BUS9048M Strategy Making

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BUS9048M Strategy Making 1 | P a g e

Abstract Tesco is in an extremely competitive market, but it also holds a disproportionate amount of sway inside that market. Tesco's primary competitors are Sainsbury's, Asda, and Morrison's. Since these retail giants own several supermarkets and supermarket chains, they wield considerable market influence. Since Tesco has such a huge market share, the company has not been well studied. Because of its planned growth, Tesco must adhere to the UK's rigorous regulations for obtaining planning clearance. Therefore, Tesco should look into any potential legal or community-based roadblocks before building a new store. Despite the current economic crisis, Tesco was able to ride the storm relatively undamaged because of the wide range of prices it offers on its products. A tax hike, stock market fluctuation, or change in currency might all have an impact on Tesco's bottom line. 2 | P a g e

Table of Contents Abstract ..................................................................................................................................... 2 Introduction .............................................................................................................................. 4 Strategic Issues ......................................................................................................................... 4 External Factors Analysis ........................................................................................................ 5 Internal Factors Analysis ......................................................................................................... 6 Relation of the current vision and mission statement with the strategic goals of the company .................................................................................................................................... 7 Future trends analysis .............................................................................................................. 8 Evaluation of the company’s current Strategies ................................................................... 9 Technology ............................................................................................................................. 9 Human Resource .................................................................................................................... 9 Estimation of the competitive advantage of the company .................................................. 10 Alternative strategy analysis ................................................................................................. 11 KPIs and Strategic Maps ....................................................................................................... 13 KPIs ...................................................................................................................................... 13 Strategy map ......................................................................................................................... 14 Recommendations and Action Plan ...................................................................................... 14 Recommendations ................................................................................................................ 14 Action Plan ........................................................................................................................... 15 Conclusion ............................................................................................................................... 15 References ............................................................................................................................... 17 3 | P a g e

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Introduction The United Kingdom's largest supermarket chain is headquartered in the same city as Tesco Plc. After Wal-Mart in the United States and Carrefour in France, it is the third largest retailer in the world. Retailers offer something in the neighbourhood of 4,000 different food items. Tesco started as a grocery shop, but now it offers much more than just food. They have everything from holiday decorations and grills to paper products, health and beauty aids, cutlery, apparel, and even electronics. Tesco declared intentions for worldwide growth in 2006, following a $2 billion profit in 2005 ( Alam and Raut-Roy, 2019). Tesco has 3,275 locations in 13 countries, with 2,115 of them located in the United Kingdom, its largest market. Supermarkets, hypermarkets, metros, and express shops are all part of its retail portfolio. Tesco's own-brand items, which it sells directly to consumers, can be quite affordable or quite costly. Strategic Issues Tesco, with headquarters in the United Kingdom, is a major player in both the online and physical retail markets across the world. Until Brexit and the pandemic hit, Tesco PLC was often regarded as the leading retailer in the United Kingdom. It is predicted that the company has lost a significant amount of money as a result of the Brexit dispute and the effects of the pandemic. The company is apparently in a precarious position due to intense rivalry from retailers like Asda and M&S and uninspiring digital advertising campaigns ( Joy, 2022). Source- Joy, 2022 4 | P a g e

However, the organization's Market gateway strategy is incredibly useful in connecting the company's customers and vendors. However, it has been concluded that the Market gateway approach does not help the business achieve its objective. Ineffective advertising and, presumably, a poor plan for retaining existing customers from defecting to the competition may be to blame for Tesco's failure to establish a loyal client base, which is crucial to any company's success ( Rosnizam et al., 2020). Therefore, it is essential for the company to implement strategies that will help it maintain its present market share. External Factors Analysis Tesco, which started in the United Kingdom, has expanded to over a dozen nations across the world. Nonetheless, the company's sales infrastructure allegedly weakened as a result of inefficient marketing efforts. An effective method for assessing the potential influence of external influences on a company's marketing efforts is the PESTEL study. These six factors are included in the PESTEL examination of a brand's external environment. Source- Monte, 2021  Political- Like other international firms, Tesco has to adjust to the varied political climates in which its shops and distribution centres are situated. Some industries in Britain have been hit hard by Brexit. According to reports, several businesses experienced losses as a result of Brexit because of their inability to adjust to the country's new legislation quickly enough.  Economical- The corporation prioritises this since it affects profitability, demand, costs, and price the most. This prepares the firm for legislative changes like taxes or other factors that may influence finance ( ZXhang et al., 2023). Tesco is expected to dominate UK retail and threaten the firm abroad. 5 | P a g e

