Tesco PLC Strategic Planing and Expansion Process

1.2 An Analysis of Factors (Barriers or Facilitators) That Have To Be Considered By Tesco When Formulating Strategic Plans for the Organization

First, the board and employees of Tesco can evaluate the external and internal environment of the company.  This will help this team to determine issues that are strategic and have an impact on the organization. They must prioritize the issues including those that are essential, the positive value and the negative ones will also be considered.  All calls for involvement of other programs such as training. All this is undertaken in order to ascertain what will be the future demands, who will be the next customers and where the company will expand to.  It is, therefore, important to consider this first factor (Hill, Jones & Schilling, 2014). For example, the company should train its staff to handle IT related service. This will help the firm to remain up to date with technological talent.

Strategic planning is considered as a process that determines the organization’s direction, strategy and resource allocation in the best way possible so that the organization can meet its desired goals. In order to meet the direction of the organization, it is vital to determine the current situation of the organization as well as the future prospects of the organization. Strategic planning has several facets without them it is not possible to attain a successful strategic planning. However, there are various issue or factors that affect the delivery of formulation of strategic plans. The below are some of the factors:

The other way is planning a group work of hire a consultant who will be mandated with evaluating or audit the business environment. This is important to the company. It helps establish the best employees who will be considered in the formulation process as not all employee will get the chance to do so. As for the case of Tesco the company hires external auditor to determine this.

The other factor is the resource availability. Strategies cannot be developed or implemented if the resources needed to do so are not there.  Therefore, for this reason, the Tesco has to ensure that the resources needed are in place before the strategies are adopted or implemented. For example, the company should ensure that it has the best Human resource that will help steer the company to the next level because due to changes in the wage limits it will be hard to employ staff in the future (Hill, Jones & Schilling, 2014).  Despite the fact that all these factors could be in place, one last, and very vital factor is the ability of the decision makers to make the right and helpful decisions.  Since this decisions are designed to the strategic objective of the business, the decision makers have to upright when handling this issues for Tesco.

1.3 An Explanation and Evaluation of The Effectiveness of Techniques Used When Developing Strategic Business Plans For Tesco

For Tesco Company, two strategies techniques are noted as below:

TESCO PLC BCG Growth Share Matrix

Tesco divides its products into such a manner that they can grade them and generate a synergy within their portfolio. This technique views the organizations four type of results that may be faced by the company in the near future. It helps an organization to know when to venture within the current products, when to divert the company earning as well as when to target a new brand (Johnson, Scholes & Whittington, 2008). Placing Tesco products and service in a BCG matrix faces four types of challenge as below:

            Stars: High Market Share and High market Growth

1. In this case, if the manager makes the business more profitable and maintain a fast market share, and the business will generates a cash cow. Here the company is expected to harvest cash from the business. For example, if the manager invests in expanding the business as well as increasing the customer base, the company expects to be cash cow in the future.
2. The company will generate much cash. Hence the managers will be mandated to make decisions on which venture to use the profits generated

            Cash Cows: High Market Share but Low Growth

The service offered by Tesco, as well as the products, will attain a minute growth in the market. However, Tesco will have the biggest market share. This will in return earn the company huge revenues and profits. For example, the company should ensure that it increases its employs skills hence the ultimate service delivery will also be increased or boosted. Due to the cost that come with this change, the business will have to incur high costs hence a small growth in the market but after this picks, the business will eventually get profits.

            Dogs: Low Growth and Low Market Share

Tesco should be careful not to incur unnecessary costs, and when the company notes that the venture is not productive than it should turn to another venture of use a different business strategy in order to persuade customers. For example, the company has constantly been producing new products in the market to ensure that is remains competitive (Hamilton & Nickerson, 2003).

            Question Marks: Low Market Share but High Growth

1. In this category, Tesco has high risk of making Dog Products. If the share is reduced, then there is higher possibility that the company will incur losses
2. It should indicate that newly products in the market will gradually earn recognition and acceptance.

Profit Impact of Market Strategy (PIMS)

It is s system that offers evidence to support principles and policies for sustaining and supporting competitive advantage. Tesco will implement this technique in order to sustain customers’ service information in alignment to research value and generate procedures that can hold pathways of their success in the future. This technique will be vital in the generation of business strategies to be used in the expansion plans that Tesco holds.

