Tesco Company’s Profile and Strategic Planning

Company Profile

This paper is an evaluation of a multinational Company called Tesco, which has its headquarters in Cheshunt, United Kingdom. The Company deals with grocery and general retail merchandise. It is the third-largest retail merchandise in the world, coming after Wal-Mart and Carrefour (Tesco 2014). The main market of the company is in the United Kingdom. However, it has stores in over 13 countries in various parts of the globe (Tesco 2014).

Tesco’s mission is to be acknowledged by its customers as the premier drilling services Company while its vision is to become a customers’ strategic partner in the elimination of non-productive time. Some of the core competencies of the Company include ethical conduct, product differentiation, a safe work environment, disciplined staff, and teamwork (Tesco 2014).

Factors to Consider When Formulating a Strategic Plan

One of the factors to consider when formulating a strategic plan is the engagement of all stakeholders (Johnson, Scholes & Wittington 2011). In an organizational context, employees are important stakeholders because they are the ones who make things work or not work, depending on their levels of commitment, understanding, motivation, and loyalty to their organizations. When employees are involved during the development of a strategic plan, they do not only embrace the strategic plan, but they also own it, and as a result, it is implemented without any resistance.

The other factor to consider is effective communication, which has to do with user-friendly and correct language during communication between employers and their employees. Managers should desist from treating their employees with contempt or ridicule. The managers should also ensure that organizations have in place very clear communication strategies so that there is no misunderstanding and confusion in the organizations. For effective communication to be realized, managers should avoid discrimination of employees based on employees’ positions, age, gender, level of education, race, and religion. Organizations must therefore put up an elaborate communication infrastructure to ensure that there is a smooth flow of information at all levels of organizations for the strategic plan to be successful.

Also, to be considered when formulating a strategic plan is the culture of innovation in organizations. Organizations must ensure that they have a culture that stimulates employees to be innovative. Without an innovative culture, a strategic plan is hard to implement because it is usually flexible and sometimes requires creativity for it to be successful (Johnson, Scholes & Wittington 2011).

There is also the need to consider the culture of organizations when formulating a strategic plan. Organizations must strive to have a cohesive organizational culture where all members have similar beliefs and values. The sharing of beliefs and values by employees renders the structures of organizations irrelevant because what is of interest to the employees is their commitment to those beliefs and values.

Organizations that have a cohesive culture have the ability to motivate their employees, which in turn renders supervision irrelevant. When employees do their work without supervision, their productivity is enhanced because to them, what matters most is the welfare of the organizations but not their personal welfare.

Cohesive organizational culture also enables organizations to align their procedures, functions, and policies with their objectives, mission, and vision without challenges. The alignment is made possible by the internalization of the aspirations of the organizations by the employees.

Ansoff’s matrix helps Tesco to manage its strategic decisions by providing insights on market penetration, product design and development, market development, and diversification of its products. These help the organization to remain competitive in the retail industry. For instance, through the use of Ansoff’s matrix, the organization has been able to open stores in more than 13 countries across the globe.

Effectiveness of Strategic Planning Techniques

When developing a strategic business plan, organizations apply two main techniques, namely the development of a business strategy model and the development of a business transformation plan. The business strategy model helps organizations to identify their desired future, while the business transformation plan helps them to come up with the key activities which must be implemented to attain the desired future results. These techniques are effective to the extent which the organizations are committed to ensuring that everything is done on time. If there is no commitment to comply with the timelines, then the techniques are only good at writing.

The threat of new entrants

Tesco deals with the threat of new entrants through the differentiation of its goods and services. In many industries, new entrants are discouraged through diversification and product differentiation. Just like Wal-Mart and Carrefour, Tesco has embraced diversification and product differentiation, and as a result, the three have managed to keep new entrants at bay.

Bargaining power of suppliers

In order to deal with the challenge of the bargaining power of suppliers, Tesco has put in place a large capital base, which enables it to manufacture some goods by itself. Tesco’s ability to manufacture some of its goods not only enables it to deal with the challenge of bargaining power of suppliers but also enables it to lower its cost of production, which in turn enables it to lower its prices and gain more customers.

Bargaining power of buyers

Tesco’s strategy for dealing with the bargaining power of buyers is lowering the prices of its goods and services so that many people can access them. The whole idea of lowering the prices is to have a large customer base, which is not only crucial for the sustainability of the business but also for the generation of high revenues.

The threat of substitute products or services

Tesco deals with this threat through the differentiation of its products. It also teams up with other multinational companies such as Wal-Mart and Carrefour to influence government policy on the introduction of substitute goods in the industry.

