Strategic Management Analysis: Tesco's Core Competencies and SWOT

This report provides a comprehensive analysis of Tesco's strategic management practices. It begins by comparing the prescriptive and emergent approaches to strategic planning, highlighting their applications, advantages, and disadvantages within the context of Tesco's operations. The r...Read More

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
SECTION 1.....................................................................................................................................3
Comparison of Approaches to Strategic Planning.......................................................................3
SECTION 2.....................................................................................................................................6
Role of Core Competence............................................................................................................6
SWOT Analysis...........................................................................................................................7
CONCLUSION................................................................................................................................8

INTRODUCTION
Strategies play a significant role in every organization whether small or large because each
company wants to increase its sales and profit in order to boost itself in the emerging markets.
Strategies gives direction to the employees in order to achieve the goals. The company faces
uncertainty and complexity in the process to formulate, develop and implement the strategies.
Tesco is one of the well-known established group of retailers dealing in the food and non-food
products making it third largest in the world. It performs its operations in many other countries
along with the headquarter country UK (Bettley and Horrocks, 2018). It is dealing in many
products like books, clothing, furniture, toys, petrol, telecom, financial and internet services.
The report below will compare the prescriptive and the emergent approaches to strategies
along with contrasting its applications. It will also give a detailed information on the core
competence in order to gain competitive advantage. It will be followed by performing the SWOT
analysis in terms of strategic management. Two models or approaches will be used to examine
the effect of environment on the competitive position along with mentioning the benefits and
limitations. the report will be concluded by mentioning the benefits, risks and cost in order to
bring innovation in the company.
SECTION 1
Comparison of Approaches to Strategic Planning
According to Coffie and Blankson (2018), the Strategies provide the direction to the
employees in order to gain long term benefits of Competitive Advantage, expectations of Diverse
Stakeholders and the dynamic business environment. The Strategic Planning is done by doing the
complete research of the internal and external environment which can be done using two
following approaches:
Prescriptive Approach
This approach towards strategic planning mainly focuses on the goals, vision,
mission and the objectives of the company. The strategies are planned by analysing the external
environment and the performance of the company. These are made by examining the intentions
and priorities of the top management then only the plan is implemented by passing through the
successive layers of the company.
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This process being a linear process, it follows the hierarchical model from strategy analysis to
strategy development and to its implementation which is done in Top-Down manner. Therefore,
business considers the planning of strategies as rational, orderly and systematic process which
best suits the environment of workplace. Mishra (2017) states that this approach basically
comprises of 3 schools of designing, planning and positioning which describes the complete
process from when the company thinks to develop the strategy to when it is implemented to
obtain the desired results.
Applications: In Tesco, the strategic planning process was so much efficient that it resulted in
long-term goals which were well-defined. The people working in Tesco applied the Prescriptive
approach which helped them to define the clear boundaries for its core businesses in UK along
with the retail service, dealing in food and non-food products and also dealing with some
international sectors. This has contributed a lot and is contributing till now in the rapid growth
and profitability in all the segments thereby enhancing the overall progress of the company.
Tesco can also make systematic and planned strategies for handling the political factors like laws
and policies of government.
Advantages: This approach helps the company in making long-term goals by strategic thinking.
It needs coordinating effort which will increase the involvement of all the employees thereby
making them learn from each other. It also makes the organization to occupy a suitable
organization.
Disadvantages: This stifles the creativity of the employees because the managers are mainly
responsible for the decision-making. Sometimes, the companies can miss the opportunities
focusing on the external and internal factors. The information of the competitors can be hidden
as it is confidential so the systematic analysis may only display the public information.
Emergent Approach
It is not compulsory for all the strategies to be planned, they can be changes according to
the changes in the demand of the people and the market. So, this approach makes more
innovative and responsive strategy which is more suited in the competitive environments. It is in
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contrast with the prescriptive approach which focused on filling the gaps between the
opportunities and the emerging opportunities, it focuses on challenging the quo of status by
creating gaps between the above mentioned factors. According to Schmidt and Redler (2018),
the strategies under this approach are planned by analysing the decisions, events, interactions at
small levels thus making this approach emerging from bottom to up. So, the making of these
strategies is incremental and more unplanned. This approach is better in the emerging markets
because these strategies create risks at lower levels but provides new experiences and innovative
ways to do things by adapting all the changing demands.
Applications: Tesco can develop strategies using this approach in manufacturing and planning
for the types of food products to be sold. As the demands of the people regarding the food
products keeps changing regularly, the company has to develop different strategies which
satisfies their demands as elucidated by Cummins (2020). For example, the people in UK are
becoming more health conscious so Tesco is making strategies to produce healthy and dietary
food instead of junk food which is increasing its customer base and the goodwill in the markets.
Advantages: This helps the companies to exploit the opportunities which gives strategic success.
Some opinions from the employees can be proved useful for the growth of the company which
can increase the motivation of the employees. It can result in bringing innovation in the areas for
which strategies are made.
Disadvantages: Under this, managers focus mainly on short-term performance rather than long-