 Social- Because social trends are unpredictable, UK customers favour buying in bulk. Consumers can save money by buying in bulk. However, Tesco fails to match customers' demands, thus most of them purchase elsewhere. Tesco's extensive consumer data research lets the store adjust product displays to consumers' tastes. It might boost the company's sales infrastructure and expansion plans.  Technological- Tesco, like many other businesses, has benefited greatly from technological progress, which is why the corporation employs a number of cutting- edge tools ( Moura, 2021). The company's digital marketing strategies reportedly are not very effective, and that's aching its standing in the UK market. Advertising campaigns fail to pique consumers' interest; therefore, they look elsewhere for their shopping needs.  Environmental- Tesco's environmental development programme includes as its primary objective the reduction of the company's carbon footprint by the year 2030. The company has a social goal that includes supporting several approaches to the growth and education of children. The community will substantially benefit from the company's CSR efforts, and the company's image may be salvaged in the process.  Legal- Laws and governmental acts have an immediate and significant effect on the company's bottom line ( Domański and Łabenda, 2020). For instance, in 2004, the "Retailing Commissioning of Food" published a Practise Code that, if implemented, may forbid practises such adjusting prices without first receiving payment from vendors. Internal Factors Analysis The SWOT analysis is the best method for quickly getting a clear picture of the internal factors related to the brand's market activities. Its primary value is in illuminating the myriad brand-related aspects that might influence the brand's commercial growth strategies for better or for worse. Strengths Weaknesses  The market's most prominent stocks.  The largest UK food store chains.  Many points of sale.  Increasing the shop count ( Kar et al., 2021).  Losses in operational income.  The store was fined for selling expired food.  Misconduct and Scandals in the Accounting Profession.  Bad strategies for promoting products online.  Not a very good plan of action. 6 | P a g e

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Opportunities Threats  Strategic alliances with competing brands  New Market Potential  Cooperative Efforts  Options for early settlement  The UK market is saturated with competing products.  Economic downturns and credit freezes  Soaring Prices  Problems in supply chain management ( Gigli, 2022) Relation of the current vision and mission statement with the strategic goals of the company The British-based retail giant Tesco is a global powerhouse in both the virtual and brick-and- mortar stores. Before Brexit and the epidemic, Tesco PLC was often considered as the most successful British retailer. The company's stated goal, however, is to provide exceptional service to the community. The company cares about its clients, thus it produces high-quality goods at affordable prices ( Mohapatra and MV, 2021). The corporate social responsibility initiatives of the firm contribute to a wider movement towards global improvement. Source- Mohapatra and MV, 2021 However, external and internal studies of the company must be considered. The effects of Brexit on the corporation are obvious, and they are not favourable. The epidemic has also had a major impact on the company's sales system, and it is become clear that the corporation is having trouble with its strategic management techniques, which in turn has led to the development of digital marketing tactics that have not been well received by the target audience. Tesco's failure to satisfy consumer requirements is in part due to the company's 7 | P a g e

inaccurate perception of its customers' shopping habits. This is the primary reason why the company is lagging behind its competitors ( Smith, 2023). In 2017, Tesco was subject to a boycott after an advertisement outraged some consumers who felt the corporation was violating their right to religious freedom. These strategies have damaged the company's image and prevented it from realising the success anticipated in its business strategy. However, the company's efforts to improve society and protect the environment through CSR have been highly successful. The corporation has started several programmes to better the lives of children and has pledged to reduce its carbon footprint by the year 2030. As a result, the firm may attract more clients who appreciate its commitment to social responsibility and environmental sustainability ( Awadari and Kanwal, 2019). Future trends analysis Tesco, with its origins and current headquarters in the United Kingdom, is the preeminent supermarket chain in more than a dozen nations. Several strategic errors have led to a bad sales system at the organisation. The company expects to see a solid profit margin as a consequence of these technological improvements, and it intends to invite innovators from all over the world to take part in its future undertakings. Businesses that invest in a thorough technology audit are more likely to employ digital marketing methods that bring in new customers and keep existing ones around for the long haul ( Mohanty, 2022). Artificial intelligence-powered technologies may analyse individuals' spending habits to anticipate their needs and wishes. The company hopes to make up for lost territory in the market with innovative technology strategies. Corporate social responsibility efforts will have a major impact on the company's growth plans. Investments in new digital technologies may have a profound impact on the business's revenue model. Although Brexit has shown the hampered many aspects of the business, with a focus on its operations and technological problems, the company's marketing status is expected to be regained within a few years ( Sharmaa et al., 2022). Evaluation of the company’s current Strategies Technology It is essential to develop a business model since it serves as a representation of the company's strategy. The presence of several competitors increases the need of effective strategic management for every brand. Tesco relies especially heavily on modern technical 8 | P a g e

