Evaluating Tesco's Strategy Development and Risk Management

This report provides a comprehensive analysis of Tesco's strategic development, focusing on its approach to strategy formulation, risk management, and stakeholder engagement. The report evaluates Tesco's strategic development, comparing planned, emergent, and incremental approaches, with a recommendation for an emergent strategy. It also identifies key areas of concern within Tesco's external environment, using PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors. The report further examines Tesco's risk management strategies within its strategic planning process. Additionally, the report delves into stakeholder theory, critically analyzing Tesco's relationships with various stakeholder groups and explores the meaning and implementation of corporate social responsibility (CSR) within Tesco's strategic framework. The conclusion summarizes the key findings and provides insights into Tesco's overall strategic direction.

Strategy

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Ques 1. A) Evaluating TESCO approach to Strategy development ...........................................3
B) Identifying the main area of concern in context of organizational external environment ...6
Ques 2. Evaluating the Tesco risk management in strategic planning process. .........................8
Ques 3 A) .Stakeholder theory and critically analyzing the Tesco relationship to each of
stakeholders group .....................................................................................................................9
Ques 3 B) Meaning of Corporate social responsibility and analyzing the CSR in Tesco
strategic framework ..................................................................................................................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Strategy can be defined as plan of action which is designed for driving an organization
towards accomplishment of objectives. It can also consider to be as general direction which are
set by management for an enterprise in order to attain desire state in the future. Strategy is
basically a framework which supports management in making important business decisions.
Formulation of the strategy is completely based on roles of different functional units within an
enterprise. Strategy has great importance as it provides sense of direction to companies. It also
highlights the measurable goals. In addition to this, formulation of an effective strategy is also
crucial in order to guide routine decisions. The main purpose of strategy is to set the overall
goals for company and to provide the direction for accomplishing the same. Strategy can also be
considered to be as an effective means of allocating business resources, establishing clear
expectations etc. An effective strategy assists companies in increasing their competitive position
and helps firm in increasing value of shareholders.
The report will have focus on evaluating an approach utilized by an organization for
strategic development in context of Tesco. It is basically a British multinational organization
which is operating business in retail sector. Study will emphasize on risk management strategy
adopted by this firm.
MAIN BODY
Ques 1. A) Evaluating TESCO approach to Strategy development
Strategic development can be referred to as the management activity which is mainly
concerned with setting of priorities. In context of Tesco, it is the procedure which emphasizes on
business resources, strengthening operations in order to make sure that workers as well as other
stakeholders are working towards accomplishment of desired organizational objectives.
Tesco is basically a multinational merchandiser as well as grocer operating business in
retail sector. An organization is among the third largest retailer in the world measured in terms
of gross revenue. The changes in internal as well as external environment has direct as well as
significant effect on the business operations of TESCO. Management in an enterprise has
developed unique strategies for dealing as well as coping with the changes in internal and
external business environment (Geyskens, 2018.). Among the different approaches such as :
Planned : It is considered to be as one of the traditional approach to strategy development.
Planned approach to strategic development includes the action plans which has already been

developed in order to achieve desired business goals. Companies using the planned approach
plans different actions on the basis of set goals or objectives. It is the approach which is presently
adopted by Tesco. Management in an enterprise plans tactics considering the set objectives. The
main benefit of planned approach to strategic management is that it provides management in
measuring the progress. In addition to this, planned approach to strategy development provides
management an ease in making sure that actions of all employees are directed towards
accomplishment of set organizational goals. It can assist an organization in gaining the
competitive advantage in the market (Keay and Iqbal, 2018).
Planned is basically an appropriate for dealing with the changes in internal factors of
company. For instance, Tesco can utilize planned approach to strategic development for
positively influencing employees to change their behavior and improve their performance at
workplace. In addition to this, business entity can use planned approach to strategy development
for bringing positive change in culture, business procedures.
Emergent: This is an approach which is usually adopted by different enterprises for
developing strategies. It basically involves use of set of specific set of actions for dealing with all
the situations. Emergent approach to strategic development is mainly concerned with the
procedure of identifying the unexpected results generated from the implementation of corporate
strategy. It also includes learning to integrate those unexpected outcomes into future corporate
plans. It is considered to be as an appropriate approach which can be used for providing an
appropriate response to changes in factors of external business environment.
For instance, an organization utilizing the social media platform for improving the
promotional or marketing activities can be considered to be as comprehensive marketing
program. But in case, social website marketing aspect of the plan suddenly becomes extremely
successful, then it is an emergent strategy that needs to be addressed.
The main advantage is that by utilizing the emergent approach to strategic formulation,
Tesco can increase its flexibility in context of adapting to change. The Biggest disadvantages of
the emergent approach to strategic development is that it is not predictable. In addition to this,
another major drawback of emergent approach to the strategic development is that, it is not use
properly it can have negative effect on the business structure of company. Emergent approach to
strategic development maker’s significant contribution in success of business.

