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For achieving success and growth in this competitive and dynamic business environment, it becomes very significant for the business organizations to have a strategic vision and clear aims and objectives. Seeking help from these goals, company can paves an effective path, which can further help them in attaining a competitive edge in the market. Thus, it can be confronted that development of strategy is far more important aspects than any other facet of the company. However, strategies must be developed collectively. In other words, the collective wisdom in the process of developing a strategy will help the firm in achieving the seventh sky and will provide supporting hands in building an organizational competitiveness and sustainability in the economic volatile situation (Moingeon and Soenen, 2004).
Attributed from the above fact, the subsequent research report will dwell into comprehending the meaning of collective strategy and various that influence the same. Further, the report will also analyze the relationship between organizational and collective strategy. The case company taken under study is TESCO. It is one of the largest multi-national food retailers of UK. The company is engaged onto the business of selling groceries, fresh foods, food products and general merchandise at various parts of the world (Tesco Competitive Analysis 2005, 2011). The present piece of work will look at collective strategy development process in context of TESCO and various other contributing organizations related to the same industry.
In order to succeed in this market place, each and every organization needs a common strategy. A common or collection strategy is nothing but defined as a collaborative effort among the people at various stages or levels in the company. In other words, it is a process in which an individual having common concern at different level in the organization collaborate with a view to identify the ways of approaching a particular issue (Ardichvili, Jondle and Mitchell, 2009). Every organization has different business environment. However, there are some of the factors, which are common to all and they are needed to be fulfilled. When speaking in regards with the political requirement, there is a need of common strategies between both the organizations and administrations. The operations and functioning of TESCO are largely effected by the political conditions and legislation. The government has imposed legislations in regards with the employment, due to which the retailers are persuaded to provide work for different people. Thus, in turn Tesco is required to abide by this regulation and need to devise such strategies that takes into consideration the need of administration and organization as a whole (Astley and Fombrun, 2003).
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On contrary to this, there are many social and ethical needs, which need to be fulfilled for the purpose of attaining a reputable position in the market. There is a common strategy between the organization and management. The main aim of the Tesco is to remain ethical by taking into consideration the needs and wants of the society as well as other stakeholders. The administration in turn also facilitates their workers to adopt ethical practices that are in their interest and this, in turn fulfills the social as well as ethical need of the company. Finally, collaboration of strategies of both organization and administration is required in order to fulfill the operational need of the firm (Barnett, Mischke and Ocasio, 1993). The operational need of any firm includes proper utilization of all resources, higher better productivity, minimal costs etc. For this regard, Tesco has adopted very cost effective strategy that saves their valuable time, efforts and money by approaching a common way to handle this issue.
The collective strategy within the organization is evolved and developed on the basis of various factors. These can be internal as well as external to the business. Internal factors may include various practices related to human resource management, operations, marketing and sales etc. (Barney, 1991). On the other hand, external factors on the basis of international and national collaborative basis may encompass political, social, environment and legal factors. Seeking help from these internal as well as external factors, Tesco makes unanimous decisions in regards with developing a collective strategy. For the purpose of developing a collective strategy, there are numerous methodologies that can be used by the company. Within the organization, Tesco can make use of value chain analysis. On contrary to this, PESTEL analysis techniques can be used to develop collective strategy externally to the business (Blanton and et.al., 1999).
Value chain analysis.
It is nothing but defined as a framework that supports in understanding various activities through which the organization attain competitive advantage in comparison with the other rivalry firms in the market. In addition to this, the value chain analysis also helps in creating a value for shareholders of the company. Thus, it can be well attributed that value chain analysis is nothing but a series of activities that every company undertakes while operating in the market with a view to deliver something precious to the customers. It encompasses primary as well as supporting activities (Cui and et. al., 2009). The primary activities include inbound logistics, outbound logistics, marketing and sales, service and operations. On the other hand, supporting activities engrosses firm infrastructure, technological development, procurement and human resource management. Tesco has adopted low cost leadership strategy and thus, to facilitate the same, the company has made use of effective information technology system. Throwing light on the marketing and sales activities of the Tesco, the firm has employed various programs such as loyalty programs in order to discourage the competitors to switch towards their competitors (The value chain, 2010).
For the purpose of enhancing the impact on the component organizations, key stakeholders and administrations, there are various opportunities that need to be identified for the future development of collective strategies. Since, Tesco is expanding its operations exponentially in the global market; various strategies are required to be developed by considering this aspect. As the company extends their global reach, there are more likely chances that they will be going to face many challenges in terms of competition, legislation and many other cultural and non-cultural factors (Bresser and Harl, 1996). Further, Tesco has also entered into the Indian market and through this; they were able to reinforce their market position all around the world. This in turn offers many opportunities for the firm to develop strategy that can significantly help them in maintaining this position for years and years.
