Factors of Tesco in Determining Its Strategies - Essay Example

Strategic Management Table of Contents Table of Contents 1 Introduction and Overview 2 The Strategic Position: The Environment 3 The Strategic Position: Organisational Analysis 5 Strategic Choice 6 Strategic Options 8 Organisational Structure and Design and Enabling Success 8 Managing Strategic Change 10 Understanding Strategy Development 10 Conclusion 12 References 13 Introduction and Overview Tesco plc is a UK based Multinational Corporation and is considered to be among the leading retailing companies worldwide. The company is identified to be operating in around 14 countries with over 500,000 employees with the intention of offering better products as well as services to its targeted customers worldwide. The principle objectives of the company have been centralised towards serving the customers with better satisfaction as well as with the motive of developing the communities where the company is operational. Moreover, the company also seeks that the employees, customers as well as shareholders are treated in a fair manner and with loyalty [1] (Tesco, 2013). Contextually, it can be stated that strategic positioning or the company, along with its available strategic choices and strategy in action plays a vital role to determine its competencies in the targeted market (Needham & Dransfield, 1994). Based on this perspective, the discussion henceforth will emphasize on the strategic position, strategic choices and strategy in action as the core elements of strategic management in Tesco. Hence, the discussion will aim to reveal the importance of the various internal as well as external environmental factors of Tesco in determining its strategies as well as in improving its business operational efficiencies creating a strong impact on its core elements of strategic management. The Strategic Position: The Environment There are various factors which constitute the external environment of a particular company such as the political, economic, social, technological, environmental and legal factors (Johnson & et. al., 2008). Being influenced by its strategic positioning in the global market, Tesco has been aimed at providing job opportunities for numerous people in the retail sector and therefore, contributing to the economic prosperity of both the UK and the global marketplace. In this regard, it can also be argued that the company has been facilitated with positive political support. Economic factors have also been of significant considerations for Tesco imposing a direct impact on the demand for its products and/or services, pricing structures, costs incurred and profits obtained by the company. It is in this context that Tesco has been responding well towards the global economic fluctuations in order to perform its business operations with greater profitability, targeting the rapidly developing customer groups and also by offering competitive pricing benefits as per the convenience of the customers in the worldwide periphery [1] (Tesco, 2013). Additionally, when operating in the global market, Tesco has to comply with a diverse range of customer preferences owing to the prevalence of distinct cultural dimensions. Hence, it often becomes a challenge for the company to function with equal competencies in every sphere of its global market constituting its social environment. Perhaps, it has been influenced by this particular factor that Tesco has been performing significantly better than compared to its performances in the global marketplace [3] (Tesco, 2013). Similarly, when concentrating on technological factors, a country with more advanced technology is likely to assist the company in performing its business operations in an effective manner. It is in this context that Tesco has been facilitated with technology advancements in the UK while it had to witness significant competition in integrating technology within the global platform. Environmental factors can also be observed to have a significant influence on the effective strategic performances of Tesco. It has been owing to the strong influences created by the environment concerns deciphered by the customers worldwide, Tesco attempts to render due consideration towards its Corporate Social Responsibility (CSR) policy directions with the objective of developing the society where the company is conducting its operations. In the similar context, it can be identified that legal implications have been quite prominent for the company influencing its customer service deliverance process and quality standard by a large extent [1] (Tesco, 2013). Apart from the external factors, Tesco’s performance has also been influenced by various internal factors such as the company’s strengths and weaknesses. For instance, Tesco has been observed to possess strong brand image, especially amid the customers in its homeland which can be attributed as one of its significant strengths. Furthermore, its integration of traditional and contemporary distribution channels has also facilitated Tesco as a leading retailing company in the global platform by encouraging its accessibility to a larger population of customer base. On the contrary, Tesco also possess the weakness of being highly dependent on the domestic markets segments of the UK accumulated with the decreasing turnover in inventory [1] (Tesco, 2013). However, when concentrating on the current retain industry structure; the