Incremental : It is considered to be as a method of planning the things in formal manner. This
approach to strategic development states that strategies are closely related to the group of
decisions which are handled incrementally. Incremental approach is basically consists of
realizing the functional components of goods which are directly usable. Incremental is
considered to be as an effective as it assists management in identifying the specific form or types
of changes which can be best sustain through gradual changes rather than complete
transformation.
It is the approach to strategic development which emphasizes on identifying the changes
which an enterprise is required to make for improving specific situations. The main advantage of
this approach is that it provides clear direction for political as well as funding priorities. In
addition to this other benefit of the incremental approach to strategic development is that if used
by Tesco it can aid an organization in reducing the destructiveness of confrontations over
intractable issues.
The drawback of using the incremental approach to strategic development is that it lacks
broad organizational focus. In companies which utilities the incremental approach to strategic
development operational department is mainly liable for executing the activities have to face
issues in aliening their operations with the plan.
It has been suggested that Tesco should adopt emergent approach to strategic
development. Tesco by utilizing the planned approach to strategic development can give an
appropriate response to changes in internal as well as external business environment. In addition
to this, by implementing emergent approach an organization can easily adjust to change. In
addition to this, the other advantages of emergent approach to strategic development is that it
helps management in boosting employee’s morale as well as assist in bringing drastic
improvement in culture (Goworek, Oxborrow and Hill, 2018.). It is very much important for
manager in Tesco to make use of emergent approach properly in strategic development
procedure, Manager in Tesco is required to develop strong strategic plan which focused goals as
well as account abilities for outcomes. In addition to this, by utilizing the emergent approach to
strategic development, Tesco can capture an opportunity to provide an effective response to
outside forces for its benefits. An organization can utilities emergent approach for strategic
planning related to development of products or services which is still not considered by their

competitors. In addition to this, Tesco can utilize emergent approach for creating the plan for
responding to the customer feedback in context of requirements which has not been fulfilled.
B) Identifying the main area of concern in context of organizational external environment
Pestle analysis is considered to be as one of the best techniques which can be utilized by
manager in Tesco for identifying the main area s of concern related to the changes in various
factors of external business environment. Pestle analysis is the technique which supports
management in identifying the issues and supports them in development of an effective plan for
dealing with the same. It also assists management in identifying the suitable strategies which can
be utilized for eliminating the risk which might occur due to changes in different factors such as
social, political, legal, environmental, technological etc in business environment. In context of
Tesco, management is highly concerned about the effect of changes in the external business
environment. The main area of concern in context of changes in different environmental factor
are :
Political factors : as Tesco is operating business in different countries, an organization is
exposed to the many political factors which can have effect on its business operations. Some
political factors which can have impact on TESCO business includes political instability, current
and impending legislation etc. In context of Political factors, the main area of concern is that
imposed of tariff as well as non-traffic barriers, Taxes by the government can create the major
hindrance in the operations of Tesco, as an organization imports raw material or products from
different countries. In addition to this, management in Tesco is also concern about the effect of
UK decisions to Leave EU on retail sector.
It is required by the Tesco, to follow all the regulations and work according to the
instruction of legal authorizes as well, as political parties, as this strategy will assist an enterprise
in accomplishing its goals of capturing the target market (Ayoub, Lambert and Shah, 2019 ).
Economic factors: Management in Tesco is highly concerned about the changes in
economic factors on firm profitability as well as financial performance. Business entity is high
concerned about the changes in economic factors such as economic condition of nation, inflation
in prices products, increase in tax rate etc. as all these components have direct and significant
effect on the customer behavior. Management in Tesco is highly concern about the inflation as
well as exchange rates in host countries. As addressing the changes in economic factors is

crucial for business plans as well as financial safety of firm. Management in Tesco is highly
concerned about the financial uncertainty, as it is the factor which might lead to the low spending
by customers and therefore can lead to the decline in sales and profitability of an organization. In
addition to other are of concern related to the economic factor is that changes in different
monetary policies such as taxation policy by the movement in the nation can affect the Tesco
ability to access finance.
In context of Tesco, an organization in order to deal with the changes in economic factors
is required to make different adjustment in their strategies,. In addition to this a firm need to
concentrate on advertisement of products as well as services.
Social factors : The main areas of concern in context of social factors which is faced by
Tesco are changes in trends of shopping by consumers. An organization is concerned about the
meeting the unique demand of customers related to fast delivery with flexible return policy. As
launching the return policy for consumer can lead to the additional cost for an organization. In
addition to this, other area of concern faced by the management in Tesco related to changes in
social factor include increase in the awareness related to health issues such as obesity can lead to
the decrease in demand for the food product offered by organization. In context of the given case
scenario, increase in awareness about the security issues among people can lead to the decline in
online banking services by Tesco.
Technological factors: The main area about which management in Tesco is concerned
about is shift in consumer buying pattern due to the advancement in Technology. Other area of
concern is that advancement in technology can give rise to intense competition in industry which
might have effect on performance of organization (Utgård, 2018.). Management in Tesco is less
concerned about the changes in technological factors, as they know that they can utilize advance
technology for providing the good experience to customers.
Legal factors : The management in Tesco is highly concerned about the changes in laws
on the performance of company. In addition to this, Tesco is highly concerned about the legal
obligations which an enterprise might have to face if an enterprise fails to comply with laws. In
addition to this, management in an organization are concerned about the impact of changes in
legislation as well as policies on its business operations. In context of given case study, in
context of strategic management, manager in Tesco is highly concerned about the laws related to
the data protection and its effect on its operations.

