TESCO Strategic Planning - Case Study Example

TESCO Strategic Planning Table of Contents Introduction 3 A Brief Overview of Tesco 4 Failed Strategies of Tesco 4 Suggestions 8 Conclusion 10 Introduction Strategy of an organisation involves long-term planning, which is mainly executed for the purpose of attaining predetermined business objectives. According to the theorist Alfred D. Chandler, strategy can be defined as “to determine the goals and objectives of an organisation and the adoption of courses and the allocation of resources necessary for carrying out these goals” (Pearson Education Ltd, n.d.). There lay different levels of strategies that employ by the organisations in this present day context. These include ‘corporate level strategy’, ‘business level strategy’ and ‘operational strategy.’ Theoretically, ‘corporate level strategy’ mainly deals with the entire scope of an organisation to attain long-term targets. On the other hand, ‘business level strategy’ reveals the fact about how a business should complete in a particular market in alignment with the set targets. Finally, ‘operational level strategy’ emphasises developing different functionality aspects towards the attainment of predetermined business targets. Strategy is duly considered to be a process of managing the current services and thus greater attention is being paid on maintaining the quality of the products being offered to the end users. It will be vital to mention in this similar context that the strategic objectives of an organisation aim at selecting appropriate policies to attain the postulated goals within a definite timeframe. Though the notion of strategic planning tends to determine the position of the organisations in the respective business markets, it also assists in attaining superior competitive position as compared to others. By taking into concern the conditions prevailing in this modern business world, the organisations should indulge in establishing more strategic concepts to acquire dominant position in future and ensuring that right track is being followed towards success (Ireland & et. al., 2008). With this concern, the essay intends to discuss about the important strategies adopted by Tesco PLC that failed during the conduct of varied operational functions. Moreover, certain suggestions have also been provided in the essay that would help Tesco to re-think their plans A Brief Overview of Tesco Tesco was established by Jack Cohen in the year 1919. The business has grown over the years and is now operated within several countries throughout the globe. The shares of the company are being traded at London Stock Exchange. Notably, the company is providing best shopping experiences to the customers with the deliverance of quality products and/or services to them. Nowadays, the company has focused on doing the right thing for the customers. Tesco is reckoned to be one of the biggest food traders in the UK, operating in around 2,318 stores worldwide. The company also operates in nearly about 1,878 stores all over the UK. The company is identified to offer complete online services that include ‘tescodirect.com’ along with ‘tesco.net’. In the year 1974, the company has established petrol stations in distinct major sites, selling fuel at a very competitive price. In 1990, Tesco started to expand its business as a strategy to mark its international presence. From the inception, the company is able to conduct varied operational functions in an integrated way with the incorporation of advanced technologies (Nair, 2014). Thus, it is quite clear that Tesco has taken into concern certain effective strategies to conduct operations efficiently in different regions of the world. Failed Strategies of Tesco Tesco adopted various strategies for fulfilling its desired business objectives. However, certain strategies that taken by the company failed to contribute in fulfilling its desired requirements, which certainly resulted in affecting its overall performance in the respective industry. In this regard, such strategies can be apparently observed as ‘entry strategy’ and ‘market analysis strategy.’ The international market entry strategy of Tesco focused on making worldwide business expansion based on long-term goals towards ascertaining sustainable success and growth. The maturity and the saturation conditions persisting in the UK market eventually made the company to adopt entry strategy. While executing this particular strategy, Tesco has to rely more on making international joint ventures as well as acquisitions, international joint ventures and Greenfield investments. This can be justified with reference to the fact Tesco has established partnerships with ‘Samsung Corporation’ in South Korea for the expansion of its business. Consequently, Tesco has also acquired the distributional unit of Samsung and the managerial rights of such unit. In the past, Tesco embraced the approach of traditional venture with the maintenance of cultural sensitivity and awareness by modifying its operations to meet the requirements of the local consumers. Specially mentioning, while entering into the US business markets, Tesco planned to open a few of the small format stores that replicate the popular Tesco stores in the UK (Lowe & Wrigley, 2009). Tesco also tried to enter into the Chinese business markets by conducting joint venture with a Taiwanese-owned corporation named Ting Hsin International in the year 2004. It thus acquired 50% of the Group’s shares. Later on, in the year 2006, the shares of Tesco raised nearly about 90%. It has been quite apparent that Tesco has been one of the fastest growing companies in the Asian market particularly in China. Apart from these, in the year 2007, Tesco entered