This paper describes the most important sector of the market which is the Food Retail Supermarket and how the strategic developments are helping the industries in progressing. These days all the industries are in a continuous process of creating changes in their organization in order to have an improvement in their organizational performances. With the development of new technologies, and various ideas one can ensure that the company work are getting more sophisticated. In the current generation what the companies are facing are the competition from the other companies and this is the biggest case that is seen within the food industries. It becomes difficult for a food retailer to handle this competition and for this arise the need of proper planning and strategic development. In this paper a lot of focus is made on the strategic planning and development that have already been taken place in the food industries and more such techniques that can ensure the food retailers to survive in the competitive market. The paper also shows some of the case studies where with proper strategic planning the company have gained lot of profits. Through this paper the food retail industries can get an idea that what all changes in their organization can be beneficial for them in order to improve their sells, ensure the quality, and make the organization function in a strategic manner.
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Super markets are one type of the traditional grocery shops but the difference is that at these shops the customers are given an advantage of self services. This means that the customers can themselves select their products and make the payment which was in traditional ways was different. There they use to ask the shopkeeper to provide them the materials they needed. In the supermarkets at one place one can find all varieties of goods and thus it becomes highly convenient for the customers because at place they get all their required products. The shops are larger in size as compared to the traditional grocery shops and can accommodate a large number of people at a time. The shops are also well equipped with recent technologies and the way the price and the other information of the product are displayed, the customers get an easy way to carry out their shopping. The super markets do provide a wide range of services to the customers along with the advantage of shopping for everything under one roof. Some of the benefits are that the markets have a wide range of products and different brands of the same product, the markets offer lower price on most of the products as compared to other places, they offer regular discounts, there are always free gifts with bigger products, the supermarkets provide special coupons to regular customers to avail free gifts, the customers can pay through cash as well as their credit and debit cards, they get genuine bills and so if there is any problem with the product they can exchange it or give genuine complaints, along with these there are similar so many benefits that the customers enjoy while shopping in the super markets. The various products that one can shop at the supermarkets are Frozen foods, cosmetic items, vegetables and fruits, various daily grocery items like rice, dal, flour etc, alcoholic beverages, baby foods, greetings cards, book stationary, games and toys, clothes, house decoration things and many more things that are required on the regular basis. The shops are also designed in a manner that they are centrally air conditioned and there are many sales people who are always ready to assist you. There are many cash counters and bill is not collected by a single person, as a result of which there is savings in the time of the customers. With so many advantages, it is quite obvious that the customers will more and more get attracted towards the supermarket rather than the traditional grocery shops. The super markets have even increased the employment opportunities as in their shops a lot of employees are required to take up the work of the sales person. Along with sales person they have opportunities in other sectors too. Thus, more the number of the supermarkets more are the employment opportunity. The supermarket being so large it requires lot of people to handle the customers, arrange the products, collect cash and many such works. Thus the manpower requirement is more. The supermarkets are all owned by big corporate companies and they invest a lot of money in it designing and marketing. A company gains a lot of profit from these supermarkets. With such a big organization and to handle so many employees and customers it is very much required that all the function of the supermarket are carried and managed in a strategic manner. Even the decisions that are taken for marketing and sales should be done on a strategic basis so that less error is obtained and more profit is gained.
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Strategic development is one of the most essential factors that are required for the proper functioning of an organization. In strategic development one needs to plan out the project in a way so that with the limited amount of resources present in the organization, one can utilize them to gain maximum profits (Bailey & Jhonson, 1995, p 2). With strategic development the organization develops an objective and a vision and tries to achieve that objective. The strategic development is a plan which are discussed and designed by a group of professionals keeping in mind the methods by which they can get success in the current market situation and also focus on the long term success of the company (Bailey & Avery, 1998). One can ask the question that "why is it necessary to adopt strategy development?" The answer can be given as the global market is changing a lot at regular intervals and with the changes a lot of challenging issues are coming which can disrupt the function of the organization (Hamel & Prahalad, 1994). Some of the challenging issues that the corporate world face these days are sudden change in the market like the global recession faced by the corporate world, increase in the competitive environment, rise in the price of the essential commodities like oil and petroleum, instability in the political environment, sudden problems of anural calamities and many more such factors creates a lot of problems and disturbances in the normal functioning of the organization (Nag, Hambrick & Chen, 2007, p 935-955). In strategic development or strategic management one plans the working of the organization in a manner that even when the situation is worse the organization will be able to handle the situation and continue it work or simply be able to survive the situation (Calori, 1998, p 281). Because of all these reasons it is highly necessary for an organization to adopt strategic development. Strategic planning also include the ways of how to attract the current generation customers and also work with the situation where there is always change in the preferences of the customers (Hart, 1992, p 327). Today's world being more and more dependent on technologies it is also very much required for the organizations to make them technology advance and this factor is also included in strategic planning. Thus one can conclude that strategic planning and strategic development is one of the most essential elements that is required not only for the functioning of the organization but also to achieve the desire success (Whittington, 1993).