developments. This is why the company is investing much in developing its technology infrastructure. As a result, the business has reached out to several pioneers in the industry in the hopes that one of them may develop a game-changing piece of technology that will aid in the development of the firm's long-term goals ( Chen, 2022). Source- Chen, 2022 However, it has become clear that the company's current technological component is insufficient because of its incapacity to investigate customer needs. Despite the company's best efforts, digital marketing has not resulted in more sales. Concerned for the sensibilities of the country's Christian population, numerous consumers formed campaigns to boycott the company's products when it aired a contentious Santa commercial in 2017 ( Woohyoung et al., 2020). Human Resource The human resources manager at Tesco was widely believed to have played a pivotal role in creating the store's legendary culture. Human resources departments nowadays are urging workers to provide 110% every day. The success of the company rests greatly on the use of transformational leadership techniques to increase employee engagement. This helps the company and its workers bond much more closely together. Management has been monitoring employees' mental health and listening to their concerns ( Dhyana and Gupta, 2022). This has helped tremendously in creating a culture where workers are willing to work together for the betterment of the company. Source- Dhyana and Gupta, 2022 9 | P a g e

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The management team's efforts in this area are significantly responsible for the company's consistent production. Management has been so effective that experts believe the company may recover and resume normal operations across the country in only a few years. Estimation of the competitive advantage of the company The purpose of Tesco's VRIO is to assess the company's capabilities and identify areas for improvement in order to establish a sustainable competitive advantage. The VRIO report from Tesco also includes projections for the company's future finances, which might help the business stay competitive. These four ideas form the backbone of the "Valuable," "Rare," "Inimitable," and "Organisation" (or "VRIO") framework. Source- Krummel, 2022 Valuable  The company's resources are priceless in terms of seizing opportunities outside the business.  The special features of regional meals that make them highly sought after are sometimes disregarded.  The company's employees are a valuable asset.  One of the company's strongest points is its network of retailers. Rare  The company is fortunate to have found this individual.  The company's financial resources are symbolised by Rare.  The firm only uses legitimate, original patents ( Abbamonte and Cavaliere, 2019).  Due to the limitations of VRIO imagery, fresh food and goods might look limited. Imitable  The startup costs associated with the company's distribution network are high. 10 | P a g e

 Company patents are notoriously difficult to copy.  It would not take much to clone the company's employees.  It would not cost a fortune to copy the supermarket staples and prepared foods ( Hashim et al., 2021). Organization  The financial resources of the company are effectively organised in order to optimise value extraction.  The company's patents exhibit a deficiency in organisational structure.  The distribution network of the company exhibits a high level of organisation and efficiency. According to VRIO, Tesco has a significant competitive advantage because of its distribution network and financial resources. Unused competitive advantages are represented by patents, whereas temporary ones are shown by workers. The Structure of Cost and the way the corporation handles R&D work against it, though ( Kollias et al., 2022). Alternative strategy analysis The diamond model, also known as the theory of competitive advantage and the alternative theory, was developed by Michael Porter. This resource is essential for locating and developing a competitive advantage, which is necessary for establishing and growing a firm model. The diamond-shaped tool is packed with many elements that show how competitive the company is. The framework's constituent parts are interconnected and operable in tandem. All of these factors have been essential in Tesco's internal growth by inspiring incremental improvements and fresh ideas. Therefore, Tesco can maintain its success in the British retail market by focusing on these necessities ( Zhao, 2021). Factor Condition  Resources, Natural  Investment Funds  People Administration  Scientific Understanding  Innovation in Technology  Infrastructure Supporting and related industries  The Presence of Corresponding Industries  Facilitating the Existence of Industry  Competition from other industries  Presence of reliable foreign vendors ( Čirjevskis, 2022) Structure, Strategy, and Rivalry  Corporate Tactics  Organisational Model  Administrative structure  Extreme levels of local rivalry  Threat from multinational rivals 11 | P a g e