organisation can be identified as facing significant threats in terms of new entrants and continuous alterations in the international trade activities apart from the opportunities of increasing customer demand and economic development (Karami, 2007). The Strategic Position: Organisational Analysis The organisational analysis will assist Tesco in understanding its capabilities as well as inefficiencies in implementing its various strategic initiatives. In this regard, the vision of Tesco is to serve its customers with greater values as well as products and/or services which unambiguously addresses the customers’ preferences. With due consideration to these factors, Tesco has been practicing innovation strategies with the intention of performing its business operations in a competitive manner in its targeted market segments allowing continuous quality enhancements along with resource allocation efficiencies. Tesco offers utmost preferences to customers and shareholders’ expectations which can further be observed with reference to its marketing strategies as well as stakeholder strategies by a large extent. Tesco has implemented corporate governance strategy with the aim of building better employee coordination and efficient working environment within its organisational structure rendering due attention towards organisational leadership practices, employee motivation, employee retention and long-run sustainability. In developing its corporate governance system, the sole intention of Tesco has been concentrated on providing products as well as services to customers and stakeholders with increasing value as well as trust (Boks Consulting, 2013; Porta & et. al., 2000). Furthermore, the company has also been successful in adopting a diverse and flexible cultural context by integrating gender diversity in its organisation for better growth as well as effective decision making. Tesco has also applied strategies for the development of communities where it is conducting its business operations to facilitate its integrity and society contribution (United Nations Global Compact, 2013; [2] Tesco, 2013). Strategic Choice Tesco has been focused on formulating as well as implementing strategies at the corporate and business level in respect to corporate diversity and competitive positioning of the brand with the belief of facilitating better development of the company’s performance. For instance, Tesco has adopted corporate level strategy with the objective of determining the market segments where the company is intended to perform its operations competitively on the basis of its strategic compliance with the observed customer requirements as well as the competition observable in the industry structure. The business level strategy of the company comprises of pricing policy as well as differential strategy among others which can be further identified to have assisted the company in accomplishing the corporate objectives to deliver its products to an increasing population (JMU, 2013). Additionally, Tesco has been implementing corporate diversity in its regular operations with the sole intention obtain the benefits of flexibility which would further enhance the company’s responsiveness towards the rapid and continuous changes observed in its external business environment. Corporate diversity shall also be beneficial for Tesco to integrated diverse workforce in its practices and thus gain better competencies in establishing its objective of quality services in compliance with its customers’ convenience acting as a base for competitive advantages. Moreover, this strategy along with pricing, innovation and quality development strategies shall also aid Tesco in acquiring competitiveness to perform competitively in the market segments (Jayne & Dipboye, 2004). Strategic Options Tesco can be identified to have adopted directions for strategy development, product or market development and diversification. The directions for strategy development have further assisted Tesco in determining whether to enter new or existing market segments with innovative products and/or services (Jones, 2010). Contextually, it can be observed from an in-depth perspective that in determining its strategic options, the main objective of the company has been to provide greater value to its customers through quality products as well as services. Moreover, the company has also been targeting various international market segments for better expansion of its business activities. Tesco has also diversified its products as well as services which include Tesco Bank, online retailing and its Dunnhumby initiatives which has not only rewarded the company with added feature of risk minimisation as well as competitive advantages with the potentialities of acquiring larger market share in the global periphery [3] (Tesco, 2013). Additionally, the company has also adopted the strategy of acquiring foreign firms with the objective expanding its business operations in international markets within a short term period (Malley & Palmer, 2011). Organisational Structure and Design and Enabling Success Theoretically, there are three sorts of organisational structures which include functional, adaptive and divisional structures. Tesco is observed to be utilising a divisional organisational structure as the company attempts to offer different products as well as services in numerous market segments worldwide. In different market segments, the