CMSE11097 Corporate Strategy : Analysis of UK Supermarket Industry
Part A
This will include the external and internal analysis of TESCO or your chosen organisation.
- Introduction and importance of strategy in a business specially relate it to TESCO or your chosen organisation.
- Apply PESTEL on TESCO or any chosen organisation and analyse the impact and influence on the decision making. Include some examples how strategies will need to be aligned after analysing PESTEL of TESCO or chosen organisation.
- Using SWOT or TOWS framework, analyse the strengths and weaknesses of TESCO or your chosen organisation using appropriate format.
- Apply Porter’s Five Forces model and evaluate them in context of TESCO’s market sector or market sector of your chosen organisation. How this analysis would help to gain or improve competitive advantage in the market, devise one appropriate strategy for it.
Part B
You need to devise a strategic plan based on the internal and external analysis and their findings:
- Based on your findings, what are the different types of strategic directions available to TESCO or your chosen organisation?
- Evaluate each available direction with its merits and demerits and recommend the best growth strategy for the TESCO or your chosen organisation.
- Give justification for your recommended strategy.
- Produce a strategic management plan with strategies, objectives and tactics for TESCO or your chosen organisation.
Answer:
Introduction:
Business strategy may be defined as a long-term plan of activities created to accomplish a specific objective or set of goals or mission (Campbell et al., 2011). This report explains the business strategy of Tesco and examines the influences of macro environment on the organization and its business techniques. The report evaluates the organization's internal environment and the key components abilities. The report also assesses and apply Porter's Five Forces model to given market condition.
Part: A
Analysis of internal and external environment of Tesco
Introduction and significance of strategy in Tesco:
According to Samy et al. (2014), Tesco Company is a British multinational grocery and general stock retailer and was built up by Jack Cohen in 1919. Tesco has stores in 12 countries over Asia and Europe, it is the grocery market pioneer in the UK. Tesco has the widest range of food for any retailer in the UK. It has two basic principal support brands that is Finest and Everyday Value goes, each offer over £1 billion reliably. The business strategy of Tesco is good, and well-known as the organization is the third largest retailer in the United Kingdom and also better for customers. Tesco has a portion of the standards and theories that the association is functioning better than their rivals. The fundamental business strategy of Tesco is the focus to enhance its business procedures to consumer loyalty, ease of access of personnel, investment in cheaper for Tesco (Meskendahl, 2010).
PESTEL analysis on Tesco and assess the impacts on decision making:
Political: Tesco has its impacts in developing business chances, and it also, become establish the requirements for its item and increase the labor force (Metzger, 2014).
Economic: The economic factors are the basic reason of worry for Tesco, as they are considered the most likely to use prices, requirements, and advantages. Hence, the company must aware about adaption in approaches, such as, modification in tax rates or other element that could impact the availability of finance.
Social: Due to variety of social changes, patterns show that consumers in the UK have encouraged towards mass shopping and one-stop shopping. Thus, Tesco has the widest range of non-food offered for sale.
Technological: The advancement in technology has comes out with new opportunities for Tesco. Recently, the UK's biggest retailer is concentrated on changing its local business through a capital-intensive program of store repairs and a potentially margin dilutive drive on the web.
Environmental: Tesco is commit to reduce its carbon impression 50 percent by 2020. Also, Tesco is diminishing the waste disposal in the stores by enhancing social conscience in consumers.
Legal: Legitimate rules and regulations also influence the execution of Tesco. To promote current practices, company gives its consumers cost decreases on the fuel they buy, in accordance to the amount spent on their supermarkets.
On the other hand, PESTEL analysis is a review of a company's ecological impacts with the reason for utilizing this data to guide decision-making process. The PEST analysis is broadly utilized among firms and concentrates on the outside variables rather than inside elements. The impacts of PESTEL enable Tesco to facilitate the following strategies:
- A comprehending of the broader business environment.
- It can empower the organization to predict future business dangers and take appropriate action to overcome or diminish their influences.
For example, Tesco is attempting to enhance their communication procedures to arrange their worldwide operations, to improve utilization of their correspondence and data frameworks in order to exploit the present information-based economy.
