Sustainable Strategy Management at Tesco - Coursework Example

? Sustainable Strategy Management Report 2 - Evaluation of the Company's Strategy Table of Contents 3 Introduction 4 Analysis and critical evaluation of Tesco’s strategic position 5 Analysis of the organization’s strategic direction 6 Ansoff’s Matrix 6 BCG Matrix 7 SFAS framework 9 Conclusions and Recommendations 11 Reference 12 Abstract The world of the 21st century is moving at a rapid pace. The development of the telecommunications technology since the beginning of the previous decade along with the fast penetration of the internet and various technological gadgets has resulted in the process of evolution of a highly connected digital world. The well connected digital world has become the birth place of various trends of globalization, which has continued to emerge from various developed as well as emerging markets. Because of the process of globalization, demands for new products and services are being formed in the markets all over the world. The demands of new kinds of products and services in the global markets are resulting in the generation of multiple business opportunities. Companies around the world are increasingly moving to the new markets to tap the new business opportunities and thereby attend significant growth in their business. This particular assignment focuses on Tesco which is the major retailer in the UK market. The assignment discusses about the evaluation of the strategy of Tesco in the current times, from the angle of sustainability. Introduction The emergence and rapid development of technology has brought in a major change in the competition dynamics existing in any market around the world. The new technology has triggered the rise of new trends of globalization, which has automatically increased the flow of knowledge in the global markets. The increased flow of knowledge and rising access to information by the masses all over the world has resulted in the process of development of demands for new products and services, which are of very high quality and are extremely high on innovative advantages and aspects. Because of the influence of rising demand, new business opportunities have cropped up in the global markets. The rise of new business opportunities has tempted corporations and business around the world to enter into newer markets and thereby consolidate their scope of growth. As a result of market entry by numerous international firms, the level of competitions in the global markets has gone up significantly. Also, the rise of competition in the markets all around the world has resulted in the process of increase of choice of alternatives for the consumers, thereby increasing the buyer’s power. In this case, the focus is on the UK based retailer Tesco. The UK based retailer Tesco has presence in around 12 markets and has team strength of more than 530,000 people (Tesco -1, 2013). The core purpose of Tesco is to make things better in an integrated manner. The values of the company can be linked to high dedication towards the customers, equal treatment along with the focus on achieving growth through creation of opportunities and values for the various stakeholders (Tesco-2, 2013). In this case, the company is looking forward to develop a sustainable strategy while significantly evaluating the currently existing strategy of the company. Analysis and critical evaluation of Tesco’s strategic position In focusing on the critical evaluation of the strategic position of Tesco, it can be stated that the company in the current times has presence in various continents like US, UK, Europe and Asia. The UK based retailer has presence in multiple countries around the world which includes UK, US, Lotus, Hungary, Czech Republic, Poland, Slovakia, Kipa, Ireland, Korea, Malaysia, China and India (Tesco -3, 2013). The portfolio of the company comprises of grocery, food, electronics, financial services, clothing, furniture, retailing of books, internet services, software, music downloads and DVD rental. The company’s growing market share and a strong presence in the online arena has greatly contributed to the development of a prominent leadership position in the UK region. For the purpose of analyzing the strategic position of Tesco, it needs to be considered that the core competencies that has been developed by the company during the process of doing business over the years, is highly compatible with the current business environment and the portfolio of the company. The company also provides a strong focus on the factor of providing good quality, safe, affordable and nutritious foods to the consumers, while continuously generating values for the various stakeholders of the company’s immediate surroundings. The company has played a strong role in developing value for the stakeholders in the form of job creation as well as supporting growth of the suppliers present in various global markets. This has further enhanced in the process of developing a strong positive outlook for the company in the upcoming days of the future. Hence, it can be said that the company currently has a very secured and strong strategic hold in the market of UK. Analysis of the organization’s strategic direction Ansoff’s Matrix The Ansoff’s matrix is a strategic tool which helps in the process of identifying various strategies that can be applied in connection to the multiple scenarios that might arise for pushing existing as well as new products in the current as well as new markets. Source: Cole, 1997, p. 70 The market penetration strategy is applied when present products are marketed in the present markets. The strategy of product development is applied when new products are pushed in the current markets. Market development strategy is executed when the existing set of products are introduced in new markets. Finally, the diversification strategy is adopted when the focus is on promoting new products in completely new markets (Cole, 1997, p. 70 - 71). In relating the company’s current strategic goals with that of Ansoff’s Matrix, it can be highlighted that the company is focusing on implementing the strategy of market penetration as well as market development. Explaining in a more elaborate manner, it can be stated that the company is focusing and deeply relying on the process of market penetration for the purpose of maintaining the leadership position in the markets of the UK. With regards to the current strategy, it can be said that the strategic objective of the company to grow the core of the UK business requires successful implementation of the market penetration strategy which is a part of the Ansoff’s matrix. On the other hand, for the purpose of increasing the influence and strong hold of the company in the other markets other than the UK, the focus is on the process of market development. In relating to the current strategy, it can be said that the company’s strategic priority in regards to attaining growth of the retail services in all the markets will be greatly enhanced by the Ansoff’s strategy of market development. BCG Matrix The Boston Consulting Group (BCG) matrix provides a strong framework which helps in a great way in evaluating and analyzing the relative performance of a business which is highly diversified in nature. The BCG matrix is a very important framework since it helps in a great way in the process of