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Unit 7 Business Strategy Assignment - SWOT and PESTLE analysis
Diploma in Business
Unit Number and Title
Unit 7 Business Strategy - SWOT and PESTLE analysis
This unit 7 business strategy assignment - SWOT and PESTLE analysis sheds light on the aspects of various strategies of business and helps us to comprehend the processes of planning business strategies and evaluating those strategies with the help of implications of different theories. The assignment also helps us to understand the methods of formulating and implementing the strategies. The Business organization that I have taken into consideration for the study is Tesco Plc. I have considered the internal factors and the external factors of the company to make SWOT and PESTLE analysis of the company. I have made an analysis of various aspect of the business strategies of Tesco Plc to see if it has made optimum use of its inputs to obtain value and sustenance in the market or not.
Overview Of Tesco Plc
Tesco Plc is a large company in UK dealing in groceries. It is a multinational company, i.e. it operates in various countries of the world. Its head quarters are in Welwyn Garden City at Hertfordshire in England, UK. Tesco Plc is a retailer company that stands on third position in terms of profitability and stands on second position when measured in terms of generation of revenue. Tesco Plc has stores located in almost 12 countries across the continents of Asia and Europe. Tesco plc was founded by Jack Cohen in the year 1919 in the form of group of market. The name of the Tesco Company was given to it in 1924 when the founder Jack Cohen bought a shipment of Tea from T.E Stockwell. Jack Cohen united the initials of Stockwell and the first two letters of his own surname and coined the name ‘Tesco’.
Tesco plc opened its first store at Burnt Oak in Barnet in the year 1929.The company’s business expanded very fast and 1939, the company had 100 plus stores across UK. Originally the company was a grocery retailer basically but in 1990s, it diversified its products and underwent geographical diversifications by venturing into clothing segment, electronics segment, petrol segment, toys segment, books segment, areas of internet and telecom services, financial services etc. With all these diversifications, Tesco plc transformed itself from being a company of low cost retail segment that has low market with high volume into a business company appealing to customer of all segments in the society. The company now offered variety of products ranging from value to finest range. The process of diversification made the company more successful and the number of stores of the company rose from 500 in 1990s to 2005. Tesco’s operations in UK are differentiated into various formats on the basis of the range and size of products sold. These formats are Tesco superstores, Tesco Metro, Tesco Express, Tesco Express and One Stop. Tesco Superstores are relatively large stores stocking grocery and large volumes of non food product range. Tesco Metro are the stores smaller than superstores but larger than express stores. These are mainly located near train stations and inner busy streets of towns. Tesco Express is the stores for the convenience of neighbourhood residential colonies. Tesco Extra is the hyper markets mainly located out of town area and having the stock of almost all products of Tesco. One Stop are the stores that are even smaller than Tesco Express and this format does not include the name Tesco in it. Tesco is listed on the London Stock Exchange. According to the statistical data of 2015, the company has a worth of £18.1 billion.
Tesco has nearly 468000 employees that are spread all over the world. Tesco has staffs that is flexible, motivated and trained well to meet the needs of the customers. Tesco supports and trains its employees to perform various roles at various levels efficiently. Tesco motivates the employees by enhancing their skills, knowledge, and job satisfaction levels via appropriate programmes of training and development and offering relevant rewards and recognition. (Tesco and society, 2016)
1.1 Using your chosen organization as an example assess the business mission, vision, goals and objectives as well as the core competencies.
Vision, Mission, Goals And Objectives Of Tesco Plc- The vision and business sytategy of Tesco Plc is to build itself around the clients or customers and the employees. The vision of the company gives the direction to it in which the strategies and policies are to be framed. The mission and vision of Tesco Plc is to become a business organization that has high value and respect in the eyes of its customers served by the company, loyal and committed employees along with the stakeholders of the company and amongst the communities that are associated with thecompany.
Elements Of Strategies Of Tesco Plc To Achieve Its Mission, Vision And Goals
- Aspiring for being needed across the globe: Tesco desires to become the most needed and wanted place for shoppers to shop and for employees to work with. It aims at becoming a business organization that has high reputation in the community and the shareholders want to invest in.
- Offering opportunities for growth: Tesco aims at giving maximum possible opportunities for growth to the employees and customers both.
- Being Innovative: Tesco makes all endeavours to understand the desires, wants and preferences of customers and makes innovative changes in the products with the motive of making the lives of customers easy.
- Building Trust: Tesco tries to build trust amongst its customers and employees with respect to all its activities such as offering healthy and pleasurable shopping experience for its customers, keeping promises in terms of price, offering high quality products and providing healthy work environment for its employees.