into the American market by means of Greenfield investment (Reinders & et. al., 2008). It will be vital to mention that the entry strategy, which adopted by Tesco, failed because of the rising cultural discrepancies between the American and the British customers. For instance, the Europeans are more likely to make frequent grocery trips in an increased manner, whereas the UK customers are observed to be make grocery trips frequently but in a lesser manner. Thus, the US venture of Tesco got significantly affected by the entry strategy adopted by the company in the form of mot meeting the requirements of the US customers as per their choices or preferences (Gilbert, 2014). Another important strategy of Tesco, which completely failed to ascertain the business objectives of the company, is observed to be market analysis strategy. This can be justified by highlighting and elaborating the example of analysing the grocery industry of the US by Tesco. It can be affirmed that the market analysis strategy of Tesco relating to the US grocery industry has failed because of weakened store image. Particularly in the business markets of the US, it is quite indispensable to form, develop as well as maintain a fair store image and improve the market position by the adoption and the execution of varied effective strategies. This is mainly because the above discussed approaches certainly provide active support to the retailers such as Tesco to get differentiated from its chief business market competitors, raise their bargaining power and most vitally improve profitability as per the desired levels. In relation to the above context, it will be vital to mention that the market analysis strategy of Tesco has failed mainly because of ineffective usage of generic marketing based techniques and making little efforts towards boosting store image among others. It is worth mentioning that a favourable store is vital to get established in the retail market to improve the existing business market position. The market analysis strategy, which adopted by Tesco, failed to differentiate Tesco with its major competitors by paying less attention on developing its store image specifically in relation to the grocery industry of the US and also gaining unfavourable customer experiences (1Azman, R., 2014). While analysing the strategies adopted by Tesco that proved to be complete failure, it has been ascertained that the company took an important decision of selecting appropriate market strategies for identifying the purchasing trends of the customers. In this regard, Tesco took deliberate steps in analysing the behavioural attitudes of its potential customers. One of such steps can be apparently observed as obtaining feedbacks from them about their respective preferences and also expectations from the company. However, this became completely failure owing to the reason of obtaining lesser customer satisfaction with one of its retail chain named Fresh & Easy having relevance with the US grocery industry(2Azman, R., 2014; Gilbert, J., 2014). Apart from the above discussed two strategies, Tesco also adopted the strategy of employing quality and effective human resources to perform efficient operational functions with the intention of attracting the customers and enlarging its customer base. However, this strategy became completely failure with reference to the case of its Fresh & Easy retail chain located in the US. In this context, it has been apparently observed that the company did not employed any employee at the traditional checkout lanes, which eventually resulted into restricting the deliverance of greater level of customer service. Moreover, the above stated approach also made lesser interaction with the customers, which in turn, lessened the customer satisfaction level at large. The prime reason for Tesco’s failed strategy of human resource with respect to the US retail chain of Fresh & Easy is the making of irrelevant and ineffective decision regarding the employment of personnel in such a vital operational area (Gilbert, 2014). Thus, in this situation, the company was forced to use Technological- Based Self Services (TBSS), which certainly affected its customer service due to lack of knowledge about this technological approach (Ramyagolla, 2013). Suggestions After acquiring a brief idea about the different strategies adopted by Tesco that failed to fulfil the desired targets of the company, certain suggestions have been provided so that it can re-think about the plans. In this regard, suggestions have been provided to the company for starting to re-think its plans by embracing corporate level strategy. It is worth mentioning that the adoption along with the execution of corporate level strategy will prove to be much effective for Tesco in terms of making strategic planning towards the accomplishment of predetermined business objectives. In terms of corporate level strategy, the growth tactic will be appropriate for Tesco in making the company to start to re-think about framing plans. This strategy will certainly strengthen the core business of the organisation, resulting in developing its overall performance as compared to others. By experiencing failure while implementing the strategies of human resource, entry level and marketing analysis, the growth strategy will certainly enable the company to reap several significant benefits. These benefits may comprise ability to get differentiated from others, greater customer service, improved level of profitability and effective decision making among others (Awing & Sahril, 2012). It is projected that the adoption and the execution of corporate level strategy in the form of growth tactic would certainly aid TECSO to maintain sustainability