Tesco's Strategic Planning: Objectives, Analysis, and Strategies

This report provides a comprehensive analysis of Tesco's business strategy, delving into its objectives, mission, vision, and core competencies. It explores the factors crucial for formulating strategic plans, evaluates the effectiveness of various techniques, and conducts organizational and environmental audits using SWOT and PESTEL analyses. The report emphasizes the importance of stakeholder analysis and proposes innovative strategies for Tesco's growth. Furthermore, it assesses the appropriateness of alternative strategies, guides the selection of an optimal strategy, and outlines the duties of personnel in strategic implementation, resource requirements, and the contribution of SMART targets. The report utilizes tools like the BCG matrix to assess market positions and discusses vertical and horizontal integration strategies, including mergers, acquisitions, market penetration, strategic alliances, and franchising. The goal is to offer a deep understanding of how Tesco approaches strategic planning and implementation to achieve its business goals.

Business strategy
Contents
Executive summary .....................................................................................................................................2
TASK 1..........................................................................................................................................................3
Tesco objectives, missions, vision, Core competencies and goals.........................................................3

1.2 Factors used in formulating strategic plans......................................................................................5
1.3 Effectiveness of techniques ..............................................................................................................5
TASK 2..........................................................................................................................................................7
2.1 Organisational audit for Tesco...............................................................................................................7
2.2 Environmental audit for Tesco...........................................................................................................8
2.3 Importance of stakeholder analysis...................................................................................................9
2.4 Innovative strategy for Tesco...........................................................................................................11
TASK 3 ......................................................................................................................................................11
3.1 Appropriateness of alternative strategies........................................................................................11
3.2 Selection of a strategy ....................................................................................................................12
TASK 4 ......................................................................................................................................................13
4.1 Duties of personnel in strategic implementation.............................................................................13
4.2 Resource requirements for implementing a new strategy .............................................................14
4.3 Contribution of SMART targets.......................................................................................................14
Conclusion ................................................................................................................................................15
Bibliography...............................................................................................................................................15
Executive summary
Business strategy is a combination of activities which helps an organization to attain the long term
goals. Strategic planning is a activity involved with panning activities to achieve the organizational
objectives. It is a critical process of an organization and without strategies the organizations cannot
successfully run the businesses. The purpose of this report is to understand the process of the strategic
planning in Tesco; a world famous retailer formulates the strategies, understand the approaches of
strategy selection and present how to implement strategies in the organization.

TASK 1
Tesco objectives, missions, vision, Core competencies and goals
Mission:
Mission is the purposes of an organization created to fulfill the shareholder expectations. It describe
how the business run, who are the customers, the products and the services they sell and the quality of
the customer service as well.
Mission statement of Tesco is
 Create the value to the customers
 Create customer loyalty
 Increase the market share

Vision
Vision statement describes where the organization required being in the future.
 To be an organization valued by the stakeholders
 Growth
 To be innovative
 Internationalization
Goals & objectives
Goals as well as objectives are the expectations of an enterprise planned to achieve within a specific
period. Objectives required to be achieved in order to achieve a goal as the objectives are short term
plans and goals are considered as long tem plans of the organization.
Tesco goals
 Be successful in the retail industry
 Grow the business
 Develop new retailing services
Core competence
Core competences of an organization are the set of special skills and attributes that helps to achieve the
competitive advantage over the other players of the industry. The core competences of Tesco are the
retail network, loyal customers, loyalty card system and the ability to sell the products at lower prices.
(Rudolf Grünig 2010)
1.2 Factors used in formulating strategic plans