The food retail supermarkets are one of the largest ventures and thus at these places strategic development is highly required and is very much essential (Thomas, Peter & Julio, 2004). The supermarkets faces a lot of competition, there are also a large number of employees, the changes in the customer preferences etc are some of the factors that initiate the supermarkets to adopt the strategic development. The strategic development in the food super market includes three main processes:
At the beginning, there is analysis of the current situation like which all food products are being used more by the customers these days, which brands are popular etc (Gupta, Govindranjan & Johnson, p 281-288). Once these entire situations are analyzed then an evaluation is done by the group of professionals. These evaluations includes a lot of techniques like SWOT analysis where the strength and weakness of the supermarket is analyzed and the opening of the supermarket can bring what all opportunities and what all threats it will face during its operation are evaluated and discussed. Similarly there are other techniques which help the organization to analyze the socio cultural situation, economic situation, political situation and so on. All these situations greatly affect the functioning of an organization. There is also analysis of the competitors. This is very important as one need to achieve the competitive advantage. All the environment macro, micro, internal and external is analyzed and evaluated (Mulcaster, 2009, p 68-75).
In the next step once the self analysis and self evaluation is done then the assessment is prepared and various objectives that are needed to be followed are set. The objectives are just now prepared on its own but it is made in accordance to the time set. Like how long will it take to reach the goal, what all things have to be done during that, how the task have to be divided and so on (Bovaird, 2003). A lot of things are kept on mind like the vision of the organization, the global strategic rules and many more such things ensure proper functioning of the food retail market.
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Finally the plan which is prepared in details of all the analysis, evaluation and objectives are set to be executed.
Thus with strategic planning one can expect to obtain very few human errors at the end of the work, this is because the work in planned in a step wise manner and at every step all the problems that can come are analyzed and alternative methods are decided (Moncrieff, p 273-276).
In this paper a case study have been described where the uses of strategic development methods have lead to the proper functioning of the organization.
In the case study presented here one of the most important and popular food retail markets have been taken into consideration and the supermarket is TESCO. It is one of the largest food retailers in the entire world. It is estimated that the organization have around 2,318 stores all over the world and it has an employee of 326,000. The popular website of the Tesco known as Tesco.com is even famous for providing online services. The website act as a subsidiary for the organization. The company main headquarter is located at United Kingdom, where it is one of the largest companies. At United Kingdom the TESCO carry out its operation under four brand names and those are Express, Superstore, Metro and Extra. The company is popular for selling food products of around 40,000 verities. Along with the food products the company is also known for selling dress apparels and other non food products. Around fifty percent of the sales come from the products which are of company's own brand label. This brand is at three levels and they are "value, Normal and Finest". Along with the food retail supermarkets the brands TESCO have many stores of Gas stations which operate in United Kingdom and also other parts of the world. Thus, the company is one of the largest independent brands of petroleum retailer in Britain. Along with these the TESCO also have finance firms known as TESCO personal finance.
Being such a big organization, the TESCO need to adopt the strategic management so that the organization can work in a systematic order and gain the profit and also remain in the position of being the world's largest food retailer supermarket. For a big organization like TESCO they cannot depend on the general strategic, they need to adopt some of the strategies which are developed by Porter and also give competitive advantages. Three strategies have been selected which can lead to proper functioning of the TESCO food retail supermarket.
To begin with, cost leadership is one of the strategies that were selected first. In this strategic method the TESCO Company have to offer a wide range of products and services to the customers but at the expense of minimum cost to the industry. In this strategic development it was found that TESCO have developed a ability to in which they were able to keep a check in the operating costs is such a perfect manner that it was making them enable to keep a competitive price for their product which leads to attraction of more customers. And it was also found that even with the competitive price the company was being able to obtain high profits margin and in this way they were having a great competitive advantage over other supermarkets. In case if the TESCO company wanted to use some other strategy other than cost effective strategic methods then they have to adopt the method of differentiation in which the company have to offer some value added services to the customers and some products which have very special unique features. If this is done then even if there is flexibility in the price then also the customers will accept the products. Some of the most widely used approaches in case of strategy of differentiation are special features, customer services, technology, breadth of product offerings and so on.