Rivalry among existing competitors

As mentioned earlier, Tesco’s existing competitors include Wal-Mart and Carrefour. It has cushioned itself from the rivalry through various strategies such as having very reliable suppliers, diversification and manufacturing some of the goods by itself. Diversification, in particular, has enabled it to remain competitive irrespective of the poor performance of some of its ventures.

Significance of Stakeholder Analysis for Tesco’s New Strategy

Stakeholder analysis refers to the critical evaluation of all stakeholders of an organization and their relationships with the organization. It plays a crucial role in helping an organization to identify partners who are essential for its success. Once an organization identifies such partners, it invests in building a good rapport and creates a symbiotic relationship that enables both the organization and the partners to gain from the relationship. In its new strategy, Tesco has embraced stakeholder analysis, and as a result, it has been able to enter into mergers with various organizations. It has also acquired some stores belonging to other organizations.

Tesco’s New Strategy

In developing its new strategy, Tesco’s main consideration was the need to respond to the needs of local customers, both in the United Kingdom and in other countries where it has operations. It used mergers and acquisitions as a way of surviving in the competitive merchandise industry (Henry 2011). According to information available on its website, examples of mergers include the partnership with Samsung in South Korea to form Samsung –Tesco Home-plus merger, and in Thailand, where it went into partnership with Charoen Pokphad to form a merger called Tesco-Lotus (Tesco 2014).

The Company also acquired several Companies in 2005 in South Korea. With the advent of globalization, Tesco managed to move to China, where the culture and values are completely different from those of the United Kingdom. The Company entered China in 2004 after acquiring about 50% of the Hymall. It also operates in various cities and towns in China, such as Shanghai, Weifang, and Taizhou, where it deals with imported wines, beers, and cheese products, especially from Italy, Netherlands, and France. In shanghai, the Company introduced what it refers to as Tesco Express, which is a customized store made to suit the needs of the local people.

In Malaysia, the company has been operating a chain of stores since 2002. Currently, it operates over 45 stores, which account for 30% of the local market share. The stores mainly deal with electronic goods, cloth ware, and the club card service. It also runs hypermarkets and a customer delivery service where it delivers goods to its customers, especially those who purchase in bulk.

Alternative Strategies for Tesco

In regard to market entry, Tesco may consider the alternative strategy of working with agents instead of opening new stores in different countries. It may do so through entering into a partnership with organizations that do not deal with retail merchandise and sell its products through those organizations. By so doing, it may cut huge costs associated with establishing new stores in other countries. In regard to substantive growth, Tesco may use the alternative strategy of establishing many stores in the United Kingdom instead of establishing them in other countries. This strategy may ensure growth through the elimination of costs associated with establishing businesses in foreign countries. The organization has not witnessed any limited growth or retrenchment of employees, and as a result, there is no alternative strategy for limited growth or retrenchment.

Tesco’s Future Strategy

Tesco has managed to place itself in a global strategic position through differentiation and positioning of its products, goods, services, and operations. It has also been able to enter various markets, especially through mergers and acquisitions. What I would recommend to the Company regarding its future strategic direction and how to increase its competitive advantage is to invest more resources in differentiation and positioning.

In strategic management, differentiation is the process of distinguishing a product or a service from the rest through the description of the unique characteristics. It is done for competition purposes with the aim of creating a market niche for that particular product or service. Differentiation seeks to create a good image of a particular product among the targeted consumers for them to perceive it as unique and different from other similar products (Thompson & Martin 2010).

The Company may engage itself in the differentiation of several products at the same time, which may enable it to have loyal customers who cannot purchase goods and services elsewhere due to the uniqueness of its products or services. This process is known as positioning, and it entails using various strategies like promotion, distribution of products or services, and production of unique products with low prices to build an identity of a particular Company in the minds of consumers. Positioning seeks to stabilize and retain the positions of the differentiated products for a particular Company so as to retain the competitive advantage of the Company in regard to those products.

Approaches to Implement Tesco’s Future Strategy

In regard to the roles and responsibilities in the implementation of the strategy, I would develop a strategy implementation matrix. The matrix would contain details of who is supposed to do what, where, and when, the expected results, and the timelines for achieving those results. In regard to resource requirements for the implementation of the strategy, I would recommend the hiring of an expert to review the strategy and give the estimated costs of all the resources which would be necessary for its implementation. I would also ensure that employees are sensitized on how to embrace any changes which may come as a result of the strategy.

For the strategy to be successful, I would encourage the organization to put in place, self-managing teams. These are semi-autonomous teams of employees that are formed to perform some specific tasks. Many organizations encourage their employees to work in teams instead of working independently. The reason is that working in teams enables organizations to benefit from the synergy found in teamwork. When employees work in teams, they get an opportunity to exercise their skills, creativity, talents, and innovativeness. They are also able to learn from the strengths and the diverse experiences of each other. Further to that, they learn how to take criticism positively, which reduces friction in the workplace.

