Detailed Study On Strategic Management in Tesco


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What is Strategic Management

The concept of strategic management is concerned with series of strategies and policies which needs to undertake for the purpose of reaching towards the goals of organization (Hitt, Ireland and Hoskisson, 2012). It also consists of the analysis, decisions and actions an organization undertakes for the purpose of creating and sustaining in competitive advantages. With the help of effective strategic management, organization can take corrective decisions for managing business operations and at the same time, it also assists in changing the scope of success and profitability. The present research study has been focusing on Tesco which is a large retail business organization in UK.

The business entity serves all sort of services to the customers and to acquire customer satisfaction, organization focuses more on strategic and corporate management. Further, in the study, discussion has been made on framework that is adopted by Tesco for the purpose of strategic analysis. Similarly, in the research work, information has been included about company’s strategic capabilities and along with that, researcher has also covered a few possible strategies through which Tesco could defend its core business aspects.


Strategic direction that the company has followed in the past and ways in which strategic thinking has developed within past 5 years

From the last five years, Tesco has been managing its business aspects in prominent manner and this is the prime reason for which Tesco is acquired maximum attention of clients and business organizations (Hill, Jones and Schilling, 2014). The business seems to be highly focused towards enhancing the competitiveness and thereby it adopts numerous strategies and approaches to create competitive edge over the rivalries. External and internal business environment is continuously analysed for the purpose of ascertaining all the factors that could impact business decisions. Strategic thinking is an extremely effective and valuable tool that helps the competitive business entity to undertake all the business decisions as per strategic aspects. From last five years, the degree of competition has been increased and many new entities have entered in the retail market. This has not only generated competition; but also it gives more opportunities for growth and success. Considering the strategic facets, Tesco has extended the product line and also depicted more concern towards customer oriented approach (Ward and Peppard, 2016). There are many organizations that provide their customers with similar products are services. They all make use of different set of strategies so that they will be able to attract more and more customers. Among all these Tesco is one among all which has adopted diverse strategies which is helpful for the cited firm to achieve their goals and objectives. In this context, below given are few of the strategic directions that has been followed by Tesco:

International Expansion: There are many markets around the world in which cited firm has made their business expansion (Swayne, Duncan and Ginter, 2012). This is an effective strategy in which organization aim at attracting more and more customers. However, there are different type of issues that firm has to face and still there are many potential markets in which Tesco has to make their business expand. In this context, it includes potential markets like India and China. As per the past strategic directions, firm has focused on expanding their business to new markets and this has helped them to raise their sales and profitability.

Non-Food Products: There are number of products that Tesco delivers to their customers. As per the recent strategies, cited organization has focused on providing non food products (Eden and Ackermann, 2013). With this respect, it includes clothing, consumer electronics and health products. These are diverse range of products and has enabled to grab attention of new and potential customers. Customers visit Tesco with an aim to buy a particular product but wide range of products are helpful enough to grab attention of these customers and they tent to purchase. Even this strategy of delivering non food products has proved to be highly beneficial.

Retailing Services: In recent time, there are many different type of services that has been introduced. These improvements are done in order to deliver high and better quality services to customers. In this context, it includes services like online shopping which make customers to buy products without having physical presence to store (Hair, Sarstedt and Ringle, 2012). Further, it includes banking and financial services, energy price comparison, etc. All these services has helped the firm to make sure that services users gets satisfied and their requirements are fulfilled.


Choice and use of framework for strategic analysis

Strategic analysis is termed as the procedure that ensure proper research of the environment in which the Tesco operates their activities and operations. There are different framework that is used by the management of the retail organization for engaging in the strategic analysis of the company it mainly include analytical models such as SWOT, PESTLE as well as Porter's five forces, value chain analysis etc. that is used in strategic analysis of the giant retail firm. The appropriate framework that include SWOT and PESTLE analysis with the help of this management can easily analyse the internal environment as well as external environment within the retail industry (Vogel and Güttel, 2013). The justification for choosing SWOT analysis include that with the help of this company can easily strengthen their activities and operations. Along with this it also assists in grabbing the opportunities that are present within the retail industry so that they may easily attain the market share.

On the other hand, PESTLE analysis has been chosen for analysing the factors that present in the retail industry that directly impact the activities and operation of retail firm in the market. For instance, with the political factor it might directly affect the strategies that are framed by the Tesco to operate in domestic market.