In addition to this, Tesco has also signed a franchise agreement with TRENT. This will provide Tesco a further aid in developing a strategic position in the market. Other than this, Tesco can also avail opportunities by evaluating the buying behaviour of the customers. All these opportunities will significantly provide supporting hands to Tesco in creating an efficient collective strategy. For the purpose of developing the same, it is obligatory on the part of organization to analyze each of the opportunities and then various ways need to be identified for availing the new prospects (Jackson, Schuler and Werner, 2008).
Various planning literatures and management typically distinguishes mainly two levels of strategic planning. One is business strategies and the other one is corporate strategies. When speaking in regards with the business level strategies, they always focus on rendering a competitive advantage to the organization over other rivalry firms in the market. On the other hand, strategies related to corporate level have broader focus, which takes into consideration the set of businesses an organization should operate in (Cameron, 2006). Recently, this distinction has been criticized because of its multiple linkages that exist between independent organizations within a larger environment. Thus, it becomes very significant for the firm to develop collective strategies as a third level of strategic planning. Collective strategy is nothing but a systematic approach by collaborating organizations with a view to deal with the variation in their inter-organizational environment. These types of strategies can be reactive i.e. absorbing the variation within an environment or they can be proactive, forestalling unpredictable behaviour by the organizations (Bresser and Harl, 1996).
There are many issues and policies that influence the development of collective strategy within the organizations. In the above section, various factors and policies were analyzed through which effective collective strategy can be developed. Policies related to the environment, human resource management, health and safety, international business and corporate information and practices largely influence the process of developing a collective strategy. However from all the above policies and issues, international business policies of Tesco influence the collective strategy severely (Sakakibara and Dodgson, 2003).
Tesco being a multi-national organization has its operations in various parts of the world. Since, the company works under international business, there are many legal and ethical issues that arise out of this. Further, Tesco is also required to comply with the Canadian, US and European laws in relation with the international business transactions (Desjardins, 2005). The most important policy under the international business policy is “International Bribery Legislation”. Canadian as well as United States has various laws that prohibit the local organizations to engage into illegal and corrupt practices at the time of dealing with the foreign government. When speaking in relation with Canada, this type of law is popularly known as “Corruption of foreign public official act” and equivalent to this, in US it is being famous by the name “Foreign corrupt practices act”. Under this law, offering gift, bribe, payment or any other benefit for the purpose of having some business advantage is considered as a great offence. In addition to this, companies or individual found engaging into these practices will be held liable for various penalties, which may include personal as well as corporate fines or imprisonment of individuals (Drejer, 2000).
Managing the collective strategy is very difficult for the organizations. Further, there are more likely chances that the assessment of collective strategy many differ because different interest groups have different criteria for assessing the collective strategy. There are many factors, which influence the collective strategy i.e. global, political, media impact, public interest, social, cultural and religious etc. (Hall, 2002). When throwing light on the political as well as global factors, if the government has imposed high regulations and laws in relation with conducting a business in the domestic as well as international market, than there are more likely chances that the frequency of pair wise cooperative behaviour of all organizations working in the same industry will be very low. Further, if in case the government has imposed quite moderate legislation and regulations in regards with trade and many other laws than the frequency of collective behaviour will be high. Thus, it can be said that the development of collective strategy is largely dependent on various political as well as global factors. Other than this, there are many social and cultural factors as well, which impact the formulation and development of collective strategy. Tesco is involved into the business of selling groceries, healthy food products and many other eatables in various parts of the world. There are many firms similar to Tesco such as ASDA, Sainsbury etc. who are in the same market but they are offering unhealthy and junk food. In such a situation it will be very difficult for the organization to develop a collective strategy, as they have their own individual strategies (Herring, n.d).
Organizations typically face many challenges in cultural and ethical context while developing a collective strategy. In order to develop a collective strategy, large number of organizations operating in the same market or industry collaborate their strategies with each and other and formulate a collective strategy for the whole (Stevens, 2012). However, it is not such an easy process. Ethical issues among the contributing companies are very harder to detect and it is more difficult to remedy as well. On the other hand, cultural issues are easy to detect. Each and every organization have their own and unique culture. Employees work as per their work culture and in the process of developing a collective strategy, this factor can offer many tensions to the management of the companies.
