Tesco - The strategic planning of an organization
This study is focusing on a Strategic planning of chosen organization. And it is the main function that a company is having in the early of their business years. Every organization has its own strategic plan which is unique to the business they are connecting with.
We are taking the Tesco PLC as the chosen organization for this study. So we can find out the plans that are set in the Tesco at the initiative stage. And here also it is important to know the Tesco’s Board of Directors set their strategic plan to accomplish the best organization and the best performing firm in the industry as well.
Tesco Private Limited Company
Tesco is the British largest wholesaler & retailer by global sales and also in UK domestic market. And also it is considers as the world’s third giant. Tesco firstly established in 1919 by Mr. Jack Cohen. But it is firstly appeared as Tesco brand in 1924.
Tesco’s first supermarket was opened in 1956 and it was the first price reduction super market for Tesco.
Then the diversify strategies implemented by the Tesco started. And that was the success for Tesco in their business world.
The main outcomes expecting of Tesco corporate strategy are as follows,
•To be the best retailer in the Domestic market.
•Take necessary action to uplift the UK market. And use the UK market as the model for international business.
•To be the best in both foods and non food market in all over the world.
•To be the strongest in other alternative businesses as well - such as Tesco Personal Finance, Telecoms and Tesco.com
•To be the excellent corporate social responsible firm
Understand the External environment affecting the Tesco
Importance of the External Factors/ major changes in the Tesco and how those affect to the strategic Direction of the Tesco.
Any business or organization does not run in an empty environment. Industries when it comes in a competitive market structure. So the organization or the business must act and react according to the environment inside and outside. So this is what we call the analysis of the environment. We have to understand the possible environment changes happening in the external world. It is depend on the degree of the competition. We have to understand the strength of the competitive alternative in the industry to find out the important of the external factors.
Any way we have six main environmental factors happening in the external environment. And those factors are very important to examine and analysis when we try to understand the importance of the external factors.
Social, major changes in Social factors can be the attitude changes due to alternative products. This will never happens so easily.
Economic, this can be changes due to economic rescission or any other immediate down ward of economic factors. The taxation can be also affected the changes in business structure.
Legal, if there is any policy changes happen in the structure of the Tesco it will affect the organizational structure as well.
Political, the major changes can be happen in the Tesco political scenario. Any way this is very important to handle because the political authority is very important when it comes to the decision making in business.
Ethical, this is important when it comes to the changes in moral and the motivation because the human rights or any other case.
Technological, changes in technology will lead to the end of any company.
Stakeholders of the Tesco PLC
The importance of the business is stakeholders. They are the major partners in running the organization. And also they can be very crucial to make the profit of the organization. They will get the profit or loss both have to take in to consideration by the stakeholders. There are few stakeholders we can identify in the business as follows.
This is the most considerable stakeholder for any organization in the world. And without these customers there is no organization who can survive with. The customers are directly contributing to the profit and the turnover of the organization. Tesco has a unique blend of customers who can be different from any other people buying ordinary goods. Tesco is the lowest price holder in any part of the UK. So the customer base also is solid for the Tesco.
This stakeholder category is the back born of any organization in the world. Without employee satisfaction the organization is useless of making profit. And also we have to make the strategies to uplift the employee’s quality of life. And there they have to set the directions by consideration the employees as well. Tesco is dealing with the retail market and the services also related with people. So the employees are the most important factor on this regard. Tesco is having 586 retail shops all around in Great Britain. So the Employees factor is the most valuable factor for the Tesco PLC.
Tesco is there because of the Shareholders. The top they have achieve in the sector of their industry just because of the shareholders. This is the most important stakeholder group in financial purpose. They have the profit share and also the loss share as well.
Food and no food retail industry is one of the biggest industries having in now days. So the complexity of the industry makes more competitors. We can have few competitors in domestic market like ASDA, Sainsbury, and Waitrose. And also the biggest international competitor for the Tesco is the Wall-Mart. So Tesco has more competitive advantages by the others.
The UK Government
In every successful and giant organization have some political influence. They sometimes have many policies over the firms. So this will make the loss in the organizations especially the organizations have more international relations as well as domestic powerful penetration.
Review the Existing Business plans and Strategies of Tesco PLC
2.1 Current Position/ Strengths and Weaknesses
The Tesco has many up and down times in their history. We can identify some important factors that will reflect the Tesco’s historical pathway to the success. And these are the main information that will indicate the today’s position of Tesco’s.
Very low population capacity of the Organization
The inflation of the food price is so much low
Well established and newly opened and fully structured supermarkets all over the country.
It is so much hard to get the planning permissions for large Greenfields
Three main well strong and powerful Competitors operating in the domestic market
There are new store places for all the other well established organizations in the industry
So the existing position is as above in the beginning. But the new situation or the position is the other side of the above facts and information.
Soothe main strengths now is as follows,
High capacity of customer base and the employee base with comparing the others
The inflation has grown up the food price and the Tesco gets the advantage of that to grow themselves
Fully structured and well established 586 retail stores under the capacity of Tesco
They have so many Greenfields other than any other competitor.
The Tesco is the No. 1 brand in the UK domestic market. And other competitors may have nothing to say on Tesco and they are sometimes unable to compete with Tesco. The Tesco has a large capacity and the power to handle the market structure some times.
Tesco has the large number of stores and the well planned spaces in the food and non food industry in UK
We can identify some of the weaknesses in the Tesco as follows,
Lack of internal communication – Present state is not communicated to the others.
