Detailed Strategic Plan Analysis of TESCO: Business Development Report

This report provides a comprehensive strategic plan analysis of TESCO, a major player in the retail industry. It begins with an executive summary outlining the key objectives and methodologies used. The main body delves into an internal audit, assessing TESCO's competitive advantage through financial performance and the VRIO framework to identify valuable, rare, imitable, and organized resources. The report then examines TESCO's business strategy, including value and cost drivers, and evaluates its strengths and weaknesses. Furthermore, it explores TESCO's corporate strategy, focusing on diversification and core competencies. The analysis incorporates relevant figures and frameworks to support the arguments. The report concludes with a summary of findings and strategic recommendations, offering insights into TESCO's strategic direction. References support the analysis.

Running head: STRATEGIC PLAN OF MY FIRM
STRATEGIC PLAN OF MY FIRM
Name of Student
Name of the University
Author note

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Executive Summary
Strategic plan refers to the process of determining the organizational goals and also identifying
all those activities that needs to be carried out in order to achieve those goals. It also includes
various control mechanisms to look after the implementation of the strategic plans. In order to
prepare this strategic plan, it is necessary to carry out the internal audit of the organization such
as to identify the competitive position and competitive advantage of the organisation. For the
same purpose, VRIO framework needs to be carried out. Therefore the main aim of the paper
was to identify and analyse the strategic plan of the company. The paper will therefore discuss
about internal audit and analysis of business strategy, corporate strategy and organizational
structure.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Internal audit....................................................................................................................................4
Business strategy.............................................................................................................................7
Corporate strategy............................................................................................................................9
Organizational structure.................................................................................................................11
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
Strategic planning refers to the process by which an organization can define its strategy
or decision-making or even direction. Further strategic planning also includes- making use of
various control mechanism for the purpose of guiding strategy implementation within the
organization. Strategic decision-making on the other hand refers to the process of planning for all
the activities for the purpose of achieving the long-term visions and goals. And strategic decision
making can help in aligning the short term plan with the mission ad vision of the company. In
order to carry out the strategic planning for the organization in a proper way it is necessary to
carry out an analysis of the internal conditions, corporate and business strategies and also the
organizational structure. Therefore in order to carry out the strategic planning properly, it is
necessary to carry out an internal audit that can help in identification of the competitive
advantage and also the VRIO framework is to be used . VRIO framework can help organizations
in identifying its capabilities and resources which can ultimately help in achieving the long term
objectives of the organization (Knott 2015). The company chosen for the purpose of this study
is- TESCO which a British multinational company belonging to the retail industry and engaged
in retailing groceries and general merchandise. The main aim of the paper is to create a strategic
plan for the selected organization by carrying out analysis of its internal conditions, corporate
strategies and also business strategies and also by analyzing the organizational structure. The
paper will therefore discuss about the internal audit of the selected organization to identify their
compertuitice advantages and identification of the competitive position with the help of VRIO
framework. The paper will further discuss about analysis of the business strategy, the corporate
strategy and also the organizational structure.

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Discussion
Internal audit
Internal audit helps in identification of the competitive strategy of the organization that
helps the organization in becoming successful in the market. The competitive advantage refers to
the ability to gain superiority over competitors by being able to provide same value at a lower
price or by being able to provide more value at higher price and also through differentiation
strategy. That is by differentiating the company’s products and services from those available in
the market. Competitive advantage is further dependent upon the identification of the capabilities
and resources of the company and matching it to the opportunities available to the organization.
In other words, competitive advantage refers to outperforming competitors on grounds of
technological capability, cost, acquiring war material at a lower cost and also by providing more
value to the customers. Value creation in this respect therefore means increasing the shareholder
value that help the company in earning more. Therefore competitive advantage and shareholders
value are two interrelated concepts and it can actually help organization in gaining competitive
advantage over competitors. In fact an effective strategy can help in creating a better market
position and also helps in creation of a sustainable competitive advantage. Shareholders value
refers to the value that ids delivered to the owners of the corporation by increasing dales,
increase in the cash flow, earnings and that ultimately leads to increased dividends to the
shareholders of the organization (Morais 2019). Therefore the organization under study is said to
gain a competitive advantage by providing shareholder value in terms of increased dividends to
them. Recently the CEO of TESCO has announced his ambition of reaching higher profitability
targets. He had announced a goal of achieving operating profit that is between 3.5 to 4 percent by

