TESCO is a transnational grocery and all-purpose merchandise dealer with its headquarters in Cheshunt, United Kingdom. It is among the three largest retailers across the world, coming third after Wal-Mart and Carrefour, when measured in terms of revenues. It is also the second largest, coming second to Wal-Mart when rated in terms of profits. It is the leading grocery distributor in UK and has multiple stores in fourteen countries across Europe, Asia, and North America (Humby, Hunt & Phillips 2008, p. 17). Jack Cohen established the company in 1919, starting out as a group of market stalls. He got the name TESCO after buying a shipment of tea from T.E Stockwell, where he combined the first initials of this company with the first two letters of his last name in 1924. The business then rapidly expanded, and has grown to the position it occupies today from that small venture.
TESCO has developed a mission statement, from which it works towards achieving its objectives. The mission statement of Tesco is ‘to retain loyal people’ (Humby, Hunt & Phillips 2008, p 21). In working towards this statement, Tesco has rolled out a club card service, with which it awards people by giving special vouchers and extra points, thus maintaining its loyal customers.
The vision of an organization underpins what the organization focuses on delivering and how it operates. The vision of Tesco is to establish overarching internal shared values, which enable the organization to deliver the promises it makes to its customers (Humby, Hunt & Phillips 2008, p. 23). Under this vision, the organization has managed to expand and grow accordingly since it can deliver to customers.
No organization or establishment can succeed without a target that it wishes to achieve. In this line, Tesco has several objectives, with which it works to achieve. Tesco, being among the leading food retailers in Britain, it has 519 stores across England, Scotland and Wales alone. It has 105 stores in France, and 44 in Hungary (Humby, Hunt & Phillips 2008, p. 31). This shows that Tesco has some commitments. These form the objectives of the retailer. The first of the objectives is to offer customers the top value for their money and at competitive prices. The second objective is to meet the needs of customers by constantly seeking the opinions of the customers regarding innovation, the quality of products, the choice and store facilities and service and acting on them. The third objective is to providing the shareholders with returns on their investments progressively and improving profitability through investing in efficient stores and distribution depots, productivity improvement and new technology. The fourth objective of the company is to build up the talents of its personnel through sound management and training practices while offering them equal opportunities for all and rewarding them fairly. Another objective is working closely with its suppliers to establish and grow long-term business relations, basing the relationships on strict quality and pricing criteria. Additionally, the company has the objective of participating in the process of formulation of national food industry policies on imperative issues such as health, nutrition, hygiene, safety and animal welfare. The last objective that the organization has is sustaining the well-being of the neighborhood and the protecting the environment from which it operates.
Tesco Core Competence
The core rationale of Tesco is to erect value for the customers so that they can earn their lifetime loyalty. Thus, the core values that enable the company to have the competence it holds are as follows. The first competence is because the success of Tesco is dependent on the people. These people shop from the stores and those who work within the stores. If the customers get pleased with the products they offer, they are likely to return and shop there another time. If the workers find the work they do for Tesco rewarding enough, they are likely to work the extra mile to help the company achieve the objectives. Thus, this forms the competence base for the company. The core competence is as expressed in the values they hold for the customers and the workers. For the workers, these values include, understanding the customers, being the first to meet the customers’ needs and acting responsibly for the communities around them. This way, they satisfy the needs of the customers and earn their loyalty and that of the environment of operation. When it comes to the workers, they achieve the competence by working on the statement, “treat people as they we would like to be treated” (Humby, Hunt & Phillips 2008, p. 81). Under this, they encourage workers to work as a team, to trust and revere each other and to listen, support and say thank you. Additionally, they encourage workers to share knowledge and experience to grow together. This way, they establish strong working environment, with the workers enjoying their work, hence the reason they are able to attain the level of competence they have today.
Significance of Stakeholder Analysis in Tesco
Like in any other organization, Tesco has its share of stakeholders, who have an interest within the organization. The stakeholders of Tesco include the following groups of people. They include the customers, the employees, the government, local community, suppliers, financers, pressure groups and non-governmental organizations (Humby, Hunt & Phillips 2008, p. 110). These groups of people have a momentous influence on the actions and operations of the organization. The significance of analyzing the different stakeholders cannot be overemphasized. The customers look for a wide range of products, ease of accessibility to the stores and competitive prices for quality products. Therefore, knowing what the customers want, Tesco can plan accordingly, and work towards attaining the desires of the consumers. This is the significance of analyzing the customers as stakeholders of the company. The employees, as stakeholders work for the organization. Understanding their expectations and needs enables the company establish a strong and productive working environment. The government sets the policies under which the business operates, therefore, it is significant for Tesco to be involved in the making of polices that affect its working directly. This way, the organization works within the stipulated guidelines by law. The local community, within which the organization works, has some expectation on the organization. Therefore, analyzing the local community as a stakeholder helps Tesco develop programs that work for the community and maintain a harmonious community. The suppliers are key stakeholders in Tesco. They provide the goods and products that the company sells. Therefore, understanding their point-of-view allows the organization to make viable plans. The financers provide the investment and in return enjoy the profits. Thus, understanding their expectations allows Tesco to plan and invest properly. The pressure groups include the competitors. Therefore, analyzing the competitors allows Tesco know how to counter their moves as they compete. These are the reasons why, it is imperative for Tesco to analyze its stakeholders regularly.