Government  Policies  Industry Standards  The Government as an Opponent  Public policy as a driving force Demand Conditions  The scale of the domestic market  High-end, discerning clientele in the area ( Merrill and Merrill, 2019)  Focus on what matters most to customers Change Events  Random Occurrences  Natural Catastrophes  Scientific Advances  Antisocial Behaviours KPIs and Strategic Maps KPIs The term "Key Performance Indicator" (KPI) is frequently used to define the method by which a company's performance is evaluated; it offers a clear method of measuring the effectiveness of the business model at hand. At Tesco, we consider ourselves successful when our work has a positive impact on people's lives and the globe. Ten percent of the company's annual profits are reportedly spent on the protection and improvement of its natural resources. The corporation has committed to become carbon neutral by 2030. Tesco is invested in the growth of the communities in which it does business and often hosts events with the goals of increasing public understanding and participation. Strategies for bettering society as a whole include increasing the employment rate, growing volunteer organisations, and investing in elementary and secondary education ( Catalão, 2022). The company's reputation in the country has improved because to its CSR initiatives. CSR is practised by businesses of all sizes and in a wide variety of industries. Approximately 37% of customers say they prefer to do business with companies that have robust CSR initiatives to help people and the planet. That's why we incorporate Tesco's CSR activities into our overall KPI reporting. 12 | P a g e

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Source- Alam and Raut-Roy, 2019 The efficiency with which Tesco handles its human resources is a key performance indicator. The HR manager at Tesco is often regarded as the architect of the storied culture at the corporation. Human resources departments increasingly expect regular exemplary performance from their staff. Transformative leadership has resulted in an organization-wide emphasis on employee feedback and input. The HR manager's ability to inspire originality and problem-solving among staff members is crucial to the success of any company ( Joy, 2022). It takes transformative leadership to make sure everyone in the office can bring their A-game every day. Such an environment would be excellent for the growth and prosperity of any UK-based business. Strategy map The utilisation of a strategy map serves as a valuable instrument in enabling the visual depiction of the fundamental goals of a business entity. The strategy map functions as a tool for evaluating different phases of an organisation and assessing their congruence with the overarching goals and objectives of the company ( Rosnizam et al., 2020). Furthermore, this facilitates stakeholders in acquiring a deeper understanding of the potential activities and projected growth of the organisation. 13 | P a g e

Source- Rosnizam et al., 2020 Recommendations and Action Plan Recommendations Some of the recommendations are as follows-  Tesco can improve its digital marketing strategy by tailoring its ads to shoppers' preferences and habits.  Tesco may improve its operational efficiency and bottom line by adopting state-of- the-art technology like artificial intelligence (AI), big data management, and robots.  In order to better understand client needs and preferences, the firm can benefit from more open communication tactics with its staff.  The company's continued success depends on its ability to develop and implement effective marketing strategies ( Monte, 2021). Action Plan The action plan is shown below- Action Description Required Resources Outcome Time Required Improving the scope of customer outreach The utilisation of cutting-edge technologies, popular social media platforms, and direct interpersonal interactions. Facilitates comprehending customer-reported events 6 months The implementation of digital marketing Social media platforms, internet Increases brand awareness through 6 months 14 | P a g e

strategies websites, and advanced tools ( Moura, 2021). refining the company's advertising strategies. Conclusion The report concluded that Tesco's expansion into new markets and strengthening of its UK operations have both benefited from the company's consistent and successful growth strategy. The strategy's core goal is to diversify the company's income sources and assure its long-term profitability by following the customer into significant growth industries at home, such financial services, non-food, and telecoms, and new markets outside. They are able to break into new countries, find success, and challenge well-established international stores. As a result of the recession and consumers' reduced spending, Aldi and Lidl have eroded Tesco's market share by offering comparably high-quality items at far cheaper rates. The firm may lose customers if it did not adjust to the reality that its customers were going elsewhere to get basics at lower prices. 15 | P a g e