Promotion Process incomplete – tension may create for the uniform and non uniform workers.
Lack of physical fitness for the employees – Public education is well needed and the attitudinal change is required.
Need diversity training on sensitivity and all – must have leadership development and the accountability
2.2 Current business Plans
The business plan for the Tesco is very simple and the plan is given by the outcome oriented. So the business plan we can identify the strategic areas. The directional plan’s subcategories can be taken in to the business plan.
The main focus or the objective is to maximise the sales of the Tesco. So to analyse the situation on this regard we have chosen the three main category that the Tesco is used to have in the pats.
We can say the three areas that Tesco has followed is given below,
Spend more to time and more money to the existing customers and the existing stores.
Identify new customers in new channels
Newly introduced geographies development
But the growth strategies we explain in the above are having some problems and the profitable matters are not supported by the strategies used in the above tactics.
So we have to switch the new strategic business plan to penetrate the market deeper. So they have thought the existing customers more and make some strategic business plan according to that. Now they have only focuses on the existing customers, like this,
Existing Customers - Product
For the product they have made it two different parts that are segmented private labels and the expanded no-foods, and the services they have switch financial and telecommunication. These are the newly introduced services that Tesco Currently engaged in.
Develop Options for Strategic Planning for Tesco PLC
3.1 Strategic Options for Tesco
As we all know the Tesco is the world’s 3rd largest retail business organization. So the organization has many strategic options that they have to take in to consideration. Especially the financial side of the company they have to think many strategic options that will suite for the organization.
We can identify there are some of the strategic options that Tesco may have and the important thing is that Tesco might have options that they can do anything they want just because they have the reputation and he monetary power. The high capacity of customer base is the biggest advantage they have right at the movement. Any way they may have following options if they want to switch in to any of the following options.
Flexibility option – we can magnitude the production or the manufacturing in to flexible operations. We can use the existing production and the other stuff in to flexible service and production. This will enhance the net present value of the organization. This can be done by the happening of massive fluctuations in the environmental changes.
Growth Option – we need to have a self evaluation and monitoring part if we want to find out there are any possibility that we can switch in to the growth option. Tesco need experience some of the stores in the UK although they have more than 1000 stores in the domestic market and the share of 33% of the total market they might need some of their businesses growth.
Timing Option – although the Tesco has giant improvements in their business they have some implementations to be commence in the time of the growth. So they may use the tactics that they will suddenly go in to some kind of projects that they will get more benefits. So they may use the option of going immediate projects by time to time.
3.2 Future strategic options and the suitable structure for all the stakeholders
We can identify these two topics in one angle. The stakeholders are the most important of any business as we mention in the above. So we can use the most suitable structures that we can make the strategic options correctly.
We can use the values that will give us the strategic option for all the stakeholders including.
Market development – this is the main strategic option they have on their hands. And this can be very crucial for all the stakeholders as well. The strategy Tesco use for market development is the joint development and the strategic alliance. Tesco is used t make alliances with the Asian international businesses. This will enhance the business strength of Tesco and it will make more profit share for the stakeholders as well. The other market development option they have is to switch in to the Latin American retail market, hey have already somewhat expanded this in to there.
Product development – this is the most important title to be discussed with the case of Tesco. They have the option of Diversification strategy. They have to use this strategy that they will get the best sales forever. And all the stakeholders will get the benefits and the employee’s will also have the chance to be innovative and more productive.
Develop a Strategic Plan for the Organization
Before developing the strategic plan for the organization of Tesco we have to consider the future goals that Tesco has. Any way the Tesco has the vision of be the global best retailer, it is easier for us to get an idea of how they need to be strategize. So there for we can have the following strategic planning steps that will suite for the organization.
Review and develop the vision and the mission of the Tesco,
We need to rethink the mission of the organization that how we can offer the best service and grab the higher part of the market share. This will indicate that we need to rethink the missions and the values and make the strategies according to those.
Business and the environmental analysis –
We did this part in the above. We need to finds out the newly emerging trends that will affect for our business. And for that we need to create the strategies for overcome those threats. We can have a SWOT analysis of the Tesco and find out the threats and weaknesses that will affect the organizational future and overcome those.
Establish strategic Objectives –
This step will show us the overall picture of the organization heading at. And we can do necessary actions to make the strategies that will suite for the direction of the Tesco.
Resource allocation –
And we can allocate the resources we have according to the set objective strategies. And the allocation will take part of the newly introduced resources as well. We can find the wants and the needs of the stores and the employees to allocate the resources.
Execution review -
This will be doing by the top level and the middle level management. And the monitoring part will need to maximize the production and the
This study is mainly focused on the strategic planning of an organization. We have found and select the organization of Tesco PLC. Tesco is the world’s third biggest retailer in all the time on now days. Firstly we have analysed the organizational external environment and the facts that will affect the organizational changes.
We have identified the existing business plans that they have to be the best organization in the world. So according to those plans thy have changed their organization by reviewing the past experiences and the success of the organization can be found in overcoming those obstacles.
Then we have to consider the options that will affect to the organization we have found that the options we have is the values that we need to develop. And then we have to study the strategies that Tesco set for developing the marketing and the products. They have to be diversifying their products that they have to be the best of grabbing the market share.
And finally we have come to the stage of making a strategic plan that will implement for the Tesco’s future development. Here we have considered the steps that we need to take according to develop a strategic plan.
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