company operates in divisions under the control of its head office. Moreover, the organisational structure of Tesco has customers on the top list as they are regarded to be the sole means of Tesco’s competitiveness. Employees are also regarded as quite significant within the organisational structure of Tesco, owing to which it has been concentrating on recruiting, retaining as well as training skilled and competent employees to serve its customers worldwide with increasing efficiency. There are six levels constituted in the organisational structure of Tesco. In level 1, employees comprises of frontline workers dealing directly with customers. The level 2 comprises of employees who manages as well as motivates frontline employees to perform their activities proficiently. In level 3, operating units employees are segregated who are engaged in monitoring and facilitating the smooth functioning of the organisational process. Level 4 includes employees who support the staff members of operating units as well as recommends any changes required in the strategies for improving company’s performances. Similarly, level 5 employees are responsible for managing the performance of Tesco and its divisions worldwide. Ultimately, level 6 comprises of employees who are assigned with the task of developing the vision and mission of Tesco and simultaneously observed its strategic alliance with the market trends observed (The Times 100, n.d.). Managing Strategic Change Strategic change signifies that a company is required to adopt changes with the intention of improving its performance and growth. In this regard, Tesco has been observed to adopt certain strategic changes in order to perform better in the market segments of UK as well as in the global market. Moreover, strategic changes were implemented by Tesco in its corporate strategies to acquire a better position in the markets of Japan along with few other similar global market places. Organisational changes were also implemented by Tesco in order to make certain managerial changes through the reinvigoration of its workforce [4] (Tesco, 2013). Understanding Strategy Development The notion of strategy development fundamentally implies that a company is required to develop appropriate strategies for conducting its business operations effectively taking into account its organisational goals and all the influencing factors existing in its external as well as internal business environment. There are three phases which include recognition, choice and alignment as observable in the strategic development course of Tesco. In the recognition phase, Tesco emphasises on analysing the market conditions and determining the purpose of a company. When determining on the strategic choices, Tesco intends to select appropriate strategies which further tend to assist the company to perform effectively. In the alignment phase, Tesco determines that the strategies selected are in accordance with the culture, processes and structure of the company with the assistance of its organisational structure ([4] Tesco, 2013; Williams, n.d.). Tesco develop strategy with the objective of providing better products as well as services to consumers. In this regard, the company has adopted Dunnhumby initiative with a simultaneous consideration towards developing internal teams after analysing the market conditions as well as develop strategies (Marr, 2009). Conclusion Tesco is a renowned retail company in the worldwide context. Considering the fact that strategic management is a multidimensional and a challenging process, it is suggestible that in order to formulate strategies, Tesco is required to analyse both its internal and external business environment which would in turn facilitate its competencies in dealing with the obstructions and thus assist it in the successful accomplishment of its determined goals. These analyses shall also assist Tesco in determining its strengths and weaknesses as compared to the external opportunities and threats which exists in the market environment. Hence, the findings derived through these analyses shall aid the company in identifying strategies to be adopted and implemented with the aim of improving its performances in the worldwide market segments acquiring better competitive advantages. References Boks Consulting, 2013. Organizational Analysis. Uploads. 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[Online] Available at: http://educ.jmu.edu/~gallagsr/WDFPD-Corporate.pdf [Accessed March 18, 2013]. Karami, A., 2007. Strategy Formulation in Entrepreneurial Firms. Ashgate Publishing, Ltd. Malley, T. & Palmer, D., 2011. Tesco: A Corporate Portfolio. Uploads. [Online] Available at: http://www.taylormalley.com/wp-content/uploads/2011/01/Tesco-Portfolio.pdf [Accessed March 18, 2013]. Marr, B., 2009. Delivering Success: How Tesco is Managing, Measuring and maximising its Performance. Management Case Study. [Online] Available at: http://www.cpdopportunity.com/resources/delivering%20success%20tesco.pdf [Accessed March 18, 2013]. Needham, D. & Dransfield, R., 1994. Business Studies. Nelson Thornes. Porta, R. L. & et. al., 2000. Investor Protection and Corporate Governance. Journal of Financial Economics, Vol. 58, pp. 3-27. [1] Tesco, 2013. About Us. TESCO PLC. [Online] Available at: http://www.tescoplc.com/index.asp?pageid=6 [Accessed March 18, 2013]. [2] Tesco, 2013. Gender Diversity. 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