understanding the financial requirements and suitably allocating the finances for the various functional divisions of the business. It is very important to highlight that the BCG matrix uses two prime factors for the purpose of proper and relevant analysis of a widely diversified organization. The two factors are the rate of growth in a particular market and the share of the organization in that specific market. Generally, this particular strategic matrix highlights that the presence of an organization with a high market share in the markets which has a high rate of growth is generally considered as a greater attractive bet as compared to small market share of an organization in a market which a low rate of growth. In elaborating about the BCG matrix, it can be stated that the matrix comprises of a 2 by 2 quadrant and comprises of the variables of growth rate and market share (Griffin, 2011, p. 222). The variable of growth rate is plotted against the vertical axis, while the variable of market share is plotted against the horizontal axis. The BCG matrix comprises of the four divisions like stars, question mark, cash cow, and dog. Source: Kotler and Armstrong, 2008, p. 38 The star division of a company is positioned in an area of high growth with a very high market share. The question mark division of a company is positioned in a zone of high growth yet low market share. The division of a company which is a cash cow is often placed in the region of low growth rate and high market share. The dog division of a company is placed in the region of low growth rate and low market share. Companies as a strategic move often focus on taking the cash generated from the cash cow divisions of the company and invest in the question mark divisions of the company so as to make it a star. Relating the BCG matrix with that of the current strategic priorities of the company, it can be stated that the UK division of the company is the cash cow division of the company. The factor of growing competition along with hostile economic environment like low job opportunities in the region has greatly impacted the market attractiveness in the negative form. The online division of Tesco is the question mark division since it exists in a region of high growth and low market share. The company also has another question mark division which is the international retail divisions in the various markets where the company has presence. Since the markets especially in the developing regions have highly favorable economic conditions, the attractiveness of the markets in the developing regions in terms of growth rate is very high. As the company currently lacks a strong market share in the international and developing markets, so naturally the international retail divisions are placed in the question mark category. SFAS framework The SFAS framework focuses on the factors of suitability, feasibility, acceptability as well as sustainability. While judging the current strategy of Tesco in connection to the SFAS framework, it is important to highlight that the strategy is comprised of multiple strategic priorities. Suitability In assessing the strategic priorities from the point of suitability, it can be stated that the priorities are largely specific in regards to a specific division or market. In a more specific manner, it can be highlighted that the strategic priority in regards to the developing the business of the UK market is suitable in nature since the move has been already balanced by a plan which aims in restoring growth in the market through a series of improvement focused goals for the customers and the target audience (Tesco, 2013, p. 13). Feasibility The various strategic objectives and priorities of the company that have been focused and pinpointed by the company can be considered feasible in nature, since the company has the ability to support its move with significant cash injections. Acceptability Talking in regards to the factor of acceptability, it needs to be stated that the various strategic objectives are highly acceptable in nature. The reason behind the factor of acceptability can be attributed to the issue that the company is very broad and diversified in nature. During the course of conducting its business, it has already expanded into various markets. The multiple strategic priorities are highly specific in nature and address the focus on the various segments like the UK market, the online market as well as the multiple international markets. Thus, the step by step strategic priority based focus on each of the divisions makes the current strategy of Tesco acceptable in nature. Sustainability Discussing on the factor of sustainability, it can be stated that the company’s strategy based priority are largely designed by the top management while concentrating on the sustainability factor. The factor of sustainability holds prime importance among the strategy makers of the company as it helps in propelling growth of the business organization in the long run. The strategies that have been designed and currently implemented by the company can be assumed to be highly sustainable in nature as the strategies have been increasingly designed while taking into account the performance of the various divisions of the company in the previous year and comparing the growth in regards to the emerging market trends. Conclusions and Recommendations Having studied and thoroughly analyzed the strategic focus and objectives of the company, it can be stated that the company’s objectives are very much in line with regards to the various divisional requirements. The analysis of the strategic position of the company highlights that the company enjoys a dominant position in the domestic market. The company’s top management has also taken necessary steps by focusing on the process of product penetration and market development for maintaining as well as developing its stronghold in the domestic as well as the UK market. The company’s strategic focus is also very much in line with the factors of suitability, feasibility, acceptability and sustainability. As a factor of recommendation, it can be stated that the company can focus on introducing new products in the existing as well as the new markets by using the online platform as a medium. By promoting the new products of the company through the online medium, the market share of the company in the domestic and the international markets can be significantly increased. This will automatically help the company to build its stronghold in the international market while retaining the dominance in the domestic market. Reference Tesco -1, 2013. About Us. Available at: http://www.tescoplc.com/index.asp?pageid=6 [Accessed 17 Sept 2013] Tesco -2, 2013. Core Purpose and Values. Available at: http://www.tescoplc.com/index.asp?pageid=10 [Accessed 17 Sept 2013] Tesco -3, 2013. Our businesses. Available at: http://www.tescoplc.com/index.asp?pageid=276 [Accessed 17 Sept 2013] Cole, G.A., 1997. Strategic management. USA: Thomson Learning. Tesco, 2013. Tesco PLC Annual Report and Financial Statements 2013. [Online] Available at: http://files.the-group.net/library/tesco/annualreport2013/pdfs/tesco_annual_report_2013.pdf [Accessed 17 Sept 2013] Griffin, R.W., 2011. Management 11 ed. USA: South Western Kotler, P., and Armstrong, G., 2008. Principles of Marketing. India: Dorling Kindersley Pvt. Ltd. Read More