Core Competencies Of Tesco Plc- Tesco Plc has created its core competencies for the enhancement of its scope, expansion of its market share and offering excellent products and services to its customers in pursuance to its vision, mission and objectives. The company has created core competency via IT based and efficiently managed operations of its stores. This has helped the company to offer high quality products to its customers at a relatively lower price than its customers and to build a strong loyalty customer base. (Tarata, 2013)
1.2 Analyse the factors that have to be considered when formulating a strategic plan of the chosen organization.
The strategic formulation of plans in Tesco Plc is a continuous and consistent process based on the analysis of situations via the tool of situational analysis. The existing state of internal environment and external environment is analysed and the objectives and strategies for the company are formulated on the basis of the assessment of these environments. Then the methods to implement these strategies and evaluating them are developed.
Factors Considered By Tesco Plc While Formulating Strategic Plans
- Analysing the existing state and the future
- The assessment of the strengths, weaknesses, opportunities and threats for the company is done by the means of SWOT Analysis process. The internal environment, the external environment, the competitors of the company, the supply chains, customer base, substitutes available in the market, the barriers in the market etc. are all taken into consideration to make the SWOT Analysis precise.
- Positive Engagement of employees by appropriate and timely communication, reward system and positive culture
- The employees of Tesco Plc play a vital role in formulating and implementing the business strategies. Therefore the company keeps the factor of positive engagement into consideration while making strategic plans. It offers a healthy positive work culture to employees that help them in imbibing the policies and changes in a healthy manner. The communication from top to bottom and bottom to top is timely and appropriate to help the instructions and feedback to move in an effective manner.
- Innovations: Effective innovation process for the products and services is also necessary to keep the company competitive in the market.
- Competition and challenges in the market and forecasts: Tesco Plc makes appropriate research and development to understand the needs of customers and the products floated in the market by the competitors.
- Needs and wants of customers: The company makes proper R&D to know the needs of the customers and make appropriate changes in its products and services to suit their needs.
- Competitive Advantage: Tesco uses IT Based innovative technology to increase the base of loyal customers and offer high quality products and services. This provides competitive advantage to the company. (Stanleigh, 2016)
1.3 Using your chosen organization, evaluate the effectiveness of at least two techniques used when developing strategic business plans for your organization, for example, the Ansoff’s Matrix and BCG Matrix
Ansoff Product-Market Growth Matrix - Strategic Tool
The Ansoff product -marketng mix strategy tool helps Tesco Plc to understand and assess the strategies for business development.
This tool has various options that possess various kinds of downsides as well as opportunities for different types of organizations. These are given as under:
- Market Penetration – This has the scope for developing the sales for existing type of products in existing types of markets.
- Product Development – This option has scope for developing novel products for novel markets.
- Market Development – This option holds the strategies for developing novel markets for existing type of products.
- Diversification – This option holds strategies for introducing new products into the new markets. (Schoemaker, 1995)
Boston Consulting Group Matrix (BCG)- The Boston Consulting Group Matrix enables the company to understand the position of the company in terms of business strategic policies and offers a roadmap to the company for the identification of needs for changes.
Market Growth and Relative Share Matrix- The business units of Tesco plc are is placed on the matrix and are categorized as Question Marks, Stars Marks, Cash Cow Marks, or Dog Marks. The units in the category of Question marks hold lower market share relatively and are full of uncertainties. When significant changes are made in such units, the market share of these units’ increases and then they come into the category of Star Marks. On further positive changes they acquire the position Cash Cow marks. In case the positive changes do not come in the business units placed in the Question Mark Category, they turn into Dog Marks which refer to the business units of very low values for the company. Such units can be shut down. The cash generated from the Cash Cow group of units is reinvested. (Kaplan Financial, 2012)
2.1 Analyse the current strategic position of your chosen organization by conducting an organizational audit (Using SWOT and Product Positioning).
SWOT analysis tool is used by Tesco Plc to identify the strengths, weaknesses, opportunities and threats of the company.
- Strengths Of Tesco Plc- Tesco has been a powerful performer in financial terms since many years in the past when profit and revenue generation is taken into consideration. Tesco has a strengthened model of business as well with strengthened supply and value chains. Strategies formulated by Tesco plc comprises of activities and actions focussing on making the products affordable for customers without making any kind of compromises with the quality of products and services.
- Weaknesses Of Tesco Plc- The weakness of Tesco plc is basically the low diversification in terms of geographical locations. This makes the company prone to risks especially in the market of UK and also leads to high transportation costs due to relatively lesser spread of branches.
- OpportunitiesFor Tesco Plc- Despite of being based mainly in UK, Tesco plc has entered into various countries in Asia and Europe. The globalization is giving many opportunities to the company to diversify geographically. The prevalent use of internet and technology has also enabled the company to make online selling and increase its sales with the advantage of economies of scale and effective operations.