Analyze strength and weakness of organization: According to Helms and Nixon (2010), the analysis of strength and weakness of organization is explained below:
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Strength: · Leadership superiority in the United Kingdom · Efficient web-based operations · Powerful property portfolio |
Weakness: · Weak financial execution · Dependence on the UK market · Reduced representative assurance |
Analysis Porter’s Five Forces model:
Threat of substitute: Small sector stores or profitable stores can make bother for the organization as they may satisfy the requirements of consumers. Moreover, the possibility of threat for company is less because Tesco has created their brand image personality. (E. Dobbs, 2014).
The threat of competitors: This factor is considered as the important element for the organization. Other retail giants like Sainsbury, Wal-Mart, and ASDA has create the big level of competition for the cited organization.
Bargaining power of buyers: Because of availability of substitutes and other retail places, bargaining power of customer is high. The company is needed to keep the price low and reasonable for capture the real part of the market.
Bargaining power of suppliers: Tesco is struggling as due of high competition, the suppliers may get an edge on the company. The retail giant has to establish a powerful connection with them with respect to get products at competitive price.
Threat of new entrants: The entry barriers are very small in the retail industry, but Tesco require not to concern as to reach up to their market share or brad valve another start up association needs to put additional endeavors.
Tesco business strategy 'Every Little Helps' directs its business techniques to an impressive degree. Tesco business strategy has generally included experimentation with different parts of the business and this technique changed the general retail industry in the UK to a specific degree. For instance, Tesco was the principal retailer to present 24-hour shopping knowledge and today it has a huge number of Clicks and Collects focuses the nation over.
Part: B
Strategic plan based on internal and external analysis of organization
Strategic directions available to Tesco:
- International expansion, for example, in the USA with 'Fresh and Easy' great nourishment comfort stores.
- Retailing services: for example, online shopping, and financial services.
Evaluate strategic direction:
International Expansion: This strategic direction enables the organization to expand its business activities across the world (Pinkse and Busch, 2013).
Advantages: Provides a framework for worldwide development
Disadvantages: High risk involved
Retailing services: This strategic direction provides Tesco to offer various services like online shopping, providing banking facility to their customers for the convenient of products.
Advantages: In-store merchandising
Disadvantages: Rise in price of products
Therefore, International expansion is the best growth strategy for the organization.
Recommendation for strategy: The reason for recommending internal expansion strategy is because of this strategic direction generates new revenue potential by assessing large customer base and also access to a new pool of capable representatives with special skills and capabilities.
Strategic management plan: According to Hill et al. (2014), the strategic management plan for Tesco includes different factors such as:
Strategies: Tesco has set various strategies in order to accomplish its objectives of being highly valued by customers, be a great worldwide retailer in stores and online, and to establish its management with the aim to create more value.
Objectives: The organization should give its consumers by providing the goods they need and the service they expect.
Tactics: Tesco utilizes mafia-style tactics to compress providers, driving some of the brinks of bankruptcy.
Conclusion:
Form the following report, it has been concluded that business strategy assumes a significant part in the organization in order to achieve its objectives and goals. This report explains the business strategy of Tesco which enable the organization to achieve its goals in a desirable manner. The analysis of different factors such as PESTEL, Porter's five forces model enables the organization to focus on overall aspect of the business.
References:
Campbell, D., Edgar, D. and Stonehouse, G., Business strategy: an introduction, Palgrave Macmillan, 2011.
Helms, M.M. and Nixon, J., ‘Exploring SWOT analysis–where are we now? A review of academic research from the last decade’, Journal of strategy and management, 3(3), 2010, pp.215-251.
Hill, C.W., Jones, G.R. and Schilling, M.A., Strategic management: theory: an integrated approach, Cengage Learning, 2014.
Meskendahl, S., ‘The influence of business strategy on project portfolio management and its success—a conceptual framework’, International Journal of Project Management, 28(8), 2010, pp.807-817.
Metzger, K., Business analysis of UK supermarket industry, 2014.
Pinkse, J. and Busch, T., ‘The emergence of corporate carbon norms: Strategic directions and managerial implications’, Thunderbird International Business Review, 55(6), 2013, pp.633-645.
Samy, M., Odemilin, G. and Bampton, R., ‘Corporate social responsibility: a strategy for sustainable business success. An analysis of 20 selected British companies’, Corporate Governance: The international journal of business in society, 10(2), 2010, pp.203-217.
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