Strategic planning is the process of an enterprise through which develops the strategies and make
decisions on allocation of the resources to implement those strategies. The following factors must be
taken into consideration when developing strategies.
The industry that the organization operates
In strategic planning the industry conditions should be evaluated. The factors such has size of the
market, past growth and the future growth potential, new markets, profitability of the competitors and
the possible future threats should be taken into the consideration when developing strategies. The
changes happen regarding those factors will have great impact of the operations of the Tesco.
Competition
Competitors’ position in the market should also be taken into consideration when formulating
strategies. The nature of the competitors should be understood in order to compete with them in the
right manner. The strengths and the weaknesses of the competitors should also be taken into the
consideration.
Strengths and weaknesses
SWOT analysis of the organization should be done before formulating strategies. Strengths or
weaknesses are the inner section of the company and the opportunities as well as threats are outer
part. An organization required to identify the internal strengths in order to develop them and the
weaknesses to do improvements of the organization to reduce the weaknesses. The threats should be
identified in order to minimize the effect on the business by developing strategies and the opportunities
should be utilized by the business in order to increase the revenue streams.
(Steiner 2010)
1.3 Effectiveness of techniques
BCG Growth matrix
BCG matrix can be used Tesco developing strategic business plan. This matrix explains four situations
that the organization may face in terms of the market growth and the market share. Tesco would face
following four situations in the operations.
Stars

In this kind of situation the organizations have high growth and high market share. Large amount of
investment required to be done in order to maintain the growth and the market share.
Cash cows
This is the situation where the organizations have high market share but low growth rate. But revenue
will be generated from the large market share it owns despite of the low growth.
Dog
Low growth and the low market share make company making losses in the market. It may have to cut
the unnecessary cost. When the product lines making losses the organizations should close those and
should invest in new products.
Question marks
High growth and low market share creates risk to the organization. Mostly seen in new product lines in
which the market share is low.
The matrix helps Tesco to understand when to invest in the business, when to diverse and when to focus
on new businesses. The portfolio of the businesses can be balanced with the help of this matrix. The
simplicity of the model makes it easy to understand by any person. it also facilitates the future decisions
of the organization.
On the other hand it has following disadvantages.
 Market growth and the market share is not the attractive factor of a market
 Sometimes even dogs can earn money to the business
 Market share is not the only factor indicating the profitability

(Fogg 1994)
TASK 2
2.1 Organisational audit for Tesco
An organization examination for Tesco can be complete by SWOT analysis in order to identify the
organizations’ strategic position. SWOT helps Tesco to identify the internal strengths and the
weaknesses and external opportunities and threats. The SWOT analysis of Tesco can be done as follows.
Strengths
 Large scale operations
 International presence
 Sound revenue and profit
 Proper business strategies
Weakness
 Largely depend on UK operations
 Less expansions
 High level of transportation0 cost
Opportunities
 Global expansion
 Develop more products and services
 Develop online channel
Threats
 Competition
 Declining income of the people in western
countries
Based on the strengths and the opportunities Tesco has competitive advantage over the other players.
In order to avoid the competition Tesco can use strengths to expand into the Asian market.
(AWWA Research Foundation, Honolulu (Hawaii). Board of Water Supply 2003)
2.2 Environmental audit for Tesco

Using PESTEL analysis the environmental audit for Tesco can be conducted as follows.
Political
Since Tesco operates wild wide the political factors of the different countries affecting the business of
the Tesco. Government policies, taxes, rules and regulations are the political factors affecting the
Tesco’s business in different countries. The main reason why many countries allowed Tesco to enter
their countries, is that the number of employment opportunities provided by it.
Economic
The economic factors such as interest rates, exchange rates, economic development, unemployment
and per capita income are affecting the Tesco businesses in UK and foreign countries. Changes in those
factors can have great impact of the Tesco’s operations.
Social factors
Since Tesco operates in many countries it is required to customize operations based on the countries’
cultures. Social factors are critical environmental factors affecting organizations. As a result of social
change Tesco started to offer healthy food products at Tesco.
Technological factors
Technological factors and the developments of the technological environment affecting Tesco’s
operations in a great del. Development of the technologies used in supermarket industry enables Tesco
to develop the operation efficiency. The success of Tesco has been contributed by the use of advanced
technology in the supply chain management, customer service, marketing and e commerce.
Environmental
The environmental factors such as the pressure group concerns, environmental authority requirements
should be met by the organizations. It is also required to be ethical in order to win the customer loyalty
by conducting a business without damaging the environment.
Legal
The factors such as government legislation are also affecting any business. Since Tesco operates in many
nations the differences of the legislation makes the business operations also different country to
country.