term which results in achieving goals of short-term. For example, the managers lay emphasis
increasing the annual earnings rather than focusing on the position of the company after 5 years.
No company can apply the pure form of this approach as it has no clear directions. It also makes
it difficult for the managers to perform without having clear objectives and monitoring
performance without targets.
Therefore, the prescriptive and emergent approaches for strategy planning applies differently in
the companies like Tesco. They have their own advantages and disadvantages. Tesco tries to use
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the advantages and reducing the disadvantages to have a greater profit margin and a rapid
growth.
SECTION 2
Role of Core Competence
There are core competence plays very excellent role to different companies and businesses
in the terms of gaining excellent sustainable competitive advantages (SCA). In this situation, the
management at Tesco have to take quick decisions towards taking lots of advantages through its
core competencies. According to Gerth (2019) core competence of a business also known as
prime or major skills and abilities of a company, in which existing management at Tesco has
different effective competencies, and that’s why this company is able to lead the UK’s retail
sector in this moment. These all competencies of Tesco play very excellent role to the Tesco for
gaining excellent sustainable competitive advantages. Generally, this is very necessary to this
company to gain effective competitive advantages in the market. Reason, top-level management
within most Tesco’s competitors also tries this same thing in the retail industry of UK. However,
Tesco not serves only in the UK, because existing management has succeeded in highly
expanding Tesco’s business operations in lots of other countries as well. In this situation, upper
management of this company have to use its different competencies in effective manner to
achieve sustainable competitive advantages in countries where its currently operates.
In the UK’s retail industry, there are Marks and Spencer, Asda, Morrisons, Iceland co.
etc. some leading retail companies which are currently giving very tough competition in market
place. So that, with the support of proper business competencies, this company is able to
generate huge profit in the market. As illustrated by Pirayesh and Forouzandeh (2016) marketing
competency, people management competency, communicate competency, problem solving
competency, competency of creativity and innovation etc. are some key competencies of Tesco’s
upper management, and this management is fully able to properly utilise these all competencies
in very specific manner. This is the main reason that, upper management within company enable
to smoothly run its business operations by gaining excellent sustainable competitive advantages
in the market. According to the Tesco’s upper management, its competency of marketing is very
beneficial to it for gaining effective competitive advantages in the market, because with the
support of this competencies, the management is able to choose which marketing strategies are
appropriate to company and which are not. In this situation, while conducting different
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marketing campaigns in different segments of market, it uses only such strategies of marketing
which can contribute in gaining very excellent sustainable competitive advantage in market
place.
Currently the management of Tesco has claimed that, having appropriate core
competencies is one of the most favourable deals to the company for running its business
operations on very progressive path.
SWOT Analysis
SWOT analysis is very helpful tool to different companies within market place, because
this analytical tool supports in identifying key internal factors of a company, so that upper
management at Tesco also have to use this tool (Lee and Tang, 2018). There are SWOT analysis
has been applied in the context of Tesco.
Strengths Weaknesses
 The Tesco is one of leading retail
businesses within the United Kingdom.
 It has the strongest distribution channel
within its home country UK.
 Top-level management not has proper
decision conflicts management ability,
because mostly there are lots conflicts
raises between employees on daily
basis in Tesco’s workplace.
Opportunities Threats
 The management has opportunity to
develop its various competencies by
creating a PDP (personal development
plan)
 The company has great opportunity to
gain more SCA by involving digital
marketing tool in its marketing
operations.
 Continuous increasing competition in
the retail sector or industry of the UK is
the main threat to this company. So
that, upper management should use
some effective business strategies to
properly deal with this threat
(LUVISIA, 2017).
Evaluation
There are upper management of Tesco have to consider these all mentioned factors
within its business environment to make some effective strategies of business. Of course, upper
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management’s poor conflict management competency is a weakness, issue or limitation for
Tesco’s all over growth, so it should deal with it in productive manner.
CONCLUSION
It can be concluded that currently gaining sustainable competitive advantages (SCA) is very
necessary task to the Tesco, because there are many other retail companies are giving very tough
competition to this company within market. Top-level management can take huge advantages
through its various well-developed competencies for gaining excellent SCA in various selected
segments of market.
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REFERENCES
Books and Journals
Bettley, A. and Horrocks, I., 2018. Emergent Versus Planned Assessment and Tuition Strategies
for Online Postgraduate Teaching of Technology and Innovation Management at the
Open University, UK. In On the Line (pp. 55-73). Springer, Cham.
Coffie, S. and Blankson, C., 2018. Strategic prescriptive theories in the business context of an
emerging economy. Journal of Strategic Marketing. 26(5). pp.373-384.
Cummins, D., 2020. Strategy in small firms. In Handbook of Entrepreneurship and Marketing.
Edward Elgar Publishing.
Gerth, K., 2019. Creating sustainable competitive advantage in the German B2B lending
business. (Doctoral dissertation).
Lee, J. Y. and Tang, C. Y., 2018. Examining “Abnormal Returns” of Elite Government
Contractors: A New Venue of Sustainable Competitive Advantage Study in
Management Accounting. Journal of Accounting and Finance. 18(3).
LUVISIA, I. D., 2017. CONTRIBUTION OF COMPETITIVE STRATEGIES TO SUSTAINABLE
COMPETITIVE ADVANTAGE OF EQUITY BANK KENYA LIMITED. (Doctoral
dissertation, MUA).
Mishra, S.P. and et.al., 2017. Approaches to Strategy–A Taxonomic Study. International Journal
of Applied Business and Economic Research.15(4).
Pirayesh, R. and Forouzandeh, R., 2016. The effective deployment of brand through sustainable
competitive advantage and corporate image. Journal of Administrative Management,
Education and Training. 12(4). pp.582-592.
Schmidt, H.J. and Redler, J., 2018. How diverse is corporate brand management research?
Comparing schools of corporate brand management with approaches to corporate
strategy. Journal of Product & Brand Management.
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