Task 2: Formulating a New Strategy

2.1 Organisational Audit For Tesco

Tesco PLC SWOT Analysis

Strengths

1. Tesco is offering premium service to its customers are low cost; the company was ranked the best last year in oline store serviceabilit, (Hamilton & Nickerson, 2003).
2. The safety features that the services and products offer are high
3. The products have gained a reputation from clients over the years hence reduced marketing done
4. The products offered in Tesco stores are of higher quality as compared to others.

Weaknesses

1. Tesco is very reluctant in promoting is service and products (Hamilton & Nickerson, 2003)
2. Lack of advertisement is noted in Tesco Company

Opportunities

1. Tesco has the opportunity of diversifying its products in the market because there are few companies in the market offering the same products and service
2. Sale of foodstuffs has a constant demand in the market hence low chances of low shares in the market (Johnson, Scholes & Whittington, 2008)
3. Tesco sale strategies as prompt opportunities in the future.

Threats

1. Suppliers’ competition is very high in the market hence hard to determine the quality of a supplier
2. The government policies play a significant part in shaping the market hence this affects Tesco sales

2.2 Environmental Audit For Tesco

So as to undertake an environmental analysis, PESTLE analysis was considered. The analysis helps the organization to understand the situation needed to set up an organization to the new settings. This will help Tesco as it wishes to expand its business to another target market. In addition, the analysis will help Tesco to minimize threats at the same time to maximize its profits (Johnson, Scholes & Whittington, 2008).

• Political

The political climate varies from country to country. However, Tesco over the years had been working with countries that are up to date with supportive countries with outstanding business-political environment. Political stability hence plays a significant in Tesco’s expansion strategies.

It issues such a taxation are considered to be political since they are development by governments as a way of earning revenue.

• Economical

The buying power of behavior of people in different countries affect the sale of Tesco products hence over the years Tesco has expanded to countries with positive purchasing power. For example, the UK has a diversified customer base that have high purchasing power

• Socio-Cultural

It is noted that the individuals’ lifestyle and preference affect the sale of Tesco products in the country that it has invested. Therefore, the company has always come up with various strategies to persuade the people towards the products.

• Technological

Tesco has been on the run to ensure that technology is part of its strategies. The company has a comprehensive customer website where they can place orders 24/7.

• Legal

It has been the obligation of Tesco to adopt laws in countries that they have stores.

• Environmental

Environmental factors such as climate and weather affect Tesco’s business. Therefore, the company has strategies that influence customer view towards environmental consequently to its products.

2.3 The Significance of Stakeholder Analysis When Formulating New Strategy

• Grid 1: The top right most part denotes the stakeholders who influence the decisions of Tesco Company also the strategies of the company. In addition, the stakeholders also promote the products.
• Grid 2: The top left corner is composed of stakeholders that possess low interest in the organization
• Grid 3: The bottom right part of the grid represents stakeholders who have high interest but have low influence in the undertakings of the organization
• Grid 4:  The bottom part refers to stakeholders who have low influence, as well as low interest in the organization. Tesco have mapped the stakeholders in the interior of the Company in order to contribute towards organization profitability.

Stakeholders are components of a company. Tesco company’s stakeholders are its customers, the government, suppliers, trade unions, creditors and the business community.  They include a wider array of parties that are vital for an organization success. Hence, when new strategies are to be created, a clear understanding of its stakeholders is important. Therefore, as Tesco did, to gain understanding of the organization’s stakeholders, a stakeholder analysis has to be undertaken (Keller, Parameswaran & Jacob, 2011).   The following are the benefits of conducting a stakeholder’s analysis:

1. To identify groups, people and institutions that can influence the functions of the organization. This is important as the right people will be noted. Such people can steer the company towards meeting its strategic goals.
2. To evaluate the influence that this stakeholder will have to the organization
3. To develop strategies that will be effective in supporting the organization and to reduce any obstacle whatsoever.
4. The organizations can use the opinions of the stakeholders to shape the company as of the case of Tesco
5. When such an analysis is done, the company will be able to identify its credible stakeholders who will help the organization to get more resources

2.4 A New Possible Strategy For Tesco

Tesco main marketing objective is to ensure there is a strong and positive growth each business quarter and to attain a stable increase in market penetration. Tesco has the best information about its market and understands the great deal of the most priced attributes of the most reliable customer as well as that of the unreliable customer. In order to communicate with the customers, Tesco will only use it marketing techniques or strategies such as marketing segmentation, positioning, targeting strategies. The company has to implement this strategies using the best Human Resources they have in order to meet their needs and market demands (Potter & Disney, 2010).