- ThreatsFor Tesco Plc- Tesco plc is based mainly in UK and the countries of Europe that are mainly EU nations. These nations are confronting various kinds of financial issues and threats. The decline in income and rise in unemployment of the buyers is affecting their buying behaviour. All this keeps the company prone to risks. (Corporate Watch, 2016)
2.2 Using appropriate method and tools such as PESTLE Analysis, carry out an environmental audit of your chosen organization.
Pestel Analysis- Environmental Audit Of Tesco Plc
- Political- Tesco Plc has diversified itself geographically and operates in many parts of Europe and Asia. The political environment of the nations in which it operates affects the operations of the company largely. The variations in tax rates of various countries, variation in legislation policies across the world, the political stability and foreign policies of these nations influence the operations of Tesco in a large way.
- Economic- Recently Tesco Plc has started focusing on geographical diversification which has made the company successful in generating more profits and revenue but at the same time the disposable income of the buyers and the employment rate has declined across the world. This has led the company to shift its promotions focus from the high end luxurious products to value products.
- Social- The increase in awareness amongst the buyers regarding the environment protection and healthy ways of living has led to the increase in the preference for organic products by the customers. This shift in consumer preference has made Tesco Plc to accommodate the preferences for organic goods and products. Increasing awareness amongst customers, with respect to health issues, has led Tesco to adapt itself to the changing customer preferences.
- Technological- The technological advancements in online shopping, initiation of counters for self service, maintenance of systematic customer and employee data, supply chains and operations of the company have given a lot of convenience to the customers and have helped the company in enhancing profits via economies of scale.
- Environmental- It is seen that the business organizations are under constant pressure to address to the environmental protection issues. Tesco plc ensures that it remains committed towards its commitment to reduce the production of Carbon by half of what it is doing now by the year 2020.
- Legislative- Tesco plc ensures that its policies meet all the legislations made by the government in terms of its operations, production and marketing of its products and services. (Ivory Research, 2016)
2.3 Assess the significance of stakeholders’ analysis when formulating a new strategy for your chosen organization.
Stakeholders- Definition-Stakeholders of a business organization or company refer to the individuals who are directly or indirectly associated with the organization and have an interest or stake in the organization. The stakeholders are the employees of the company, the customers, the director and the management, media, investors, creditors, social groups, society, community, government, unions etc.
Stakeholders’ Analysis-It is a method or tool or technique that helps in identifying the individuals or stakeholders whose help and support is needed for making the operations of the company successful.
- The opinion of influential stakeholders shapes the business project when they are initiated and are present in early stages. These stakeholders can offer inputs that can help in improving the quality of the project.
- The influential stakeholders can be given with the information and can be communicated about the significance and the developments of the project. This will help the company to receive the support from them actively when ever required. (Thompson, 2016)
2.4 Present the new strategy for your chosen business based on organization audit and stakeholders analysis.
Presenting New Strategy
Within the present scenario, the new strategy that is being proposed by me includes:
- Development of a reputed and innovative brand in the retail industry
- Using an effective data management system
- Reduction in costs
- Addition of value
- Induction of customer centred marketing
- Strategic dealing with creditors and suppliers
- Emphasise on strengthening relations with stakeholders.
Following measures can be taken for formulating the strategy:
- Tesco Plc must explore the markets of urban regions that have scope only for smaller stores. Such stores can help to focus on customers in a more effective manner.
- The policies of the company must be more effective in increasing product volume, geographic and product diversifications, widening the base of customers, reduce costs, become more competitive and strengthen the value and supply chains.
- The company must also focus on distributing the additional profit margins amongst the sales team in the form of bonus or motivating incentives. (Olsen,2016)
3.1 Analyse the appropriateness of alternative strategies relating to market entry, substantive growth, limited growth or retrenchment of your chosen organisation.
To run a successful business and to retail a proper position in the global market the strategic team of the companies has to keep an eye on the changing trends in the market since it makes a huge impact on the business, hold the clients and future success. The continuous analysis of the market helps the company to plan its strategies to alter the success factors. In the current scenario the competition among the competitive companies is at its peak to hold the top position and to retain it and this can only be done if the company understands its client’s requirements, keep on a research in the recent trends and introduce its new products and offers to attract the attention of the customers. Tesco is ruling the UK market since a long time and regularly facing big challenges from its competitors. To deal with it Tesco needs to bring out some changes in its products and marketing strategies to grasp the attention of its customers. (Reference for business, 2011) Tesco can plan to introduce a new line product from their regular league and that is more favourable for the people of all age group. Tesco can plan to target a new dimension of audience and prepare the store to become a place for one stop shopping point. Tesco may plan to introduce a section of leather bags, travelling bags and shoes.
