Delivery in day(s): 5
Diploma in Business
Unit Number and Title
Unit 7 Business Strategy
Business strategy is the long term action plan of any organization generated to achieve a set of goals or objectives. In other words, business strategy is generally a document which coherent the direction a business will seek and the measures it will take in order to fulfill the goals. A classic business strategy is matured in three stages: analysis, integration and implementation.
In the report the business strategic tools and techniques has been applied for Tesco, a UK based company. The report includes critical presentations in which the mission visions, objectives and competencies of Tesco have been provided. It has also engaged critical information on the strategic planning and reliable issues related to it. The report has also provided different business strategy tools and techniques in the presentation. The study has been continued with proper implications of reliable strategies for market development of Tesco in the United Kingdom. The SWOT analysis evaluates as the organizational analytical strategic tools been adopted by the business entities. It has been assessed that this strategic tools enhance the internal environment and external forces that effects the business operations. As per the analysis the Tesco’s, strengths, weaknesses, opportunities and threats are been assessed as following: The PEST analysis is the strategic tools that is been introduced form, measurement and evaluations of the external environment of the company. It has been assessed that the proper audit and evaluations enhance the industry scenario, performances and effecting forces in which the Tesco is been operating. The report has engaged critical assessment of the roles and responsibilities of Tesco management and employees to execute the selected strategies. It has also assessed the resource requirement, target and time scale planning for the market development strategic implication for Tesco.
Tesco Plc is a British multinational grocery and general commodity retailer with its head quarters in UK, England, Chestnut and Hertfordshire. The company is also ranked the third largest retailer in the world marked on the basis of profits and second largest measured by the revenues. It was founded in the year 1919 and currently has its stores in 12 countries across Asia and Europe and is the market leader in UK in its sector. Tesco Plc has diversified its business globally in the areas of books retailing, clothing and electronics, financial services, telecom and internet services to name a few. The company is listed in the London Stock Exchange and is also an essential part of the FTSE 100 index. In the year 2014, Tesco has launched a ‘healthy living’ brand which features a range of healthy foods in order to help its customers lead a healthy lifestyle. Also in the same year Tesco finest, UK’s fastest growing premium food brand was re -launched and over 400 products were announced. In 2012, Tesco’s UK sales figure was £42, 248 million, making up over 60% of its group sales of £64, 539 million which indicates that UK is the company’s core market amongst other markets in the world. In the UK market, the retailer owns the largest market share of 34.4% in the grocery retailing sector, competing with other retailers such as Asda (17.9%), Sainsbury’s (16%), and Morrisons (11.9%).
Strategic planning at Tesco is an organizational management exercise which is used to set priorities, focus on the energy and available resources, strengthen the operations and ensures that employees and other stakeholders are working towards a common goal. It is an acclimatized effort that produces fundamental decisions and actions which shapes and guide what an organization is and who it serves, what it does and why it does, with a focus on the future. In other words, Strategic planning is a methodical procedure of visualizing the future and converting the same into well decrypted goals in a broader way and a set of related events in order to achieve them. It requires a systematically graphed plan for how to distribute the available fund, workforce and time.
The main purpose behind strategic planning is to help in determining its priorities and to fulfill the needs of its electorate. The plan should be crisp and flexible but still serve as a guide in the implementation of various programs. Strategic planning, execution, monitoring and evaluation are essential for Tesco as it is fundamental to developing result based accountability system in the organization.
The strategic context and terminologies of Tesco are:
Mission- it is an integral part of the Tesco as it emboldens the employees to work together as a team and achieve the company’s vision. It defines the critical goals and performance objectives of an organization in context for development and is described within the framework of organization culture, vision, values and principles.
The Mission statement of Tesco:
Vision - the vision statement explains the reason for Tesco’s existence and reflects their aims that they intend to achieve in future. In other words, it is basically the blueprint of Tesco. Generally, vision statements are generated on the basis of long term goals of the company and its future operations. Vision statement is very effective and developmental for the organization.
The Vision statement of Tesco is as follows:
Goals- it defines the general idea at Tesco of becoming the world’s premium grocery retailer company. It is usually the harbor of the firm and also is the circumstantial planning in order to achieve the predefined target. The senior management at Tesco Plc decides the goals of the company and every employee will chase the planning to complete the goals.
The goals of Tesco are:
Objectives- are the steps to attain goals that means objectives are the part of a goal but goals are not a part of objectives. The company’s objectives define the critical issues, business goals and to build a common trust source with its customers, partners and governing bodies.
Tesco’s objectives are as follows:
Core competencies-The y are the critical factors that are used by Tesco to deliver competitive advantage over other competitors. These are important to reflect their strengths in the industry and build confidence of their suppliers as well as their customers in their capabilities.
The core competencies of Tesco are:
Strategic Planning is a systematic process of visioning a desirable future and translating the same into well defined goals and objectives. It paves the road map to consistent success and performance in the dynamic market. It helps to stimulate the changing business environment and formulate realistic and achievable business objectives to satisfy suppliers, stakeholders and customers. Thereby ensuring progressive growth and continuous improvement in their critical thinking as well as strategic operations.