Environmental factors : The introduction of environmental laws by government in the nation
has raised the concern of management in Tesco. Implementation of the environmental legislation
in the nation has led to the intense pressure on Tesco in context of becoming eco-friendlier. In
addition to this, management in Tesco is highly concerned about their liability towards
environmental issues and effect of the same on business performance. Manager in Tesco is
highly concerned about the way to provide high level of satisfaction to its stakeholders.
Ques 2. Evaluating the Tesco risk management in strategic planning process.
Strategic risk management can be defined as the procedure which involves identification
as well as mitigating risks involved in context of strategic planning Process. In context of
Tesco, an organization has integrated its risk management in strategic planning process. It is very
much essential for manager in Tesco to address as well as evaluate risk as this tactic will assist
them in making suitable business decisions. It is very much important for the manager in Tesco
Illustration 1: Pestle analysis
Source: (Scanning the Environment: PESTEL Analysis, 2016 )

to address as well as evaluate the risk involved in strategic planning process. The different risk
involved in the strategic planning procedure includes changes in different factors such
demographic, economic factors, trends, changes in consumer behavior, technological
advancement, political as well as regulatory directions (Li and McMillan, 2019.). In context of
Tesco, Strategic risk management procedure of company consist of an important component
these are target risk profile, strategic risk identification procedure etc. It also includes procedure
for the assessment of likelihood as well as effect of the same. Tesco strategic risk management
procedure in strategic planning also includes special procedure for monitoring as well as
reporting of strategic risk. Such types risk occurs when an organization fails to identify the
needs of people as well as market.
Target risk profile: Management in Tesco utilities target risk profile as a parameter for
strategic planning. Target risk profile is a document which consists of detail about the risk that
an organization deems acceptable. They are a check against which strategies must be evaluated–
do the proposed strategies developed in order to support an organization in accomplishment of
desired objectives.
Strategic risk identification procedure: Tesco has separate procedure which is mainly
established for identifying the risk.
Strategic risk assessment procedure: Dephi technique is utilized by management in
Tesco in order to assess the effect of strategic risk on success as well as sustainability of an
organization. In addition to this, manager in Tesco also identifies as well as evaluate trends by
conducting the market research. In addition to this, management in an enterprise conducts the
environmental audit which is important part of their strategic planning procedure.
Monitoring as well as reporting of strategic risk: After assessing the strategic risk,
excerpted trends are developed then manager in Tesco reevaluates the strategy. After the
revaluation of the strategies a report is prepared. Report consist of detailed information about
triggering events which are addressed during the assessment phase. The procedure of risk
management does not ends here, continuous monitoring is done by management in Tesco
(Ansoff, Helm-Stevens and Ansoff, 2019.).
In context of Tesco, an organization has adopted the Top down as well as holistic
approach in order to manage the risk in strategic planning procedure. It is the approach which
assisted management in identifying as well as evaluating the broad range of possibilities related

to occurrence of events which might influence strategic planning procedure and also the
objectives set.
Ques 3 A) .Stakeholder theory and critically analysing the Tesco relationship to each of
stakeholders group
Stakeholders can be defined as person those who are directly or indirectly involved in the
operations of company. Companies have two types of stakeholders these are internal and external
stakeholders. Internal stakeholders are those who work within an organisation. For instance,
board of directors, shareholders, managers, employees etc. all are internal stakeholders. They are
the stakeholders those who get highly effected by the action taken by management in company.
Internal stakeholders by applying their skills as well as knowledge make their significant
contribution in driving firm towards success. External stakeholders can be referred to as party
such as investor, suppliers, customers who influences business and they also get effected by an
enterprise. In addition to this, stakeholder analysis is the technique which is utilised by Tesco for
identifying those stakeholders who supports business activities. Stakeholder analysis is
conducted by management in Tesco in order to get important opinions from stakeholders and
obtain support from powerful stakeholders.
Tesco have good relationship with their internal stakeholders. Business entity makes huge
capital investment on training and development of employees. Management in an organisation
conduct regular meeting in order to identify the problems faced by their workers and to provide
employees with an appropriate solution to their problems. An organisation has also adopted the
Employee empowerment strategy which has assisted them in ensuring the participation of
employees in decisions making procedure (Chernev,2018). An open communication channel has
been provided to workers so that they can easily share their opinions, problems with
management. Training and development opportunities provided by manager in Tesco has helped
employees in increasing their morale and helped them in improving their performance. It has
also supported workers in fostering personal as well as professional growth.
Customers are considered to be as one of the important stakeholders of Tesco. An
organisation have developed strong relationship with its customers by providing them with good
quality of products at reasonable price. In addition to this, Tesco made capital investment in
research for getting the information about the factors or things which provides high level of