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2020 which clearly implies higher dividends to its shareholders and therefore TESCO is aiming
to increase the shareholders’ value.
Figure 1: Growth in sales of TESCO
Source: (Tesco.com, 2019)
The company’s performance as can be seen from the graph, in the year 2019 has been
better than most of the previous years performance and the company for the first half year of
2019 was achieving an operating profit of 3.45 percent and for the second half of the year it has
been 3.79 percent.
VRIO framework is a strategic tool that is used by organizations to analyses and
identifies the various resources and capabilities that provides competitive advantage to the
company. The VRIO framework includes resources that are valuable, rare, imitable and
organization. There TESCO achieves competitive advantages by having capabilities and
resources that are valuable rare, imitable and organized. Valuable resources of the company
includes- its financial resources as they will help the organization in grabbing external
opportunities by investing in the sane. The local food profits of TESCO are also valuable as the

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company offers differentiated food products. Therefore the perceived value of the differentiated
food products of the company are higher for the customers. Another major important resources
of TESCO includes the human resources since the majority of the workforce is highly skilled
and trained and moreover the employees of the organization are loyal. Moreover the company’s
distribution network is also valuable because it helps in improving the access of the goods and
services to the end customers. The rare resources and capabilities of TESCO comprises of its
financial resources and moreover the employees of the company are also a rare resource for
TESCO because they are motivated and feel engaged with the organization and therefore they
are loyal towards the company (Pollanen et al. 2017). And the distribution network is also rare
because the competitors will find it difficult to imitate the distribution network of TESCO. The
imitable resources of the company include- its financial resources because the same has been
procured by the company through its prolonged profits. The distribution network is difficulty to
imitate because it has been developed over years. TESCO’s financial resources and distribution
network is well organized.

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Figure 2: VRIO Framework
Source: (Kim, Lee and Shin 2015)
Business strategy
Business strategy refers to all the actions and moves that a company usually uses in order
to compete in the market, attract new customers, improve performance and for the purpose of
achieving the organizational goals. It therefore provides a guide or outlines that needs to be
carried out by the organization in order to achieve the desired results. Some of the common
business strategies includes-m differentiation, cost leadership, and focus strategies. These
strategies are also known as the Porters generic strategies (Fumasoli, Pinheiro and Stensaker
2015). TESCO has the strategy of improving organizational performance by improving the
customers loyalty. Value drivers includes all those strategies that are aimed at providing more

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value to the customers, reducing the risks and also for the purpose of promoting growth of
TESCO. The present strategy adopted by the company to improve customers loyalty in order to
improve the organizational performance wills help in adding value for the company by
improving its overall performance and also by providing better quality goods and services to the
customers. Further in order to improve the customers loyalty, the company is also engaging in
various community program and undertaking similar initiatives (Rothaermel 2017). This will
help the customers in feeling good that they are a part of a community program by becoming a
part of TESCO. TESCO’s strategy is divided onto seven parts- the ability to grow in UK,
becoming a creator of valued brands, to become one of the best retailers, to grow all their retail
services, to keep the community responsibilities, to build a better team in order to becomes able
to create more value for the customer’s and to become strong in the non-food sector as well just
as it is in food sector. The company has recently made huge investments in order to improve the
customers shopping trip and therefore be valued by customers and become a sustainable
business. In order to grow throughout UK the company is increasing the number of its
employees, introducing promotions and also renovating the existing stores (Johnson 2016). The
main aim of this strategy is to make the customers feel wanted and also respected by the
organization. In order to become a creator of valued brands the company will be developing own
labels products in order to quality products to the customers. The company has also decided to
open new stores in many countries for the purpose of becoming an outstanding retailer. In order
to become responsible towards the communities, and for this purpose implemented the strategy
of THREE BIG AMBITIONS (Steiss 2019). The company has decided to continuously diversify
its products and services range for becoming a strong market player both in term of its food and
non-food goods and services. Therefore the values that will be added by the company through its