Discussion of the company’s competitive advantage among its direct competitors

Tesco has been operating its business in highly competitive market place; however even after that the business has the ability to develop itself as a competitive entity. In order to meet the competition, Tesco has been coming up with several products and services which also aids the business entity to grow more in competitive market place (Evans, Stonehouse and Campbell, 2012). Tesco is having high competency within environment which helps in sustainable development so that goals and objectives can be accomplished in desired manner. High level of skilled workforce allows to improve the work place productivity so that better opportunities can be attained effectively. Moreover, the business firm is also well focused towards diverse strategic principles so that goals and objectives can be accomplished in desired manner. Application of modern and digital equipments has improved the work performance (Mellahi and Frynas, 2015). It assists in meeting business development standards so that better competition can be offered within market. In order to gain the competitive advantage the entity is well focused towards consideration of customers needs and new product development. It also allows to improve sales and profit effectively as compared to others players in the market. It can be said that brand identity of Tesco is the major factor that helps the entity to survive in long term market place.

Industry scenario facing the company within its existing market domains

Ultimate aim of any firm is to gain maximum profit. This is only possible when they will be able to satisfy their customers. The needs and requirement of customers changes frequently and it is important that companies understand these changes (Keupp, Palmié and Gassmann, 2012). Accordingly, steps should be taken with the help of which aim and objectives can be achieved. As there are organizations that deliver their customers with similar products and services like Tesco. There are many changes and challenges that this firm has to face. Further, there are different industrial scenarios facing Tesco within its existing market domains and these have negative impact over the business. As per the finding, it can be stated that there is high decline in sales in the market of UK. One of the main reason for this decline is due to high competition. More specifically, price and quality of any product affects the buying behaviour of customers (Rahm and Riha, 2012). Competitors like ASDA and Sainsbury deliver their products at low price because of which customers shift on their services. This can be determined as one of the main reasons due to which the sales of Tesco at UK market is declining.


Analyze if the mission and vision statement are aligned to the demands of the marketplace

In accordance with the vision and mission statement of Tesco, it is aligned according to the demand of marketplace. Mission of cited firm is to create value to customers in order to earn lifetime loyalty. In order to achieve this mission, Tesco aims to develop the business into full rig-maintenance organization (Priem, Li and Carr, 2012). Further, it focuses on delivering healthy environment in which the products are safe and no life is put into danger. They maintain the safety and quality standards. In this modern world, people are very much health conscious and Tesco make sure that the products and services delivered are with high quality. Moreover, they also understand the importance of their employees and develops relationship with them by making sure that all their requirements are satisfied. On the other hand, the vision of Tesco is to be the most valued business. In order to achieve this vision, they focus on delivering cost effective product. For this purpose, they make sure they have negotiations with suppliers and deliver the products at low price (Goetsch and Davis, 2014). The changes in taste and preference of customers take place frequently. Further, cited firm is well known for their implementation and invention. They make frequent changes in their services in order to deliver variety of products. In addition to this, employees of Tesco are trained in such a way they take part in all the activities and promote health, quality, safety and issues related to environment.

Strategic capabilities of business

Each and every organization have their set of strategic capabilities which are helpful for the management to make sure that business operations are undertaken effectively and efficiently (Dobbin and Baum, 2014). As per the case there are different type of strategic capabilities which enable to firm to achieve their goals and objectives. In this context, below given are strategic capabilities of Tesco:

  • Developing Relationships: They focus on creating value towards their customers. This is generally done by identifying the issues that are faced by them. In this context, cited firm has after sales services in which all the problems and issues that are faced by service users are considered and step are taken in order to over come them.
  • Price: Price can be determined as one of the effective factor that high impact over the buying behaviour or perception of customers towards the product. As per the strategic capabilities, when new product is introduced in the market by Tesco, then they deliver it at low price. This is done in order to develop trust and confidence over the product (Harrison and John, 2013). When customers get to know about the product, then price is reduced.
  • Innovation: Changes in taste and preference of customers take place frequently. As per the change, it is essential that firm make improvement in their products and services. With this respect, Tesco conduct market research in which they aim at identified the requirement of service users. Accordingly, products are developed or changes are make in existing product.
  • Training to Workers: Employees are the face of organization as they have direct interaction with customers. They are the one who present the services and products to customers (Boyd, Haynes and Ketchen, 2012). In this context, training is provided to workers so that they will be able to understand their set of roles and responsibilities. This way it helps management to attract more and more customers.