Internal and external stakeholders’ interests in Tesco strategic planning
As outlined in the significance of stakeholder analysis for Tesco, those stakeholders do have related interests within the strategic planning of the organization. For instance, the customers have an interest in that they expect quality products and a competitive price. Therefore, they have internal interest in the planning to ensure they get prices of products that fit their spending. The employees have internal interests since they have concerns about their rewarding. They also have concerns about their skills hence they need training programs as well as employee rewarding systems. These interests directly reflect in the strategic planning of the company. The government has external issues such as revenue among others in the strategic planning of Tesco. It is responsible for making policies that govern the business environment. Therefore, their external interests have an impact in the strategic planning of Tesco. The local community needs support in the form of services from the organization. The company has to maintain the environment within which it operates. This is an external interest, which also determines the strategic planning of Tesco. The suppliers have internal interest in that; they get income by selling products to Tesco. Therefore, they directly influence the strategic planning of Tesco. The financers’ interest is an internal issue. These people invest in the business; hence, they want to be included in the strategic planning of the organization. The pressure groups have an external issue, though they are not involved in the planning, they influence the planning process as they pose competition in the market.
The ideal strategic planning technique for Tesco in achieving business growth
The ideal strategic planning technique that Tesco can employ is that of Ansoff Matrix. The Ansoff Matrix is a two by two matrix, used to assess the strategy of an organization based on two areas; that is the difference in products and the market scenarios (Kaplan & Norton 2008, p. 58). A simplistic approach takes the complex scenarios and allows for easy rapid assessment. It helps the company or organization measures its product and market growth. The technique indicates that a business growth depends on if it is marketing new or existing products, and in new or existing markets. The result from the Ansoff is on the market penetration and market development for existing market and new markets respectively. It also includes product development and product diversification for new products and existing products respectively. This technique is best suited for Tesco, as it will allow the planning team to establish what area they need to improve. In analyzing the market aspect, the technique will enable Tesco to determine its market penetration, thus increasing its shares within the existing markets. The strategy of market development will allow the organization to find new markets for its existing products. It will also expand the customer base for the organization thus; it will grow its income. The aspect of product involves product development. This will enable Tesco to create new products in order to meet the needs of the customers. These will easily allow Tesco to continue outdoing its competitors. It also involves diversification. It is a risky strategy as it involves taking new products into new markets. This creates uncertainty for the business; however, it helps spread the risk involved for the organization by spreading the risk. It also grows the organizations activities and operations. Ansoff’s technique is the most ideal in the strategic planning for Tesco in achieving the business growth that it desires.
SWOT analysis for Tesco
A SWOT analysis of Tesco reveals the organization’s success over the years is undeniable.
The first strength is that Tesco is well established. Tesco is a name that is famous in UK, with the biggest share of the market and a chain of 1500 stores in UK alone. The second strength is the club card that it introduced. This card gives a feasible insight into the customers shopping habits. A third strength is the online transaction that it enjoys. Tesco’s online supermarket is the biggest in the world. Additionally, the retailer has a strong brand name. The brand name of Tesco makes people associate the business with soaring quality and dependable products, representing an excellent value for money. The last strength is that Tesco offers low prices for quality products, which makes it the focus and choice for customers (Humby, Hunt & Phillips, 2003).
The first weakness is that Tesco relies largely on the UK market, despite having an internationally well-established name. The competition is fierce in the U.S. market and, therefore, it is hard for the company to establish a good name.
Tesco has the prospect to sell and dominate the market place. This is due to the widespread supermarket outlets. The second opportunity is on the health and beauty product range, which is the fastest growing skincare retailer in the market. They also have the opportunity to develop the web services further for convenience to their consumers. Lastly, they have the opportunity to expand operations into other markets such as those of clothes or personal finance.
The first threat is the buying of Asda by Wal-Mart. Asda is now closing the gap between Tesco and itself. The second threat is the challenge of international growth. Venturing into new markets is expensive due to extra operating costs. Thus, Tesco’s debts increase more before they start to decrease. The last threat is that of the credit crunch. The low income of people may necessitate customers to switch to lower priced products of less quality, hence affecting Tesco.
