it plays in gaining competitive
advantage to the company.
A literature review has been carried out where the tools and models related to strategic
management were introduced. Further, in the research, the factors that influence a company, here
Tesco has been analyzed. The researcher also has discussed the roles of stakeholders and the
impact of changes on them. Various factors that affect the macro environment of Tesco have
been studied and its SWOT analysis has also been carried out. Further, strategic marketing has
been analyzed by using Porter's model and lastly, some recommendations have been suggested to
enhance the strategic management in the company.
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Kung’u, A.M.U., 2017. Effects of Selected Porter’s Five Forces on Competitive Advantage in
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