2.3 Importance of stakeholder analysis
Stakeholders are the groups of person who affected by the operations of business. Neutral of Tesco are
employees, shareholders, customers, government, authorities, community, suppliers and unions.
Stakeholder analysis is a tool used to identify and analyze those stakeholders in order to identify
strategies to manage those stakeholders.
The importance of stakeholder analysis,
 Able to use opinions of the stakeholders in developing strategies of the organization
 When the support of the powerful stakeholders are there the success of the operations is
ensured
 Able to understand the intentions of the stakeholders
 Able to pre determine actions of the stakeholders
Through stakeholder analysis the stake holders can be plotted in the below matrix based on their power
and the interest of the organization.

The basic pace of stakeholder analysis is to identify the an individual who are affecting by the
organizational activities. Then it is required to identify the power of those categories and the interest of
them regarding the business to decide the level of influence using the above grid.
 High power, high interest- Those stakeholders require greatest effort to satisfy
 High power low interest- Also powerful but due to low interest only satisfy them is enough
 Less power, more interest – needed to maintain informed
 Less power , less interest – necessary to control them with a minimum exertion
The last stage of the process is to develop strategies to how to deal with most important
stakeholders of the organization.
(Rudolf Grünig 2015)

2.4 Innovative strategy for Tesco
Tesco focuses on create value to the customers and satisfy them to achieve the lifetime loyalty. It
follows market development, differentiation and market penetration strategies. New product
development strategy can be followed by Tesco by offering the products to meet the different customer
requirements rather than the products they offer in the stores. This will create an additional revenue
and profit to Tesco. By developing own brand products Tesco can expand vertically and can challenge
the branded products who offer the same products categories.
(Wallace 2006)
TASK 3
3.1 Appropriateness of alternative strategies
Vertical integration: It is define as aggressive strategy by which Tesco takes full monitor over various
stages in the product and distribution production. There are various strategies which is includes in this
approach are as follows:
Acquisition
When a company buys 100 of shares of another company it is called acquisition. The parent and
subsidiary relationship begins with an acquisition. This is beneficial and quicker than organic growth. The
market can be expanded and reached quickly due to the synergies.
Merger
Merger is the scenario in which process two organizations are combined together and operate as a
single organization. The main purposes behind the mergers are expanding a company’s reach, expand
into new segments, or gain market share.
Market penetration
Market penetration is increase the presence of the existing market by increasing the market share of an
existing product produced by the organization. This is done through advertising and promotions.
Horizontal integration: It is an other aggressive approach that Tesco use. It is an acquisition of different
kinds of company activities that are available in the equal level in different as well as similar firms. There
are several points of this type of strategies which are as follows:
Strategic alliance

When two or more organizations share important assets own by them in order to obtain their
objectives. The objective can be to undertake a mutually beneficial project and this is not a permanent
relationship. A separate entity is not created or the control of each company is remaining unchanged.
Franchising
When a company allows another company to use only its brand name, business process and the
technology at a fee it is called franchising. Franchising is a permanent relationship than strategic alliance
and here a new business entity is created.
Licensing
When a company allows another company to use only its brand name at a fee it is called licensing.
(Crowley 1994)
3.2 Selection of a strategy
Tesco is a retailer company which is used vertical integration strategy in their business. Because
it is an importance approach to determined aims and objectives. Cited business continue to attain
growth and success in minimum research and investigation. Vertical approach is very useful to develop
market penetration and merge their business in a successful way. One of the main objectives of cited
company is to be a successful foreign retailer. In order to achieve this objective the organization should
develop new markets all around the world. Market development strategy can be followed by Tesco who
seeks new market opportunities. company have the option to move into an Asian country by offering
the common retail items. In order to fulfill this strategy it can also create strategic alliances and joint
ventures with the local organizations. India is one of the potential countries for business to enter. After
having successful entry to the country firm can adopt other strategies such as product development,
differentiation in order to increase the revenue streams of the country. This approach has many
advantages and benefits to improve business performances like:
 Maximized competitiveness
 Better process monitor
 Maximized the share in the marketplace
 Increased the coordination of supply chain
 Reduced the cost
Still, This strategy used the Tesco in reduce the production cost and increased the productivity and
performance in an essential manner.