The Strategic and marketing team may alter the promotional strategies by using the latest technologies and personal man to man marketing plans. The introduction of new products are necessary for the substantive growth and this let the company to elaborate the brand name in new fields and open the opportunities to earn more profits. The advantage of achieving substantive growth is that the company gets numerous opportunities for the future and the funds earned as profit can add value to the further planned projects. While designing the strategies for the company, the role of substantive growth plays the major role. Entering in the dimensions of new entries by the company keeps the curiosity of the customers alive. The regular changes in the market trends have to be followed by all the company employees and the needs and demands of the customers should remain at the regular check. If the old products are out of trend, they need to be discarded regularly. (Marketing 91, 2015)
3.2 Based on the appropriateness of alternative strategies, justify the selection of the new strategy for your chosen organisation.
As it is always discussed and is a fact that the every company needs to adapt itself according to the changing scenario of the business market to sustain in the market and retain the top position among its competitors. For this the companies make certain strategies to attract the customers and win their loyalty towards the company. TESCO being the leading company of UK needs to bring out the changes in the products and offers to hold the numbers one position in the business world. It has planned to introduce the new section of leather products, specially the bags, handbags, travelling bags and shoes. The product will have a wide range from budgeted bags to good quality superior bags. The same will go for the shoes also. Company will provide promotional offers and fix the cost of the products keeping in mind the requirements, demands, class and pocket of the customers. The products will be useful for all the sections of the society and this will elaborate the dimensions of the audience.
The introduction of the product will be done through effective marketing via technology and personal Marketing along with the promotional offers to the existing and new customers. All the investments will be done under the supervision of the most efficient strategic team and it will assure that the plans and projects are such designed that the company only gains the success and earns the profit. (Net MBA, 2014)
4.1 Access the role and responsibilities of the personnel in charge of implementing the Strategy.
Any company which is going through a certain changes in the process or launching new products have to implement the strategies for the success of the planned project. For the implementation of the strategic process the employees and the managers need to work hard and understand their roles perfectly. The main role is played by the personnel in charge of the process. The implementation of the strategies impact on the duties and responsibilities of the in charge and he needs to have a thorough understanding of his work.
- During Strategic implementation: Strategic implementation involves the execution and planning of the project to be introduced in the company. The focus of the in charge of the planned project in TESCO will be that the product is launched properly and all the steps taken will be though the planning. The communication among all the employees and managers should be effective and everybody should be aware of their responsibilities.
- Job Impact of the in charge: As this is a new project in TESCO the in charge will understand the changes that will be faced by him directly or indirectly. He will understand his normal and changed responsibilities. Communication with others: The in charge needs to stay in touch will all the up liners and the subordinates. The in charge needs to set an example with his working efficiency and will have the tendency to solve all the difficulties arising in the launching of the product. (Long, 2016)
4.2 Analyse the estimated resource requirements for implementing a new strategy.
The management and the employees of TESCO work in a unit to achieve the goals targeted by the company. The new product will be launched in the market and will require an efficient set of the employees. The implementation of the new strategy will require the collective help of the resources like
- Human Resource
- Financial Resource
- Time and Management Resource
- Human Resource:- The Human Resource Department of TESCO will hand over the positions and duties to the workers who are efficient and capable of fulfilling the responsibilities. The company’s performance depends on the HR department as it has complete knowledge of all the employees and productivity of the company.
- Financial Resources:-To implement the strategy TESCO needs to spend a certain amount of money on the process. The Financial Resources deals with the financial matters so that the strategy comes out to be more effective and profitable.
- Time and Material Resource: After designing of any project the company settles a particular time in which the project has to be launched. For the completion of the project the raw material is required. TESCO uses the high quality material and the employees work on their toes for the completion of the project in the targeted time interval. (Learn Marketing, 2013)
4.3 Evaluate the contribution of SMART targets to the achievement of the strategy implementation.
Strategy implementation targets the goal set by the company to achieve. To attain these goals SMART goal setting is applicable as it helps in setting the structure and places track ability into the objectives and the goals. The SMART targets bring out the reality in completion of the goal. TESCO has also set the SMART targets that have a specific nature, realistic, can be completed in specific time and measurable.
Contribution of the SMART Targets:
The specific nature of the SMART targets in TESCO has made the company to put on all the efforts to achieve the success of the planned project. The specific nature helps in finding out the questions like from where, how, when the target can be completed The realistic SMART target makes the project attainable in the specified time period. This includes the project should have enough time, money and efforts of the employees. The measurable goal setting will tell how to deal with the success and how to retain the position in the market for the future. The targets have to be completed within the given deadlines. For this the whole team needs to work in full swing to go after the target. The deadline needs to be realistic and approachable. (Your Coach, 2016)
This assignment has helped us in understanding the hard work that is required to establish a business and sustain the position in the business market. The employees of the companies work with their hundred percent dedication to attain the targets established by the companies. It explains the importance of the Strategic planning for the companies to launch the new projects and adapt the current scenario of the global market to satisfy the customer’s needs and demands.
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