Strategic Management Report: TESCO Transformation Strategy Analysis

This report provides a comprehensive analysis of TESCO's strategic management and transformation strategies. It begins with an introduction to strategic management and its significance for business growth. The core of the report focuses on TESCO's transformation strategy, including the application of the McKinsey 7S model to assess the company's internal elements such as strategy, structure, systems, staff, style, skills, and shared values. The report details TESCO's adoption of digital transformation, encompassing initiatives like the Clubcard, online business expansion, social media engagement, and multichannel strategies. The analysis highlights how these strategies have contributed to TESCO's success in both local and international markets. The report concludes by summarizing the key findings and emphasizing the impact of these transformational approaches on the company's overall performance and achievement of its objectives.

STRATEGIC
MANAGEMENT

TABLE OF CONTENT
INTRODUCTION ...............................................................................................................................3
TRANSFORMATION STRATEGY FOR TESCO .............................................................................3
Tesco McKinsey 7S Model..............................................................................................................3
TESCO's Digital transformation......................................................................................................6
CONCLUSION....................................................................................................................................7
REFERENCES.....................................................................................................................................8

INTRODUCTION
Strategic management acts as the backbone for the growth and development of the company.
Planning and implementing strategies according to the needs and demands of the market and
consumers enhances the functionality of the company. The report has discussed the different
transformational strategies used by the organisations to improve the performances. The report has
been drawn in context to TESCO, a leading retailer company. The company has successfully
embedded its roots as leaders in local and international markets. The supermarket chains of the
company has adopted digital transformations and 7S McKinsey model which has been described in
the report (MINI, 2015). Better understanding of turnaround strategies adopted by TESCO have
been briefly discussed in the report.
TRANSFORMATION STRATEGY FOR TESCO
Tesco McKinsey 7S Model
This model describes the interlinking of different business elements which in turn increases
the overall efficiency. The model illustrates seven business elements. In accordance to the model
business consists of hard elements and soft elements. Hard elements include company's strategies,
structures ans systems. Soft elements consists of skills, staff members, shared values and style.
Shared values are the resultant of the interaction of all the business elements which have direct
impact upon the performance and behaviour of the workers of the company. The seven elements are
described as follows -
1. Strategy – Strategies made in the business model describes the methodologies used by the
company in order to meet its desired goals and objectives. TESCO basically applies the
strategy of Balance Scoreboard (BSC) to accomplish its targets. The company carries the
marketing message that every little helps which means small efforts and small steps can also
lead to a big difference and help the organisation to fulfil its goals. It has also adopted the
business strategy of cost leadership for the communicating their message. The organisation
has sustained this strategy because of its bargaining power with its suppliers to get reduced
purchasing costs and taking advantage of economies of scale (Hill Jones and Schilling,
2014).
Presently the main challenges dealt by the cited company are restoration of trust of
consumers in the company. Profit account scams, delays in payment of the suppliers and reduction
in sales due to these incidents are some major challenges faced by the company. The cited company

has adopted many strategies to overcome these problems which include reduction in capital
expenditures, replacing the benefit pension scheme offered for all the staff workers and revising the
portfolio of the property with the goal of reducing the cost. The company has also increased its
emphasis on availability, selectivity and services on the costs of the offered products and services.
2. Structure – Structure involves the infrastructure of the company like top to bottom
management. The company believes that only one leader is not enough rather all the
workers engaged in top to bottom management should contribute in the working of
strategies. The company follows an extensive hierarchical structure. It contains many layers
of the employees in the hierarchy. There are number of participants from the assistant to the
CEO of the company. In 2015 the roles of deputy store managers was eliminated by the new
CEO of the company. This was done in order to simplify the complex structure followed in
the firm. The Board of Directors in the company consists of approximately ten workers. The
Executive Committee of the quoted company is composed of around eleven members. This
type of intense and complex structures affects the hierarchical functioning of the company
which results in decreased the efficiency of the tasks and functionalities. The company has
tried to reduce the complexity by simplifying the structure (Eden and Ackermann, 2013).
This is done by reducing the number of layers and roles of many members and increasing
direct contacts to the higher levels.
3. System – The system in the company is the functioning of doing work in the company. It is
based on how the allotted task has been completed. It includes prioritizing the allotted work
and smartly finishing the work. To accomplish its pre determined strategies the cited
company has adopted the use to steering wheel in a smarter way to aid the functioning of its
workers in the future. The supermarket chain is depended on many ranges of system on a
regular basis so that its routine operations are sustained. The new CEO of the company has
transformed the management system to get back the business on track. The new
management has adopted many plans which are aimed to simplify organisational structures.
The steering performance appraisal system has been reformed and forty different measures
has been adopted under it (Hambrick, Humphrey and Gupta, 2015).
The latest system of performance evaluation is composed of only six performance measures
in order to simplify the overall procedure of the company. These new systems act as appropriate
examples for the description of the activities of the new management in the company. These
systems help the company to increase the overall efficiency of the internal procedures and the
company activities.
4. Staff – This includes all the employees working for the company. They are the most essential