The success of any business strategy is based on skills and ability of corporate strategist and management team. In order to formulate a strategy, set of information is required by the company but no matter how much the company spend in gathering such information until their business intelligence is not effective. The need of strategic intelligence is vital to formulate strong business strategy as it defines the pattern of the collection, processing, analysis, and dissemination of aptitude required while formulating the strategy (Herring, n.d). The use of strategic intelligence in strategy formation and development can be identified by following systems; Strategy is a long term plan that requires proper concentration on possible threats and opportunities. The strategic intelligence facilitates the ability to understand trends that can present opportunities or threats for the organization, it is also called foresight. It enables the understanding of possible threats and opportunities which is must to be identified for a successful strategy (Yip, 2004).
In order to formulate or develop a strong strategy the organization need to focus on identified threats and opportunities and implement sub plans to deal with them. Strategic intelligence enables the ability to conceptualize foresighted opportunities and threats and formulate plans to engage resources to deal with them. This procedure is called visioning.
The effectiveness of strategy is based on systematic thinking that defines the ability distinguish, synthesize, and incorporate elements that function as a whole so that objectives can be achieved effectively. This ability of systematic thinking is facilitated by strategic intelligence (Tidd, 2005).
It is very significant on the part of management of the organization to take into consideration the formulation of strategy as a major part of their strategic management. Through developing a collective strategy, companies can avail various opportunities. Collaborative efforts by all contributing organizations will substantially provide benefit to the society, environment, community, employees as well as many other stakeholders of the concern (Collective Strategy, 2009). However, it is not an easy for the management to formulate such strategies without facing any difficulty. They come across with various challenges and issues in relation with culture, social, legal, political etc., which affect the development of collective strategy apparently. When talking about the formulation and development of collective strategy, there are mainly three phases that needs to be considered by the management. The very first stage is of diagnosis. Herein, analysis of internal as well as external environment of the contributing organization is being done. The next stage is of formulation, in which the necessary objectives as per the analysis so conducted are devised. Finally, the last stage is implementation. In this stage, all the developed strategies and plans are put into action (Ulwick, 2005).
In order to sustain a business in the market, each and every organization has certain aims, objectives and purposes. They thrive to achieve all these aims and objectives so that they can achieve a competitive edge in the market. The purpose of carrying out the business for individual organization will be different (Johnson and Scholes, 2002). Further, the rationale behind the development of strategies within the organization will differ to that of the collective strategy. The distinction between the two is being explained below:
Aim and purpose of individual organizational strategy
Tesco is a multinational and one of the leading food retailers of UK. They are well known for their quality and healthy products. Further, the company also undertakes various strategies in order to sustain this position in the market for extended period of time. These strategies are implemented by the company with certain aims, objective and purpose. One of the most significant objectives of Tesco is to become the successful international retailers. Earlier, the company was operating only in the domestic market, but soon after the mid of 90, they started extending their reach in the global market as well (Moingeon and Soenen, 2002). Tesco has adopted expansion strategy for the purpose of availing various opportunities. Presently, the company operates in more than 14 nations of the world and is now planning to enter in Indian market as well. Secondly, Tesco also want to remain strong in Non-food just like in food items. Further, with a view to gain loyalty from the customers, the core purpose of Tesco behind the development of strategy is to provide value to them. Lastly, the company also aims to grow the core business of UK (Venkatraman and Camillus, 2004).
Aims and objectives of collective strategy
The purpose of developing a collective strategy will be different to that of the individual organizational strategy. There can be many purposes behind formulating the collective strategy. The one among them is to follow the European Union guidelines. There are assortment of laws, regulations and legislations in relation with employment, health and safety, education, trade, environment etc. (Nalebuff and Brandenburger, 1997). Another purpose can be to render quality products to all their potential customers. In other words, the collective strategy needs to be developed with a main aim to render quality products to all the customers. Further, there main motive behind the collective strategy development is to decrease the bargaining power of the supplier and this, will in turn increase the bargaining power of the buyers. In addition to this, the main reason behind the formulation of collaborating strategy is to minimize the level of competition prevailing among the organizations related to same industry. For this purpose, they are also developing various strategies with a view to offer competing price in the market. Finally, collective strategy wants to bring to an end to unfair trade practices as well as unethical issues that are being practiced by various organizations abruptly.
Attributed from the above fact it can be concluded that collective strategy is systematic approach by collaborating organizations with a view to deal with the variation in their inter-organizational environment. These types of strategies can be reactive i.e. absorbing the variation within an environment or they can be proactive, forestalling unpredictable behaviour by the organizations (Bresser and Harl, 1996). Further, it was also found from the research study that there are various political, cultural, social and legal issues that significantly influence the development of corporate strategy. Therefore, as a whole it can be said that to bring a change within the organization as well as all contributing companies, there is a need to critically comprehend the exercising philosophical, organizational and methodological approaches to organizational strategy (Johnson and Scholes, 2002).
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