Discuss possible strategies that the company could follow to defend its core business

For any industry, there will be particular organization that will hold up all the market share and strong customer base. However, if the firm do not make improvement in their strategies, then they will not be able to hold upon for long time. In this competitive world, there are organizations which make use of strategies to develop profits by creating strong customers (Vogel and Güttel, 2013). As per the case, there are certain defence techniques that is used by Tesco with the help of which they defend their core business. As per the finding, it has been found that cited firm was the leading in general merchandising but when Wal-Mart entered into market, they delivered their products at low price. Analysing the strategies used by Wal-Mart, Tesco started reducing the price for their product as well. This way Tesco was able to improve their sales in which they also used personalization of promotion and coupons. With this respect, cited firm make use of defensive marketing campaign in order to defend its core business (Defensive marketing, 2014). There are various type of strategies involved in this marketing campaign which are as follows:

  • Advertising: In this Tesco will invariably respond towards the new entries in this as campaigns. Organization make investment in brand awareness and to raise the perception of people towards the products and services which are delivered by the firm (Hubbard, Rice. and Galvin, 2014). These are helpful to provide customers with proper information about the services and products that are delivered by the firm (Hill, Jones and Schilling, 2014). In addition to this, marketing strategy also includes some improvements in the product.
  • Distribution: In accordance with this strategy, it is possible to block the distribution of competitors and this is done by creating incentives for distributors who do not agree to carry it out. However, this is only possible when the leading business is ready to provide incentives. In addition to this, profit is retained by Tesco by reducing the investment for distribution and by keeping defensible market.
  • Pricing: Price of the product play vital role in preventing customers to shift to competitors. This is important as the price for a product is low when compared with same product that is delivered by Tesco, then customer will prefer to purchase the product which is comparatively low (Ward and Peppard, 2016). In some of the cases, price of the product is raised as it must be sold on the basis of quality, quantity, feature, etc. In such condition, the price can be raised and profit can be gained by the organization.
  • Without defending market share, defending profit: There are many products that are delivered by Tesco and with an aim to protect profit, management divest itself of losing product. Then the money is taken which was invested in the product and that money is used to make improvement in another product. As per the case, there are many products that has been divested.
  • Product improvement: There are different type of qualities which a product has and some them even as more than one quality. As per this strategy, management of Tesco focus on making improvement in the product by adding up the quality. This is helpful to develop positive perception and they tent to buy the product (Swayne, Duncan and Ginter, 2012). In this context, the strategies that are implemented by competitors are also considered and implemented.


Analyse and evaluate the resource implications of recommendations that the company has to address

As per the analysis made, it can be stated that there are different areas in which Tesco needs to make improvement. Below given are the recommendation which will enable to compete effectively:

  • Improving quality: There are different type of factors that are considered by customers when they are to buy a product. However, among all the factors it is important that organization consider quality of product (Eden and Ackermann, 2013). As there are firms which deliver similar products and services but by making sure that quality is not affected, then it will enable to develop positive perception among mind of customers. Quality of product can be determined as an effective factor which will enable to attract more and more customers.
  • Employee training: Tesco spend highly on providing training to customers. However, there are cases in which management do not get the expected result. With this respect, one of the main reason for this is that organization do not identify the issue because of which workers are not performing effectively (Hair, Sarstedt and Ringle, 2012). In this context, management should identify the areas in which improvement is required and then they should be provided with training. This will enable to save money and this will also help in raising profit.
  • Spending less in advertisements: In accordance with the finding, it has been found that Tesco spend highly on advertisement. In this context, they make use of television, radio, newspaper, etc. to promote the services and products that are delivered by the organization. There are different set of products that are delivered by cited and it increases the cost as they spend highly on advertisement. With this respect, Tesco should reduce the expenses that they incur in advertisement. This way they will be able to make use of that money for improving the quality of products.
  • Business expansion: There are potential markets like India and China in which Tesco make their international expansion (Evans, Stonehouse and Campbell, 2012). Cited firm should develop plans so that they will be able to enter into these potential markets. This will enable to increase the sales and profitability of the organization.


Summing up the entire research work, it can be said that Tesco has been operating the business in competitive market place; hence the business needs to emphasize more on developing effective business strategies. Hence, it can be said that corporate strategies are essential for Tesco because that aids in creating more competitiveness of the business in external market place. Further, Tesco is required to emphasize more on strategic analysis so that factors which affect the business practices can be ascertained. Moreover, in order to protect the business practices, it is required for Tesco to develop alternative growth strategies so that success elements of the retail giant can be encouraged. As per the mission statement of Tesco, it is vital for the business organization to focus more on better service provision which is also essential in terms of enhancing profitability aspects.


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