Many consultants in the field of management agree that teamwork is a prerequisite of both intrinsic and extrinsic motivation. Intrinsic motivation arises from the employees; that is, they are motivated by internal factors such as ambition to acquire new knowledge and skills, passion for work, and the need to be successful at the workplace.

On the other hand, extrinsic motivation arises from external sources such as rewards, increased salaries or wages, appreciation, promotions, and congratulatory messages. Motivation enables employees to learn new skills from each other because they are not only free with each other, but they also have diverse experiences.

Through the diverse experiences and learning from each other, employees are able to come up with new ways and strategies of doing things, which enhances their abilities, potentials, and productivity at the workplace. Through motivation, employees acquire positive beliefs, values, norms, and attitudes towards their organizations. Examples of positive values that come as a result of motivation include hard work, faithfulness, respect, commitment, and appreciation.

According to management consultants, teamwork enables employees to form group norms. These norms are rules which govern the conduct of employees and constitute what is allowed and disallowed in different organizations. Teamwork also helps employees to work collectively and to micromanage their work, which not only boosts organizational efficiency and effectiveness but also enhances the quality of internal organizational processes. In many cases, organizations that embrace teamwork also involve their employees in making important decisions that are related to the work done by the employees. The whole idea is to ensure that organizational processes, functions, and policies reflect not only the mission and vision of the organizations but also the wishes and aspirations of the employees.

Many organizations occasionally hire consultants to train their employees on the dynamics of teamwork. The teamwork training exposes employees to various work-related challenges and ways of dealing with those challenges. Through the training, employees learn how to work independently and as part of a group to deliver good results on time.

Through the spirit of teamwork, employees enrich each other with divergent views, ideas, and suggestions on various work-related issues. As a result, any challenge which arises at the workplace is viewed as a challenge of the team, not as a challenge of a particular employee. The ability to collectively come up with solutions to various challenges at the workplace transforms employees into transformational leaders. The reason is that teamwork has to do with coming up with work plans and schedules which are in harmony with the policies and objectives of organizations.

Another approach that Tesco may use to ensure that its future strategy is implemented successfully is to use employee engagement initiatives such as employee training and strong organizational culture. Employee training is considered as part of organizational development approaches. Organizational development refers to a systematic and ongoing process of designing and implementing effective organizational change. It is also a scientific field of inquiry in which scholars study how best organizations can be developed. The underlying principle to organizational development is, therefore, the need to implement change in organizations and manage the change to achieve certain predetermined objectives. Organizations that invest in employee training are able to maximize their human resources because the employees are able to multitask, and as a result, such organizations are rarely overwhelmed by workload (Gamble & Thompson 2011).

A strong organizational culture is defined as a culture in which the focus is on improving the work environment and making employees feel appreciated. Many contemporary organizations aspire to have a strong organizational culture that is based on the human relations approach to management. Organizations that have a strong culture perceive their employees as assets, not as liabilities. As a result, employees are treated with respect, dignity, and understanding. Such organizations, therefore, invest immensely in capacity building their employees, who in turn use all their potentials, skills, and knowledge for the benefit of the organizations. Organizations with a strong culture, therefore, embrace flexibility instead of rigidity, and as a result, they are able to increase their efficiency and effectiveness as well as customer satisfaction (Cummings & Worley 2008).

SMART is a popular criterion for developing organizational goals and objectives. According to George Doran, organizational goals and objectives must be specific, measurable, assignable, realistic, and time-bound (Wysocki 2011). These criteria may help in the implementation of Tesco’s future strategy by aligning the strategy with SMART targets. Such an alignment would ensure that there are enough resources and clear guidelines for the successful implementation of the strategy.

Reference List

Cummings, T.G & Worley, C.G 2008, Organisation development & change, Cengage Learning, Farmington, MI.

Gamble, J. E & Thompson, A. A 2011, Essentials of strategic management, McGraw-Hill, New York.

Henry, A 2011, Understanding strategic management, Oxford University Press, Oxford.

Johnson, G, Scholes, K & Wittington, R 2011, Fundamentals of strategy, McGraw-Hill Publishers, Prentice Hall.

Tesco 2014, Mission, vision and values, Web.

Thompson, J & Martin, F 2010, Strategic management: awareness and change, Cengage Learning, South Western.

Wysocki, R.K 2011, The business analyst/project manager: a new partnership for managing complexity and uncertainty, Wiley, Hoboken, N.J.