part of the organisation as without them functioning of the company is not possible. The
recruitment process in the company is such that only skilled and deserving candidates are
selected to work for the company. The company also focuses on retention of the existing
employees (Bettis and et. al., 2015). The cited company is able to achieve its goals and
objectives because of the hard work done by its employees. All the staff members have the
opportunity to express their ideas and perceptions. The firm focuses on the functioning of
the group as a whole rather than a single leader.
They are aimed to recruit more number of good employees so that the work load on the
existing employees is reduced and the targets are met. The recruitment process follows personal
interviews, group discussions, and many other procedures in order to get the best employees for the
company. There are presently more than 400,000 number of staff members working in the elected
company all over the world. More number of employees are targeted to recruit every year in the
company and performances of existing employees are tried to improve by adopting different
measures.
5. Style – It comprises the mannerism with which the organisation perform its work in order to
accomplish its goals and targets. Every organisation carries its own style of performing
work. The cited company adopts the style of working in a smarter way. The company
focuses on smart work rather than on hard work. It has styled its functionalities in a way that
every little strategy and each worker's effort helps in achieving the objectives of the
company. It conveys its marketing message of every little can help. The company has
adopted the style of steering wheel to meet the targets and objectives. This style has resulted
in increased performances of the workers and an enhancement in the overall profitability of
the company (Zhao and et. al., 2017).
The elected company has also undertaken the style of ninety degree arcs. In this arc style the
focus is being paid on four major areas which proved to be quite advantageous. These areas are
fiscal sectors, consumer aspects, operations of the firm, and performances of the staff members.
This style is different and has contributed significantly in achievement of the firm's targets.
Different style leads to versatility and their outcomes enhances the functionalities of the
organisation.
6. Skill – Skills are the soft elements of business which basically are the abilities. The activities
performed in the company consist of different tasks which are to be performed by the
employees. Skills defines the potentialities of the staff members as well as of the firm to
perform the task and finish it efficiently. Various staff members requires different skills to
complete the given task efficiently. For example management skills, leadership skills,

communication skills, technical skills, presentation skills, etc. which depends on the allotted
task. The skills and performances could be measured by analysing particular employee's
performance and hence the outcome of the task.
The cited company offers complete understanding and knowledge to its workers to perform
effectively in the organisation. To achieve this the company has set standards for the work. Workers
have to work as per the set standards of the company. Benchmarking is the best way of improving
performance of the employees and also analyse the result. Trainings on a regular basis is given to
the staff members so that they are able to work in a smarter way increase the efficiency of
performing task. Proper skills are embedded amongst the workers to get the best possible outcome
(Stefan and Richard, 2014).
7. Shared value – Shared values of the company are the outcome of the all the other elements
interacting with each other. Every organisation has its own objectives and beliefs. Shared
value states these objectives of the company. The cited company carries constant visions.
The business strategies although changes with the time as per the demand and situation. The
company carries a clear vision of creating and maintaining a lead in the market and handle
firm to help TESCO bank growth strategy. Its core values involves the commitment of
scaling its performance by becoming a responsible retailer (Demangeot and et. al., 2016).
The company aims to enhance its sophisticated methodologies of management to the high
standard values from simple manufacturing organisations and increase their value chain. Its vision
comprises five elements. First is to be in demanded across the world and be needed globally.
Second is to develop a growing business which is filled with immense opportunities for everyone.
Third is to adapt modern changes and technologies, develop an innovative way and create an
environment full of ideas. Fourth is to apply its skills in the global market and take a lead in all the
local markets. Last is to gain trust and loyalty of consumers, business partners and that of staff
members.
TESCO's Digital transformation
The quoted company has gone through many transformations. Digital transformation proved
to be a great success. It included introduction of club card, online business expansion, social media,
multichannel strategy etc. Club card was simple and effective approach. The customers needed
simply to visit the stores fill the form and take the membership. The members benefited through
special schemes and offers. The information taken from the consumers included their hobbies,
interests, activities, etc. Accordingly offers were provided. In 1990, the company started the online
shopping. Orders were taken through telephone, internet, fax etc. The company followed the

manual mechanism which was slow. With the introduction of new technologies TESCO made the
improvements and launched the service 'tesco.com' which provided large number of products and
services in 2000 (TESCO’s Digital Transformation, 2017).
The company also offers in store digital facilities. Another innovative and attractive feature
was scan as you shop offer for its club card members. To facilitate scanning many handle – held
devices were provided in the stores. For increasing the interaction with its customers the quoted
company opened Facebook account on social media. The company appointed a special team to
handle the social media pages and regular update the account. Better customer interaction is
achieved by rewarding extra points and credits in the club card. The transformation has lead to an
increase in profitability and efficiency of the goods and services offered by the company.
CONCLUSION
The report concludes that the different transformational strategies adopted by TESCO have
lead to achievement of goals and objectives of the company. The McKinsey 7S model describes the
different hard elements and soft elements of the business and their contribution in accomplishment
of company's objectives. The company has adopted the digital transformational strategy which
proved to be a great success for the local as well as international markets. Club card, online website
and social media interaction has given a boost to the profitability and efficiency. The company
should focus more on timely payments and technological advancements in order to improve more.

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Online
2017. TESCO’s Digital Transformation. [Online]. Available through
<http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy/TESCO
%E2%80%99s%20Digital%20Transformation-Excerpts.htm>. Accessed On [1st April, 2017].