Tesco will be positioning their products by continuous building of their brand image on a “freshness” stage.  Tesco is expanding its customer base around the world with a mission of offering the Tastiest and healthiest food.  If its positioning strategy is effectively communicated with an advertisement campaign, it will serve the company chain part of clients every day.

Over the years, the company has been employing various strategies to position their farm products. In 2005, the company used social media to position these products but it did not meet the expected level. However, with various targeting and segmentation strategies, the company is now able to meet this demands. Farm products are now the highest selling products in both offline and online Tesco stores. In addition, the company has devoted to supporting several schools as sponsors. They provide the schools with fresh products as donations.  These students and other school staff act as ambassadors for Tesco products.   This is a befitting strategy that the company should use continuously to diversify their client base.  The company should also consider co-branding with other organizations to increase its business opportunities.

Task 3: Approaches to Strategy Evaluation and Selection

3.1 An Analysis of The Appropriateness of Alternative Strategies Relating To Market Entry, Substantive Growth, Limited Growth or Retrenchment or Turnaround For Tesco

• Market Entry Strategy Organic Growth

When an organization such as Tesco have completely exhausted their domestic market, they opt to develop the same market in the countries (target market).  In order to meet the needs of the external market more easily such companies opt to merge or use varied market entry strategies to meet the target market needs (Wheelen, 2008).

• Strategic Alliance

This is a strategy whereby two or more businesses come together with a common objective. They also share the assets they have to meet their objective. This methodology or approach is one that resides in the idea acquisition and economic development.

• Licensing

This is a strategy whereby a mother company also known as the Licensor allows another business to use the trademark of the company to be able to sell the products and service of the mother company.  For this case, Tesco is well known to use the strategy in order to meet the needs of the target market.  It uses this strategy as an entry strategy.  However, the licensee pays revenue for this provision.

• Franchising

For the case of this strategy, it is important to note that the mother company allows another company to use its trademark to make a sale. In addition, the company also uses the mother company’s business strategy to meet the needs of the market (Wheelen, 2008).  For this reason, Tesco may use this approach to distributing goods and services in distinct locations

• Product Development

This is the evolution of different products that do not exist currently in the market and so persuade clients to get to the stores or business.  As for Tesco, the company is well known for introducing different goods in the market (Keller, Parameswaran & Jacob, 2011). However, the company should keep this strategy live by continuously coming up with new products in the market.  This will increase the inflow of client in their stores as well promoting more visits to their online stores.

• Innovation

This is one of the calls that all companies that operate internationally have scaled.  For the case of Tesco, the company has been on the eve to ensure that innovation is a strategy adopted by the firm.  The company accommodates all types of innovation ideas as well as talents. Therefore, in order to make increase in sales, the company has to ensure that it meets this threshold.  The company has to accept more talent so as to meet the every changing demand for innovation (Hill, Jones & Schilling, 2014).

• Retrenchment

This is an old strategy that companies to slash the prices of products as well as to lay off staff in order to meet the economic changes anticipated or expected. Tesco can implement this strategy when in venture in a new market whereby the prices of products are low.  This can be considered as a persuasion strategy that permits businesses such as Tesco to increase their sale.

• Turnaround

This is a strategy dedicated to business renewal. Its uses analysis and development to save companies that are running at liquidity. The tools used to determine the best turnaround plans are SWOT and PESTLE analysis. As for Tesco, it can use this strategy especially in the less promising stores around the world.  This will not only help the company to reenergize these stores but also to boost their performances.

3.2 Justification For The Selection of a Most Appropriate Strategy For Tesco Using a Criteria such as Suitability, Acceptability/Desirability and Feasibility

According to the analysis of the Tesco Market segment, the business needs a new strategy to improve the scalability of the company in the market. It is evident that the two possible strategies for Tesco is product development and innovation (Hill, Jones & Schilling, 2014). This is so because, the business needs innovation currently due to the changing nature of technology and product development because the world is changing are new products are coming up each day and due to changes in climate other stores lack varied foodstuffs.

Task 4: Implementing a Chosen Strategy

4.1 An Assessment of The Roles and Responsibilities of Personnel Who Should Be Involved in Strategy Implementation For Tesco

For an organization to be successful at strategic position levels, it has to ensure that it meets the threshold needed for its Human Resource team. For Tesco, they have to realize that Human Resource is a twofold department that handles various concerns that lead to the success of the company over the years. First, consideration of human Resource management is the ideals of proper communication needs. They should articulate the communication strategy with others in the company so that others can understand other issues or concerns in the organization. This is the reason Human Resource personnel are the ones responsible for strategy implementation (Hamilton & Nickerson, 2003).

