Business Strategy: Tesco

Introduction

Business strategy is crucial when it comes to achieving organizational specific objectives and goals. One can refer business strategy to management plan, as it can increase productivity and performance of the company. Moreover, it reveals the ways of achieving competitiveness and goals. It is a top priority for the organization to produce a business strategy. However, one cannot say that business strategy can be the basement of success and efficiency of the organization. The current paper intends to explain the peculiarities of the process of strategic planning of Tesco in the UK, formulation of a new strategy of this company, approaches to strategy evaluation and selection and the process of the implementation strategy.

Part A. The Process of Strategic Planning

1.1. The Goals, Objectives and Core Competencies Contributes to the Achievement of the Mission and Vision of Tesco

Strategic planning is a process of defining organizational objectives, goals and competencies necessary for achieving top priorities. For Tesco, strategic planning is a way of fulfilling its long-term objectives. Moreover, their strategic planning is constantly changing due to the process of globalization and integration at the international market. The mission of Tesco is to occupy a leading place at the competitive global environment. The vision of Tesco includes such priorities: becoming needed and wanted around the world, applying their skills globally, innovation, implementation of the creative ideas and opening future opportunities.

To achieve their mission and vision, Tesco uses such goals as reaching the target market, implementation of the change management process, introduction of products and services. Tesco has such objectives as improvement of promotion, distribution, prosing, product strategies and becoming more competitive. The core competencies contributing to the achievement of the organizational mission are human resources, customer service, manufacturing process and product development (Akkaya 2000).

1.2. The Current Issues Affecting the Strategic Planning Process of Tesco

Strategic planning is an inevitable part of Tesco’s management, as it defines the ways of achieving the target market and attaining organizational objectives. However, there can be the issues that prevent Tesco from efficient strategic planning. First issue is related to time, as strategic planning demands quick decisions and creative ideas and not all employees can fulfill these tasks immediately. Another issue concerns disagreement between members of the team in the question planning. It means that lack of understanding and cooperation, conflicts and discussions can lead to the failure of strategic planning. Tesco is a big company, therefore, long debates and discussions can be supposed as the usual phenomena. The decision makers should always look for compromises when it comes to strategic planning.

Moreover, there can be issues appearing from the internal and external environments. The internal problems refer to the competitor’s and customer’s perspectives. The external problems include political, legal, environmental, economic, social and legal. As a result, employees should be ready for them and do their best to lessen their impact on strategic planning. One recommends prioritizing issues to avoid their negative consequences. The employees of Tesco should also prioritize the points of strategic planning, according to importance, timing and feasibility to escape failure. Wrong strategic planning in Tesco can prevent from flexibility, innovation, consecution, moving forward and achieving objectives.

The possible barriers to Tesco’s strategic planning can concern organizational, operational and strategic objectives. Consequently, one should make it well-done, well-organized and efficient. Despite these possible issues, Tesco’s strategic planning is a dynamic and complex process that is relied upon human resources and competencies. Moreover, strategic planning of Tesco should be rigid, flexible, dynamic, perspective and realistic. Every month, the managers should review strategic planning points to change or improve them.

1.3. Different Planning Techniques

Tesco uses different planning techniques to improve their strategic planning. They use SWOT analysis, EPISTEL, PEST analysis and STEER analysis. Such combination of techniques can provide a real picture of the organization. SWOT analysis is efficient because it helps to analyze the micro environment of the organization: its weaknesses, strengths, threats and opportunities. PEST analysis is used for the analysis of the macro environment of the company and its technical, social, economical and political issues. STEER analysis is an efficient technique for the evaluation of the regulatory, ecological, economic, technological and socio-cultural factors. EPISTEL analysis includes analysis of the legal, economical, technological, social, informatics, environment and political factors. Moreover, all these techniques can identify the strategic planning issues, related to measures and processes, tools and skills and stakeholder involvement (Amato 2004).

As to Tesco, its strategic planning can be analyzed according to PEST technique. Its political factors are connected with the international relations, as this company operates not only in the UK, but in other countries like Poland, Germany, and France. Economic factors of Tesco are defined by buying power of consumers and economic situation at the market. Sociocultural factors include change of consumers’ attitudes to the products offered by Tesco. The company should follow healthy and safe policy and avoid products with GMO and chemicals. Technological factors refer to the innovation and change management process within the organization.

Another efficient technique that is helpful for the micro analysis of the organization is Porter’s 5 Forces method. It consists of such components as: the power of buyers, threat of substitutes, and threat of new entry, supplier power and competitive rivalry. Tesco depends on the power of buyers, as it defines its sales and profits. Threat of substitutes is another alarming factor, as Tesco has a lot of competitors such as Wal-Mart stores and Carrefour.