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References Abbamonte, L. and Cavaliere, F., 2019. Adaptively Evolving Ecosystems: Green-speaking at Tesco. In Worlds of Words: Complexity, Creativity, and Conventionality in English Language, Literature and Culture (Vol. 2, pp. 407-422). Pisa University Press. Alam, S. and Raut-Roy, U., 2019. Evaluating the Effectiveness of Reward Strategy at Tesco. Indian Journal of Industrial Relations , 55 (1), pp.105-120. Alexander, I.N., 2020. The influence of technological innovations on organization's competitive advantage: Case study on Irish food retail company (Tesco) (Doctoral dissertation, Dublin, National College of Ireland). Awadari, A.C. and Kanwal, S., 2019. Employee participation in organizational change: A case of Tesco PLC. International Journal of Financial, Accounting, and Management , 1 (2), pp.91- 99. Catalão, I.D.P., 2022. Equity research-Tesco PLC (Doctoral dissertation, Instituto Superior de Economia e Gestão). Chen, J.J., 2022. Tesco Plc. In International Cases of Corporate Governance (pp. 27-44). Singapore: Springer Nature Singapore. Čirjevskis, A., 2022. A Discourse on Foresight and the Valuation of Explicit and Tacit Synergies in Strategic Collaborations. Journal of Risk and Financial Management , 15 (7), p.305. Dhyana, B. and Gupta, O., 2022. Evaluating the management model of information systems and its applicability in enhancing business operations in Tesco. Central European Management Journal , 30 (3), pp.353-357. Domański, R. and Łabenda, M., 2020. Omnichannel of private label grocery products in Tesco and Carrefour retail chains on the Polish market. Ekonomski Vjesnik/Econviews- Review of Contemporary Business, Entrepreneurship and Economic Issues , 33 (1), pp.191- 202. Gigli, L., 2022. Waste management in the food & retail industry: the transition towards a circular economy-focus on Tesco's 4Rs strategy implementation. 16 | P a g e

Hashim, M., Nazam, M., Abrar, M., Hussain, Z., Nazim, M. and Shabbir, R., 2021. Unlocking the sustainable production indicators: a novel tesco based fuzzy AHP approach. Cogent Business & Management , 8 (1), p.1870807. Joy, J., 2022. The implication of the cyber threats and its issues in the business process organization: A case study of Tesco. Department of Computing and Informatics Bournemouth University . Kar, S.K., Bansal, R. and Mishra, S., 2021. Tesco: Entry and Expansion Strategy in India. Emerging Economies Cases Journal , 3 (2), pp.65-76. Kollias, S., Ye, X., Yu, M., Duan, W., Leontidis, G., Swainson, M. and Pearson, S., 2022. AI- enabled Safe and Efficient Food Supply Chain. Krummel, D., 2022. Expansion in the Retail Sector—Market Entry Strategies in Consideration of Formal and Informal Institutions: A Tesco Case Study. Open Access Library Journal , 9 (2), pp.1-19. Merrill, G.J. and Merrill, G.J., 2019. How Sinful Is Your Shopping Basket? The Reporting of Tesco in 2006, 2007 and 2008. The Political Content of British Economic, Business and Financial Journalism: A Deficit of Perspectives , pp.143-181. Mohanty, J., 2022. Sustainable Marketing of Csr Through Employee Volunteering: The Tesco Experience. Academy of Marketing Studies Journal , 26 (S2). Mohapatra, P. and MV, N.K., 2021. Accounting Scandal at Tesco. IUP Journal of Accounting Research & Audit Practices , 20 (4). Monte, A., 2021. A study of value chain reconfiguration processes under Covid-19 pressures: the case of Tesco PLC in the United Kingdom. Moura, M.B.L.D., 2021. Equity Research in Food & Retail Industry-TESCO PLC (Doctoral dissertation, Instituto Superior de Economia e Gestão). Rosnizam, M.R.A.B., Kee, D.M.H., Akhir, M.E.H.B.M., Shahqira, M., Yusoff, M.A.H.B.M., Budiman, R.S. and Alajmi, A.M., 2020. Market opportunities and challenges: A case study of Tesco. Journal of the community development in Asia , 3 (2), pp.18-27. Sharmaa, A., Jain, R. and Pajni, N.S., 2022. Risk Identification Techniques in Retail Industry: A case study of Tesco Plc. J. Corp. Gov. Insur. Risk Manag , 9 , pp.201-214. 17 | P a g e

Smith, D., 2023. Logistics in Tesco: past, present and future. In Logistics And Retail Management insights Into Current Practice And Trends From Leading Experts (pp. 154-183). CRC Press. Woohyoung, K., Kim, H. and Hwang, J., 2020. Transnational corporation’s failure in China: Focus on Tesco. Sustainability , 12 (17), p.7170. Zhao, C., 2021. Research on Cost Management of E-commerce Enterprises Based on Value Chain——Taking Suning Tesco as an Example. ZXhang, Y.X., Haxo, Y.M. and Mat, Y.X., 2023. Analyzing Tesco PLC Stock: A Comprehensive Evaluation of Growth Potential and Investment Opportunities. AC Investment Research Journal , 220 (44). 18 | P a g e

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