Macro and micro environmental audits using STEEPLE and SWOT analysis respectively
Sociological- changes in the taste and lifestyle of consumers presents both opportunities and threats in the industry. The new markets and consumers are opportunities while the alternative tastes are a threat.
Technological- changes in technology and the development of the internet to make online sales presents a positive strength to the organization.
Economic- the retail industry s prawn to the recession and sensitive to changes in interest rates. Such low times in the economy affect the organization extensively.
Ecological- the renewable resources used for production are environmentally friendly. Therefore, the organization has a strong base for the environment.
Political- the signing of free trade agreements and European integration, the markets are now open for the company to invest.
Legal- the government is keen on constructing and implementing legislation for health and safety for the consumer rights, this regulates the operations of the organization
Ethical- strong business ethics regulate the culture of the working environment; thus, the organization operates within limits.
Alternative strategies relating to substantial growth, limited growth or retrenchment in Tesco
The retail industry structure in which Tesco is operating is remarkably competitive (Humby, Hunt & Phillips 2008, p. 97). Therefore, Tesco should employ a strategy that gives an alternative to its planning strategies to allow substantial growth. To achieve this, Tesco should employ a generic strategy for example, setting the lowest prices in the industry while offering its products and services to a broad market. However, this strategy depends on the ability of Tesco to manage their operating costs at low level to sustain the low prices. This will allow Tesco to achieve a high profit margin thus gaining competitive advantage. The author alternative strategy is to apply differentiation, in which it will strive to offer products and services with unique features from the usual in the market. This uniqueness is applicable in product offerings, technological advancement, customer service approach and special features that customers will value. The last strategy that Tesco can use is to focus on the internal efficiencies that can help them withstand the external pressures.
Significance of monitoring the objectives of an organization within timescales in achieving a selected strategy
When setting objectives of a business, there is always emphasis on the time factor. This significance directly relates with that of setting timescales for any selected strategy. The timescale aspect allows for the evaluation of the strategy at different stages of implementation so that the organization can determine the effectiveness of the strategy before much time passes. After every stage of implementing the strategy, the timescale allows for monitoring. Therefore, if the strategy is not working as expected, it gives chance for termination before it is late.
The roles and responsibilities of strategy implementation in an organization
Strategy implementation is the process that converts the objectives, visions and mission of the organization into the action and the success that it envisions. Implementing the strategic plan is much pivotal than having the strategy, as the strategy is useless if not put into action. The implementation of the strategy enables the organization to realize its objectives (Kaplan & Norton 2008, p. 78). The management and employees have the duty to oversee and implement the strategy plan, which enables the organization achieve the targets set.
Organization’s resources and capabilities requirements in implementing a new strategy
To implement successfully a new strategy an organization needs the following supporting factors. The first requirement is action planning. The organization outlines the chronological steps that it will follow. The second requirement is the organizational structure (Johnson, Scholes & Whittington 2007, p. 71). The organization gives thought to its structure to determine if it is suitable for the intended strategy. The third resource requirement is the human resource. The organization should consider the impact of the human resource on the strategy and the vice versa. Additional requirement is the inclusion of the strategy in the annual business plan budget so that it gets funding for implementation. Moreover, the organization requires establishing a control and monitoring for the strategy to ensure that it is on course. Lastly, the organization needs to establish a linkage of all these resources and requirements to ensure that the strategy is successful.
Future strategy for Tesco
Tesco is currently enjoying a lean lead at the top of the market. However, in the future, it will need to create and execute a new strategy to ensure that it maintains the competitive advantage in the market. The strategy that I propose for Tesco is a value-based strategy. This strategy emphasizes on value and low prices over the high quality and price of products (Johnson, Scholes & Whittington 2007, p 41). This strategy will be effective because, in the present, it is applying the growth strategy, and in the near future, it will have explored most of its opportunities. Therefore, the only remaining goal to achieve will be to establish a brand identity in all the markets that it invests. Thus, a value-based strategy will enable Tesco to achieve this objective.
Tesco is already-established retailer, and the current growth-based strategy that it is using is effective in achieving the objectives it has set. However, the diversification of markets makes the organization unable to establish a brand identity in the new ventures. Therefore, switching to value-based strategy will allow Tesco to establish brand identity in these new markets in the future.
Humby, C., Hunt, T., & Phillips, T. (2003). Scoring points: How Tesco is winning customer loyalty. London, Kogan Page.
Humby, C., Hunt, T., & Phillips, T. (2008). Scoring Points How Tesco Continues to Win Customer Loyalty. London, Kogan Page. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=473883.
Johnson, G., Scholes, K., & Whittington, R. (2007). Exploring corporate strategy. Harlow, Financial Times Prentice Hall.
Kaplan, R.S., & Norton, D.P. (2008). The execution premium: linking strategy to operations for competitive advantage. Boston, Mass, Harvard Business Press.
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