Task B. Formulation of a New Strategy

2.1. An Organizational Audit for Tesco

For conducting an organizational audit for Tesco one can use SWOT and Porter’s 5 Forces. SWOT analysis consists of defining strengths, weaknesses, opportunities and threats. The strengths of Tesco refer to its experience at the international market, permanent customers, operating all over the world and high quality of their products. The weaknesses of Tesco refer to its commitment to the similar products and services with their competitors and complaints of the customers about some quality-related issues. It is crucial for Tesco to overcome these weaknesses for saving a good image in the market. The opportunities of Tesco are related to its possibility to open new stores in other locations, diversification of services and products and finding new ways of the customer attraction. Moreover, Tesco can reinforce its brand image through the advertisement and public relations. Tesco can also face such threats as high competition, declining of their brand image due to the commitment to their marketing strategy (Akkaya 2000).

According to Porter’s 5 Forces technique, Tesco depends on the power of buyers, threat of new entry, and threat of substitutes, supplier power and competitive rivalry. High demands of customers are the driving forces for the innovation process within the organization. Threat of new entry can also be harmful to Tesco’s brand image as new companies can offer more attractive services and products. Wal-Mart stores and Carrefour can substitute Tesco, as they are also not less reputable companies in the market. However, Tesco should use a competitive rivalry as a way to improve their marketing strategy. Moreover, for Tesco supplier, power is also crucial. As a result, this company should look for new suppliers. It is evident that internal conditions are favourable for the strategic planning. However, they demand constant improvements, innovation and changes.

2.2. An Environmental Audit for Tesco

For conducting an environmental audit for Tesco, one should apply PESTEL analysis that consists of the legal, environmental, technological, sociocultural, economic and political factors. Political aspects include health and safety regulations of the government and tax obligations. It means that all products of Tesco should respond to governmental demands. They should be healthy, without GMO and chemicals. Economic aspects of Tesco refer to its dependence on buying power of consumers. Profits and sales of the company are also defined by the state of the market. Economic crisis, unemployment and inflation rates are the restraining forces for Tesco.

Sociocultural aspects of Tesco refer to quality of products. In present times, people are more conscious about health, so low fat foods should become the top priority for Tesco. Moreover, operation in the market with the different eating habits demands adaptation to the national peculiarities. Technological aspect is also crucial for Tesco. Technological progress presupposes using innovative ways of the food distribution and communication with the consumers. Payment operations can be improved through the more innovative devices. Public relations and advertising can be done online and directly with customers (Amato 2004).

As to legal factors, they presuppose obligation of the governmental laws and regulations, paying taxes in time and products responding to the legal healthy and safe demands. One recommends excluding GMO products from the assortment to save a good reputation and remain competitive in the market. Moreover, legal aspects are related to the promotion of the equality and diversity policy among employees. Tesco can bear a criminal responsibility for the discrimination and racial issues. Environmental aspects of the company refer to the ecological policy that presupposes avoiding the harmful manufacturing and creating a positive ecological image. One can say that Tesco has some environmental issues but strategic planning is a good way of avoiding it (Ferrel & Hartline 2011).

2.3. The Significance of Stakeholder Analysis in the Business Strategy of Tesco

Stakeholder analysis is no less important for Tesco than organizational or environmental. It is conducted before strategic planning to assess the attitude of stakeholders to changes and innovation within the organization. Direct and indirect stakeholders can show positive and negative attitudes.

Tesco has many stakeholders. As a result, they influence business strategy of this company. One can divide stakeholders into direct and indirect. Direct stakeholders include owners, managers, employees and customers. They can also call them the primary stakeholders. They are interrelated and have a direct impact on Tesco’s business strategy. Direct stakeholders have more priorities than indirect. The owners of Tesco should collaborate with both direct and indirect stakeholders to make their company operate more efficiently.

Employees are the basement for the productivity, high profits and sales. Consequently, Tesco should guarantee healthy and safe working conditions, learning, training, good salary, bonuses for the additional or excellent work and technical support. The customers are the driving forces for the economic growth of Tesco in the market. As a result, Tesco should take into consideration their tastes and interests to develop high-quality products. Moreover, Tesco should provide the ethical catering, after sale services, tolerable attitude and efficient delivery policy. Strategic planning should take into consideration these aspects and include them in company’s policy to please their customers (Beaver 2002).

The government, environment, society and competitors refer to the indirect stakeholders. The impact of the indirect stakeholders is also influential, especially on the macro environment. Tesco depends on the government, despite the fact that it is an indirect stakeholder as violation of regulations and laws can lead to the political and legal issues mentioned in the environmental analysis. The government demands an annual report about sales and revenues, in order to demand obligatory taxes. Moreover, to serve the society, Tesco should follow ecological policy, offer only healthy products and be the pattern of ethical and moral principles. Competitors serve as the driving force for the growth and development.

Task C. The Approaches to Strategy Evaluation and Selection

3.1. Possible Alternative Strategies Relating to Substantive Growth, Limited Growth or Retrenchment

For limited growth of Tesco, one should use such strategies as: market penetration, market development and product development. Market penetration presupposes building market share and protect customer base despite Tesco has not problem with the target audience. Market development presupposes operation in other countries (Asian, African) and targeting other customers. Product development is another not less important strategy for Tesco, as it presupposes introduction of new products and services.