The key issues of strategic planning that can arise in Tesco are:
Strategic planning is a very integral part in the success of Tesco. The company had faced issues in applying the innovative cultures as the workforce was not comparatively stronger but later on the efficient understanding of business and the increasing competition has helped them in emerging as market leader. The inability to adapt to the changes affects the profit ratio of any business and this can also lead to its end. In case of shortfall of the resources and focus on the problems related to the business environment, negative outcomes might be generated which again can bring an adverse affect to Tesco. (L.Draft, 2008)
The strategic planning at Tesco focuses on better operational efficiency, safety and performance. They focus to deliver value in their supply chain and customer network to ensure competitive advantage at lower price. They ensure valuing their shareholders to maintain capital inflows and allocation of resources. They focus on developing their research initiatives to grow their exploration and innovation projects. They are committed to ensure high quality in their products and services. They are also focused to strengthen their relationships with their suppliers, partners and customers.
Strategic planning techniques can be used to gather and interpret the information required to structure the process in Tesco. They are used to structure the resources that are needed to improve the performance and productivity of business. It also helps to analyze critical issues and develop creative and effective solutions for addressing the concerns. It also helps to measure the impact of performance and strategic planning to maintain sustained growth and positive business outcomes.
Mentioned below are key strategic planning techniques:
Boston Matrix- it was initially developed in the early 70’s to assist the managers in deciding which business unit one should invest. However, in current times it is also used as a deciding factor for getting an idea on which product line an investment should be made and the ones which should be get ridden off. The BCG matrix has these categories:
In cash cows the business meets their profit targets easily and has high capital generation. So, they can reinvest in product portfolios that have entered maturity stage.
The BCG matrix will help Tesco in the efficient allocation of available resources and will also act as a scientific tool in marketing the brand, product management, strategic and portfolio analysis. The aim of BCG matrix is to indicate high growth plan by groping the company’s products or services as per its growth and market share. By the escalation of positive cash flows into a highly potential product or service, Tesco Plc can gain advantage on the growth opportunities.
The effectiveness of the BCG matrix at Tesco can be evaluated as follows:
PIMS strategy - function of PIMS is to highlight the relationship between key strategic decisions and its results. When analyzed adequately, the data can help the manager gain a better understanding of their business environment and identify analytical factors in improving the position of the company and develop strategies that will facilitate them to create a continuous advantage. PIMS principles and the data are widely used in academic research. As a result, PIMS has influenced business strategy in companies around the world. PIMS pursues to address three questions in general what is the typical profit rate for every business type, as per the current strategies of a company, what are the future operating results likely to be and which strategies are likely to help in developing the future operating results.
The effectiveness of the PIMS at Tesco can be evaluated as follows:
SPACE Matrix – The Strategic Position and ACtion Evaluation (SPACE) matrix is a strategic planning tool that determines strategic thinking focusing on to the competitive position of a business strategy. The SPACE matrix is divided into four principal components like aggressive, conservative, defensive and competitive.
The SPACE matrix has two dimensions: internal like financial strength and competitive advantage. External dimension like environmental stability and industry strength. The evaluation of SPACE matrix for Tesco:
Directional Policy Matrices – It evaluates the market conditions and the strengths of a business to sustain in the changing conditions by outlining the strategies for future investments like decisions related to invest, grow, harvest or divest.
The evaluation of Directional Policy Matrix for Tesco:
The organizational audit serves as a program that helps organization operate by aligning the internal structure, processes, and systems to strategy in accordance with the rapidly changing business environment. The audit process can help Tesco by identifying and verifying the organizational strategy and key business units, identifying and designing core business processes with the support of competent team, identify and allocating resources to optimize the system, designing co-ordination and development schedules with the support of management structure and efficient planning and implementation of new design strategies. (Mackenzie, 1986)
The various approaches to organizational audit that can be adopted by Tesco are:
SWOT Analysis of Tesco:
Value Chain analysis for Tesco: It describes their internal processes such as product design, market segments, delivery system and strategic after sales support. It even includes warehousing, outbound logistics and operations activities that reflect their desired outputs condition. Moreover, it includes support activities like technology, human resources and infrastructure development decisions.
The value chain analysis of Tesco outlines strong customer satisfaction and loyalty, high product quality, differentiated product offerings, timely delivery and improved customer benefits that illustrates high value and strong financial stability that is primary for Tesco’s growth and survival. (Phillips, 2003)
Product Position analysis for Tesco:
Environmental Auditing is a tool which includes a systematic and objective assessment of how smoothly a firm, the management and equipments function in context of the environmental safety. The sole purpose of conducting this kind of audit is to provide safety to the surrounding environment as well as reducing the risks that might be generated to humanity. By including environmental auditing in its program, Tesco has adopted its international responsibility and agreements on keeping the environment protected.
The environment audit guidelines regarding Tesco’s operational by PESTEL analysis process include:
The environmental impacts that were highlighted in the environmental audit report of Tesco include Political, Economic, Social, Technological, Environmental and Legal impacts.
The key Political, Economic and Social impacts include:
The key technological impacts are:
The key environmental impacts are:
The key legal impacts are:
Implementation of Porters Five Force Model for environmental audit in Tesco Plc:
The Five Forces include
The key stakeholders for Tesco are:
The significance of stakeholder analysis at Tesco is as follows:
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