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new strategy can be understood through the seven parts of the strategy of the organization. The
main advantages and disadvantages of the new strategy is that it aims at improving the overall
organizational performance by improving the customers shopping experience and also by
improving customers loyalty. Therefore the strategy if implemented in a proper way can help the
organization in becoming sustainable by providing value to shareholders, meeting the customers
need and by being able to engage the employees in a better way (Vargas-Hernández and Garcia
2019). However the main disadvantage is that the strategy does not put emphasis on
strengthening the competitive advantage of the company and therefore the company’s strategy
needs to focus more on developing financial and human resources.
Corporate strategy
Corporate strategy refers to the organizational direction taken by an organization for the
purpose of achieving objectives in the long-run. One of the most recent approach that is adopted
by the organizations includes its ability to adapt to the environmental changes or the adoption if a
flexible strategy. Diversification strategies are used by the organization in order to expand its
product offerings by increasing the line of its products and also by operating in different markets.
Some of the major diversification strategy includes- horizontal, concentric strategy and also the
conglomerate diversification strategy. And moreover each diversification strategy focuses on a
particular method of diversification. The present corporate strategy adopted by TESCO is that of
a two tier one. The first strategy includes- expansion of the company into the non-food market of
UK and also includes strategic alliance with the RBS. For example if TESCO decides to create
personal finance the second strategy will include aggressive expansion into international
markets. Some of the major core competencies of TESCO is that it has a strategy that is customer
centric or focused. For instance the scheme started by TESCO that is the reward scheme helps it

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in making use of information and adoption of their services to local markets and thereby helps in
improving the customers experience. Moreover TESCO can carry out the diversification strategy
of concentric diversification to serve the country specific needs of customers. In case it adopt the
same, the core competency will be the ability of TESCO to differentiate its products and service
from those offered by the existing markets. The term vertical integration refers to an arrangement
where the company’s supply chain is owned by the company itself. In case of vertical
integration, each supply chain member, produces some products and services and all of them
combine with each other in order to provide satisfaction of a need. TESCO engages in backward
vertical integration by taking over its wholesalers and also the logistics activities that was earlier
carried out by the Brooker group. Therefore TESCO has taken the first step for carrying out
external growth. By this takeover of all the wholesalers the company is expected to become the
major supplier and therefore will complete with small retailers. A strategy gap means a gap the
gap between the present organizational performance and also the performance of the desired
future and is therefore expressed in term of its objectives, vision, mission, and strategy.
According to the gap analysis there lack of an effective human resource strategy of the company.
Strategic alliance refers to an agreement between the parties for the purpose of achieving some
common goals and objectives while also being able to become independent organization. A
strategic alliance does not includes- partnership entity, relationship that is corporate affiliated
and also agency. A recent strategic alliance decision undertaken by TESCO is its decision to
carry out a long term alliance of purchase with retailer Carrefour. The main aim of this strategic
alliance is that of cutting costs (Winnubst 2017). The build borrow buy framework is used to
help organizations in their decision of identification of resources that is required by them for

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growing and also to help them in understanding the right way the resources will be occupied for
becoming successful. Therefore there is a need to identify the strategy gap.
Organizational structure
Organizational structure is the process of outlining the way certain activities needs to be
carried out in order to achieve the organizational objectives. These activities comprises of the
roles, rules and responsibilities. It also helps in identification of the way communication needs to
flow between the various levels of the company. In other words organizational structure refers to
the coordination, allocation and supervision of all the activities for the purpose of achieving the
organizational objectives. The organizational actions are affected be the organizational structure
and it helps in providing the standards operating procedures. The organizational structure of
TESCO is that of hierarchical structure. It is a functional structure because it focuses on all the
departments within the organization (Ashkenas et al. 2015). The main reason why TESCO uses a
hierarchical structure is that the organizational has many department and it is a large
organization. Another major reason behind TESCO’s organizational structure is that it is based
on functions and not the locations. Moreover the organizational structure is also related to the
organizational strategy of the company because in order to carry out the business strategy many
activities are required to be carried out and therefore for the same purpose hierarchical structure
is suitable. TESCO has got mechanistic organizational structure because it operates in a much
formal way with centralized network.
Conclusion
Therefore from the paper, it can be concluded that it is necessary for any organization to
carry out an internal audit for the purpose of identification of the competitive advantage, and