For substantive growth, Tesco should use such alternative strategies as horizontal integration, vertical integration, related diversification and unrelated diversification. Horizontal integration can be used for the new markets, as it presupposes merging with competitors for increasing the market share. Vertical integration can be applied by Tesco in the domestic market, as it presupposes linking with another company that has the same supply chain. Moreover, Tesco can use related diversification for operating in the European market, as companies use the similar marketing strategy. For the Asian market, Tesco can use unrelated diversification strategy, as it involves new products and technologies. For retrenchment, Tesco should use such alternative strategies as acquisition and organic growth-internal investment. Acquisition presupposes merging with other companies or joining together. Organic growth-internal investment is used for developing of new competencies (Beaver 2002).

3.2. An Appropriate Future Strategy for Tesco

The stakeholder, organizational and environmental analysis helped to define an appropriate future strategy for Tesco. The marketing objectives of the company include increasing of market penetration and maintaining strong growth. The advantage of Tesco is that it knows its market and the ways of attracting new customers. It will help to communicate better with their competitors and serve customers’ specific needs. One recommends using positioning, targeting and segmentation marketing strategies for the further development. A strong brand image of Tesco will help them to position their products and expand their food to healthy and tasty one. Tesco can do this through public relations and effective advertising campaigns. Besides, one also recommends to develop partnerships with suppliers and manufacturers of the products. It will be also efficient to open new stores in the Asian countries, as Tesco operates mostly in the European market (Belch 2001).

Part D. Implementation of the Chosen Strategy

4.1. Comparison of the Roles and Responsibilities for Strategy Implementation

Strategy implementation considers the human resource factor as the most crucial one for successful realization. Human resources are responsible for management and organizational communication needs. Managers are responsible for the implementation of new marketing strategies and involvement of the creative and strategic thinking. Moreover, managers develop tactics for fulfilling organizational goals and objectives. The responsibilities of Tesco include offering the high-quality products necessary for the society. Company also engages with essential operations, such as diversification, market development, and market penetration. To meet all these responsibilities, Tesco uses strategies and analytical tools, such as Ansoff matrix, model of the structure, coordination and duty allocation.

4.2. The Resource Requirements to Implement a New Strategy for Tesco

Implementation of new business strategy for Tesco is necessary for making changes in customer’s attitudes, technologies and increasing profits. However, to implement this new strategy, Tesco needs some additional resources like human resources. Tesco should include resource allocation in their central management activity. Moreover, they should involve personal and political factors for fulfilling their objectives. One can divide the necessary resources into four groups: technological, human, physical and financial. Technological resources are crucial when it comes to monitoring and evaluation processes. Human resources are essential to implement Tesco’s business strategy. Financial resources are necessary for the advertising campaign and implementation of new products. Physical resources are also involved in the distribution and manufacturing strategies. One cannot say that a new strategy for Tesco will be successfully implemented. However, some parts of marketing and management will be improved. It is a risky task, but it is a strategic way to improve organizational vision and mission. Moreover, implementation of a new strategy for Tesco demands additional learning and training and organizational culture (Bingham, Gomes, Knowles 2005).

4.3. Targets and Timescales for Achievement in Tesco to Monitor a Given Strategy

Tesco is one of the most competitive retail companies in the UK. However, this company wants to increase their profits due to the necessity being more efficient. A new business strategy is a way to increase sales and market shares. They want to become more competitive and improve their product strategy. Moreover, Tesco wants to increase the efficiency of management and performance of employees. One should say that the retail business is a highly competitive business; therefore, a change management process is a must, even for such company as Tesco. Strategic planning of Tesco presupposes long term and short term goals. Long time goals are more crucial for Tesco, but they want to turn them into the short time to see the results of their business strategy. Increasing in sales and market share is their long term goal that will be achieved through the short term ones, such as: opening new stores, public relations and advertising campaigns. Year by year Tesco wants to win other markets, like an Asian one. Moreover, they include promotion of healthy and safe products to a short term goal, as it is a more alarming issue.

Conclusion

In conclusion, one should say that a new business strategy will be efficient for Tesco, as it will help to reach the target market, implement new products and change management process. Without doubt, there are issues that prevent strategic planning, and they are related to the mutual understanding between an employer and employees. One recommends using

SWOT analysis, EPISTEL, PEST analysis and STEER analysis to detect the potential threats and reveal new opportunities for Tesco. Organizational and environmental audits helped to understand the way of the implementation of a new business strategy. Stakeholder analysis proved that it was crucial for Tesco to find a mutual understanding with direct and indirect stakeholders for fulfilling a business strategy. Moreover, Tesco should use possible alternative strategies for retrenchment, limited growth and substantive growth, as the ways of the widening of the target market. One recommends opening more locations for Tesco stores, streamlining, launching new healthy and safe products as the ways of winning the international marketing. The company tries to build positive associations with their brands and provoke interest to their products. If they spend money on advertisement, with time, they will double their incomes. Increasing of sales is the next objective of sponsorship; it involves indirect actions as increasing of sales depends on the image of the company, its place on the market, and ability to compete, among many other issues.

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