Along with the cost leadership strategy and strategy of differentiation the company also needed to focus on the marketing strategies and for that they adopted another strategy where the company planned to create some efficient internal factors so that the company can survive in the fluctuating external environment. To carry out this strategy in a proper manner the TESCO needs to be in constant interactions and have to maintain a good relationship with the various government sectors, then regulatory officers and other sectors of the supplier environment. According to the theory of the Porter, the cost leadership strategies and the differentiation strategies aims at the market of the broad range but to market the products the TESCO have to choose a strategic manner in which they have to sell a small line of products in the bigger market or may choose to sell their product in a smaller markets which is more specified. Thus the TESCO have the power to decide what strategy would they adopt, either they have to go with cost leadership strategy or they have to carry out the differentiation strategy but keeping in mind either a market which is specific or a product which is specific.
In many cases it has been found that many organization take up both the cost leadership strategy as well as differentiation strategy simultaneously. This creates lot of danger and the organizations get affected in the middle of their progress. But the management of TESCO realized this and never took such risky step, they had a very much clear strategy through which they planned to progress their business. And also they have a clear idea on which all market segments to target to get maximum benefits.
There are two main key factors which are used to access the business situations and they are the structuring tools as well as the strategy frameworks. TESCO have developed various strategic planning methods to carry out their operating g as well as marketing process.
According the Porter's description of strategic development the two types of the strategy which are cost leadership strategy and differentiation strategy that are defined above, TESCO took up the differentiation strategy where the company going to have a focus on the objectives of the market and also going to develop their marketing strategies through partnership and the new product development will be done by diversification..
The two strategies taken up by the TESCO can be described as given below:
1. Market Development Strategy:
TESCO have planned to get into the new market areas of China and Japan as the company feels that these areas have the potential that can provide the company its expected revenue as well as will help the company in expanding its business. TESCO will continue planning and expanding its business in the Asian countries because there is an increase in the retailing trend. The marketing opportunities are also high in these places. One of the strategies that have been suggested to the TESCO is that to carry out proper international dealings with the retailers of the local Asian markets. This is going to be a development method and through this method the company will be able to use the resources that are present with company recently and also develop the competitive advantages.
TESCO have decided to form partnership with the local retailers in order to gain the knowledge of the local marker as well as to learn the method of operating in these local areas. Through these partnerships they have a plan to obtain economy on a large scale and also obtain a high range market presence. TESCO have planned that along with the partnerships they will also carry out the development of the products, supply their own chain, develop their operation skills, will provide a better shopping experience to the customers and so on. But along with the huge marketing potentialities in these areas the market condition is also quite complex and thus the company does not consider that entering the market first can be of much advantages. Rather they focus on the methods by which the partnership can be formed successfully. This is done by keeping in mind three criteria: "sustainability, acceptability and feasibility". In case of sustainability the strategies those are made are checked whether they are helping the operation of the company and its expansion, the next criteria acceptability is concerned whether the strategies those are planned are bringing good returns to the company and finally the feasibility criteria checks that whether the company have enough resource to carry out the operation and also the competence level so that the strategies that are planned are carried out properly.
2. Product Development Diversification:
With the change in the corporate environment there has always been a situation where there is a demand of new products and thus one of the strategic development rules involve that to be efficient in the market the companies need to develop new products. The product development is one of the most important strategies that is need to be included at the management level. Thus, even for the TESCO to develop and expand itself in the new markets it needs to develop their internal strategies to deliver new products to the market. Hence, it is very much essential to consider the diversification extension in relation to the portfolio diversity. Keeping in consideration of the customers the TESCO can develop various new food products to be introduced into the market. For this the TESCO have to give more attention to the research and development sector and also need to invest more.
There is an increase in the food retailer supermarkets and thus a rise in the competition. To survive the TESCO need to develop innovative ideas to develop their products and also introduce new product lines. Various suggestions that can be made to TESCO seeing their current situations are like they should create different type of stores in the United Kingdom such that they should provide the customer a different experience of shopping. It has been estimated that in the Eastern Europe there are more number of hypermarkets and so TESCO can develop a plan to establish some different kind of stores in the existing hypermarkets. There should be value added services and price enjoyment for the customers. The TESCO management team have to develop innovative ideas in relation to strategic decisions, they need to retain their competitive advantage and also need to work on their internal weakness.
All these factors need not be introduced all at once, but the main thing that always need to be consider is that the company success always depends in what strategically manner they carry out their planning and execution of these plans.
From the above case studies it has been clear that how the use of strategic development methods can benefits the food retail supermarkets. The strategic development makes organization strong and increases its capability. The rise in the food retail supermarkets can sometimes affect the market in an adverse manner. So strategic planning is very much required so that the food retail supermarkets can sustain in the competitive environment. Thus various strategies like value added services, new products; cost management etc can not only provide satisfaction to the customers but also increase the profit margin of the company. Hence, the strategic development is the most essential factor which is very much required to be included in the management of the food retail supermarkets.