in its overall business operations. By taking into concern the execution of growth strategy, the company is required to expand its business throughout the globe, which in turn, will aid in maintaining superior competitive position as compared to others. Apart from the growth strategy, certain other strategies such as low price strategy, customer focused strategy and differentiation strategy will also facilitate Tesco to re-think its plans for attaining desired business goals (Awing & Sahril, 2012). The low pricing strategy can also be adopted and implemented by Tesco, which would make the customers to get attracted with the products and/or services that deliver by the company. Specially mentioning, the low pricing of the products could make the customers more attractive and the product sales much higher as compared to others. Low pricing has maximised the sales of the product, which eventually denotes greater product development. It can be apparently observed that Tesco add greater value to its varied product offerings in the form of making greater product development and incorporating distinct technological advancements in the operational procedures (ThuyDung, 2014). It is projected that the customer focused strategy will certainly make Tesco to remain much loyal to the customers, resulting in generating greater value to its products. The underlying aim of Tesco is to earn maximum profit with enlarging customer base at large. The company tends to focus much on developing its level of customer service at the topmost priority (Humby & et. al., 2008). By considering the fact that the entry, human resource and market analysis strategies adopted by Tesco with respect to its Fresh & Easy retail chain have failed to attain its desired goals, the company may launch ‘Club Card Scheme’ for its potential customers. This particular approach may support Tesco to attract huge figure of customers and get differentiated in comparison with other chief business market competitors. Apart from this, the company could also launch ‘Green Club Card’, which would make the customers to obtain points during shopping (Hatherly, 2013). Notably, Tesco established attractive shopping centres in different countries wherein it operates. Thus, in order to ease its operational functions in such stores, the company adopted the strategy of plug-n-pay service for its customers. This service is deemed to be an electronic payment service, making the customers to shop in an easy way (Ferrell & Hartline, 2012). Though Tesco failed to reap several benefits from adopting entry along with human resource and marketing analysis based strategies, which is evident relating to its Fresh & Easy retail chain, it can start from numerous areas to re-think plans. One of such areas can be differentiating itself as compared to others. This would support the company to diversify its business and remove any sort of discrepancy prevailing within the business or operational systems. The other area wherein Tesco should start to re-think its plans is the generation of greater value to the customers. Besides, the company should also aim for establishing its services in the non-food business with the maintenance of product quality and costs among others. The company may attempt to build a strong community to develop its overall product and/or service offerings in national as well as international business markets. Identifiably, Tesco provided banking facilities to the customers so that they can avail the products and/or services being offered by the company to them within a set timeline (Emerald Group Publishing, 2008; Kornum & Bjerre, 2005). Conclusion From the above analysis and discussion, it has been evident that Tesco has adopted and implemented effective strategies in order to attain its desired business and operational targets. These targets can be measured in the form of attaining maximum profitability, enlarging market share and accomplishing superior competitive position as compared to others. However, it can be apparently observed that the entry, marketing analysis and human resource strategies, which adopted by the company, were failed due to lack of integration in these strategies and shortage of coordinating the same. Thus, the situation would force the company to start to re-think its plans by covering several major areas. In this regard, the company should ensure that its sustainability is maintained to acquire leading market position in the respective industry. Specially mentioning, Tesco can adopt and use corporate level strategy in the form of growth tactic, which would support the company to re-think its plans towards successful accomplishment of predetermined business goals. Thus, with this concern, it can be concluded that the adoption along with the execution of the above discussed strategies and the covering of varied operational or business areas would not only support Tesco to retrieve from the situation of failure, but will also aid in ensuring long-term sustainability in this present competitive landscape. References 1Azman, R., 2014. Business Level Strategy and Corporate Level Strategy of TESCO Malaysia. Tesco Corporate Level and Business Level Strategy, pp. 1-38. 2Azman, R., 2014. Marketing Management. Marketing Plan for Tesco Stores (Malaysia), pp. 1-45. Awing, F. & Sahril, N., 2012. Strategic Management - Retail Sector (Tesco). Strategic Management Industry: Retail Synergy, pp. 1- 60. Emerald Group Publishing, 2008. Tesco’s American Dream: Doing It Differently. Strategic Direction, Vol. 24, No. 2, pp. 11-15. Ferrell, O. C. & Hartline, M., 2012. Marketing Strategy. Cengage Learning. Gilbert, J., 2014. Tesco’s Fresh & Easy Failure. 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