satisfaction to its clients. In context of Tesco, an enterprise has formed strategic partnership with
other firms in an enterprise in order to provide its customers with more services (Bryson, 2018).
Word of mouth is the strategy which has assisted an organisation in developing the strong
relationship with customers. It has helped an organisation in gaining the loyalty of customers. In
context of Tesco, an organisation has much focus on the catering to the needs as well as meeting
the expectation of customers, as they are people those who contributes to the profitability of an
organisation. In addition to this, firm seeks feedback from customers about the products or
services in order to strengthen its relationship with clients. Seeking the feedback from the
customer is the strategy which has helped Tesco in gaining competitive advantage (Dess, Eisner
and Lee, 2019). In context of Tesco, business entity is planning to sell more variety as well as
range of products in order to keep both shareholders as well as its client happy. Customer get the
benefit of quality products which are offered to them by organisation.
Tesco does not have good as well as strong relationship with suppliers, as firm sometimes
engage in bad negotiation which is facilitated in order to force suppliers to reduce the prices of
products. An organisation is taking high initiative to rebuilt its relationship with suppliers by
launching a new Online network. Tesco has always been criticised for tactics utilised by an
organisation for dealing with suppliers. An organisation is now maintaining the relationship with
suppliers by quality as well as price criteria. In context of Tesco, customers are considered to be
as pressure group as they force company to fulfil their needs. Supplier get benefit as by
developing the relationship with reputable firm, they get chance to earn high profit.
An organisation has strong relationship with shareholders as well as investors, company
is taking high initiatives for providing high return to both the parties.
Management in an enterprise makes strategic plans and make business decisions considering the
interest of its shareholders. By developing the strong relationship with company, shareholder
avail a chance to get high return on investment.
In context of Tesco, an organisation has adopted the agency. It is the hypothesis which is
adopted by Tesco in order to resolve its issues in context of relationship between principle and
agent. For instance, executives in Tesco has decided to expand business in new market. The step
or decision taken by executive has lead to the sacrificing of short term profitability of an
organisation in expectation of growth and high return on investment. Shareholders in an
enterprise has place a priority on short-term capital growth and oppose the company decision.

Ques 3 B) Meaning of Corporate social responsibility and analysing the CSR in Tesco strategic
framework
Corporate social responsibility can be defined as business approach which contributes to
the sustainable development of an organization by delivering social, environmental and
economic benefit for both internal and external stakeholders. It can also be considered to be as
sense of an organization responsibility towards society as well as environment. Tesco has
emphasized on fulfilling interest of its shareholders. The main motive of Tesco in context of
implementing the corporate social responsibility is to gain customer loyalty (Friday, Sridharan
and Collins, 2018.).
In context of Tesco it is very much important for an enterprise to fulfil its corporate social
responsibility because of the ethical issues as well as scandals faced by organisation. Due to the
ethical issues there has been great decline in sales and profitability of firm. CSR strategy of the
Tesco mainly emphasizes on promoting human right as well as addressing societal challenges.
An organisation in order to fulfil its responsibility towards society as well as environment has
form strategic partnership with other organisation in an industry. In December 2015, Tesco join
the UN global compact, it was an initiative taken by for encouraging companies to adopting the
socially responsible policies and execute sustainable business practices. In addition to this, an
enterprise has taken high initiative to reduce the carbon emission of the product in their supply
chain. Steering wheel approach has been utilised by management in Tesco for ensuring the
corporate social responsibility formed a part of their routine business activities (Ivory and
Brooks, 2018).
Tesco corporate social responsibility policy involves business ethics as well as their
effects on its business practices as well as stakeholders. An organization has sense of
responsibilities top respect the human right. An enterprise has taken a high initiative by aligning
their strategies as well as operations with fundamental principle on human right, labor
environment as well as anti-corruption. In addition to this, human right policy has been
developed by management in Tesco, in align with local culture as well as labor laws. In addition
to this, Tesco has adopted the Timber sourcing policy in order to reduce the negative effect of its
operation on business environment. In context of TESCO, corporate social responsibility is an
integral part of an organization strategic planning procedure