On the other hand, managers who are good at strategy implementation are aware of the effects that each strategy will have on their HR needs. They should consider asking themselves questions such as how much changes that such a strategy advocate for? Moreover, how fast the strategy can lead to change? In answering the above questions, Tesco will be able to understand the value of Human Resource personnel in the provision of service that could lead to change in the company’s business strategies. In addition, it will inform the management of the type of employees to hire such as those that can drive change at all times. Furthermore, it will help Tesco towards development and implement training programs that can steer change and development strategic wise.

4.2 An Analysis of The Resources Required For Implementing a New Strategy For Tesco

Tesco wants to implement new strategies to maximize the profits of the company on the eve of changes in technology, tests and customers attitude. In order to implement the new strategies, the company needs the following resources:

Resource allocation: this is a central management activity that opens the path to strategy implementation. For an organization such as Tesco that do not use strategic management approach in decision-making, they opt to use resource allocation as it is based on personal and political factors. Strategic management allows resources to be allocated according to priorities derived from company’s annual objectives (Elms, Brammer, Harris & Phillips, 2010).

Nothing could be more damaging to strategic management and the success of the organization like resource allocation. For instance, wrong resource allocation could lead to various negative effects to the success of a company based on the company objectives.

The company should have at least four type of resources that can be used to attain the desired objectives. These objectives are physical, human resource, financial resources, and technological resources. However, it is important to note that allocating resources to each department, and division does not mean that the strategies have been implemented successfully. This is because the implementation of a strategy is dependent on various factors such as resource allocation, over protection of resources, vague targets and lack of adequate or sufficient knowledge.

Below the corporate level of the company, there exist a gap between systematic thinking about the resource diversification and allocation as well as other strategies of the firm. According to view from some of the employees: The manager has more tasks than expected of him. Hence, this has trickled down to management problems. The manager should be able to allocate resources and time to this tasks if this is not consider then pressure will build and the costs are too expensive (Elms, Brammer, Harris & Phillips, 2010). The CEO of the company calls for outstanding financial reports, but the strategy implementation and formulation are often deferred creating a corporate hitch. At Tesco, today’s problem soaks up all available resources and energy. This ultimately scrambles the company’s budget hence makes the company fail in its strategic needs and roles.

4.3 A Discussion of the Suitable Targets and Timescales to be Considered by Tesco in the Implementation of the New Strategy Using Techniques Such The SMART Method of Analysis

Tesco is one of the leading groceries in the world, but its profits are not as much as that of the other competitors in the market. Therefore, they want to maximize their profits so that they could be able to implement new strategies. They want to meet the demands of the new competitive market and to develop new products for their customers. Their efficiency of their employees and the management is not satisfactory. They want to change the condition of the company permanently. So they prepare for both short-term and long-term growth. The organization is planning to overlie on the long-term strategies. However, they will split this down when all goes well with small and short terms goals and strategies.

If the short-terms goals are attained, then automatically the long-term will be attained. For example, Tesco at present has only 40000 clients around the world, yet it is planning to increase this capacity in the next ten years to thrice this number. First, they have to decide their potential client and market year by year. It is mandatory for the business to increase their customer base for them to attain these goals (Easterby-Smith, Thorpe & Jackson, 2012).

In order to increase the loyalty of the client, the company has to offer healthy and fresh foodstuffs and offer quality service. They need to research about the marketplace and customer frequently to identify the business trend and customer demands otherwise their competitors will beat them in business.  Regular market research is important to any business. Breaking down the organization strategy into smaller ones is an added advantage to Tesco because it allows more time to scale up the business (Boyne & Walker, 2010).

Conclusion

As for the case of Tesco, it is important to note that the company has been employing various strategies in the past.  Due to this, the company is listed on the stock exchanges around the world. However, due to changes in technology, climate and others such as economics status, Tesco has to adopt other strategies in order to remain competitive amid its competitors. The noted strategies can steer the company to a greater extent. However, they need to change the manner in which it is handled the implementation of the strategies. For example, the company has failed in the past to use stakeholders’ decisions in running the company and if it has it has never implemented strategies proposed by them. Therefore, the company should deduce a better business implementation strategy in order to meet its threats and weaknesses.

References

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