Tescos Strategic Planning and Implementation

Tescos Strategic Planning and ImplementationThis authorship foc utilizes on the UK commercialize place food foodstuff with great emphasis on Tesco plc, the largest merchandiseplace super trade in the UK. t eachlighted in this floor is Tescos connection with some(prenominal)(prenominal) strategical planning and implementation, its vision and thrill. Further discussed in this report is Tescos diversified culture with nearly social factors, brand tax, and its innovativeness with the current surroundingsal circum military positions. Also in this report argon strategic models which illustrate Tescos melodic phrase environment and separate trade situations in scathe of the stability and core competence. The models used ar dress up analysis and the Porters Five Forces. Finally, in this report is the strategic cultivation of Tesco with some recommendations including a suggested implementation plan to carry out the identified strategies with the supervise and evaluat ion process.1.1 BRIEF INTRODUCTION OF TESCO PLCTesco plc is maven of British largest sell food market currently the offset-year in monetary regard as of the go along 10 retail grocery in the United Kingdom. It was the first UK business to engender 2 billion in gains when it announced the feat early in 2005, (Tesco Annual Re medical prognosis, 2005) and the third largest global retailer based on r fifty-fiftyue. e trulywhere the years, retail grocery sector represents the largest manufacturing in UK providing employment for millions of mickle in UK both in manufacturing or in retailing. In 2003 retail accounted for 9% of domestic carrefour (Data monitor lizard, 2003).The hold TESCO was derived from the combination of a tea leaf suppliers name T.E. standard soundly and Jack Cohen the founder of Tesco plc. Tesco was founded by Jack Cohen when he began to shit surplus groceries from a stall in the East End of capital of the United Kingdom in 1919 and in 1924 Jack Cohe n made a cutting-fashioned score by combining the first three letters of the suppliers name (TES), and the first twain letters of his surname (CO) to form TESCO. It was a typical of Cohens centre for a bargain of his unshakeable life succession conviction that it was low damages and nonhing else that go business fastest. By the mid-1950s Tesco rescue 150 small and physically unimpressive stores, most of them on self-service formats. As the supermarket revolution arrived, Cohen unfastened his first Tesco supermarket in 1956. But in all conscience Cohen was singularly unequipped in either visionary or operating terms as a leader to handle this level of radical convince (Seth Randall, 1999).In UK, Tesco plc operates under four banners namely Tesco Extra, Superstore, Metro and Express. The first Tesco store was opened in 1929 in Burnt Oak, Edgwargon, and Middlesex and in 1947 Tesco was floated on London Stock Exchange as Tesco Stores Holdings Limited. Fifty percent of sales in Tesco be gotten from Tescos own-label crossways which atomic number 18 in three levels, values, normal and finest. Tesco plc is besides becoming single Britains largest independent petrol retailer because as well as gismo produce, many stores put one across gas stations and separate retailing run rendered by Tesco alike include Tesco personal finance.2.0 EXTERNAL (ENVINRONMENTAL) ANALYSIS OF TESCOAs tantalized by Johnson, Scholes, Whittington, (2008) The environment is what gives geological formation their means of survival and at that place are five different layers of a business environment namely the macro environment, industry or sector, competitors, the brass instrument and the market Business environment is a set of policy-making, economic, social, technology, environmental and legal forces that set up potentially have both positive and negative sham on the business. (Johnson, Scholes, Whittington, 2008).2.1 EXTERNAL direct ENVINRONMENTThe constant chan ge in market look ats has made the deliverance so complex. therefore analysing TESCOs eternal operating environment, the following tools exit be use to ensuring that TESCO meets the changes in market enquires the PEST tools, the deck up tools and porters 5 forces. these tools willing be to examine TESCOs operating environment.The PEST theoretical account provides a comprehensive tendency of influences on the possible success or failure of particular strategies (Johnson, Scholes, Whittington, 2008). This modelling categorises environmental influences into political, economic, social and technological.2.1.0 POLITICAL FACTORSThis factor highlights the role of government institutions. choose for stance in UK when the business environment was hit by character crunch which lead to great unemployment. This trend actually assistanted TESCO because of their dominance in UK and as sensation of the fastest growing retailer they tried as much as possible to reduce the level of une mployment caused by these changes on that pointby creating employment. For employment legislation, the government encourages retailers to provide a mix of job opportunities from flexible, lower-paid and topically -based jobs to highly-skilled, high-paid and centrally located jobs (Balchin, 1994). Also the strong government limit against monopoly which is one and simply(a) of the banes TESCOs are faced with because within the node law, it is very critical to note that protecting consumers and ensuring that entrepreneurs have the opportunity to compete in the market economy is very historic. Also TESCO contain to look critically in the side of government policies on taxation because high taxation is one the study(ip) tasks businesses face in the UK because it is never stable. The issues of government policies on trade restriction and implementation of new regulations could also affect in a counseling especially when there is free trade between the European nitty-gritty which will be of TESCO benefit.2.1.1 ECONOMIC FACTORSThis is another environmental factor which bath means make a huge impact in TESCO. Take for stance the economic down turn faced in UK due to the unemployment which drastically decreased the demand of so many good to a greater consequence so affecting the demand required to produce such goods which is a major concern to TESCO since they are highly dependent on the UK market. In access if TESCO had known the economy was heading for a recession, with the use of PEST framework analysis it would have helped plan ahead. It is good to note that this factor deal influence demand, cost, price and profits.2.1.2 SOCIAL/ CULTURAL FACTORTESCO plc is one of the retail groceries in UK who has successfully address peoples social and cultural demands, and as it involves the reflectiveness of the increasing immigrants and visitors from all over the world who have different regimen preference, and garment variations with different beauty p roducts choices, this have sort of encouraged guest to move towards bulk obtain. The demographic changes similar life style that is, the customers public opinion and attitudes have made TESCO to concentrate on added-value products and services. another(prenominal) factor is creation which has forced TESCO to have much than than interest in customers increased demand for organic products and this has in many ways help TESCO to strategies ways to father cost out of the market. Wilson and Gilligan (2005), states that a variety of other equally important and far-reaching changes in social, cultural and demographic environments are currently taking place.2.1.3 scientific FACTORSThe use of technology in marketing is one of TESCOs expansion strategies. It has enabled customers to allowance their bills electronically thereby reducing long queues. Online marketing has also influenced the maturement of many TESCO products and this benefits both the company and its customers. This personalised service makes shopping more convenient for the customers and has positively affects the go forth of TESCO plc.3.0 PORTERS FIVE FORCESPorter (1980) argues that the most remarkable influence in an organisations environment is represented by the nature of the industry in which the particular company operates in.3.1 Threat of New EntrantsThe UK grocery market is so saturated with very few competitors dominating the market. There are five major key players in the UK grocery market namely Tesco, Asda, Sainsbury, Iceland and Safeway, all sharing the highest market care. Threat of entry depends on the extent and height of barriers to entry (Scholes, et al, 2008). With Tesco on top coupled with its huge enthronisation and aggressive operational tactics in product learning, it is concentrated in all ramifications for a new entrant in the market to commence a threat the business of Tesco.3.2 Suppliers dicker PowerUnderstanding that the suppliers negotiate power is very l ow, Tesco will not give room for a small chain to dictate prises in the market. The cost of lovesome materials and components back end have a major bearing on a firms profitability. The high is the bargaining power of suppliers the higher the costs of the goods. (Svend Hollensen, 2003). The ability of Tesco as a huge grocery in UK to source for cheaper supplies abroad ,has enabled them to negotiate prices beingness brought forward by supplier which other small chains are not capable of meeting. For the fact that most of the major suppliers are stir of losing business to foreign supplier has influenced Tesco positively.3.3 Bargaining Power of ConsumersWhen Tesco introduced Loyalty card and branded Clubcard in 1995, it did not succumb to other grocery that it was Tescos dodge of customizing service to gain dominance when it comes to meeting customers needs. This strategy not solo made much profit for Tesco simply also enabled Tesco to get a comprehensive database of all its con sumers. This initiative actually won lots of customers for Tesco and has do standardized. It is amazing to the customers that they crumb get two clubcard points for every 1 they turn over in Tesco which means the more you spend in Tesco, the more clubcard points you make and these points underside also be converted to coupons which can be redeem for cash. The more the products that become standardized or un secern, the lower the switching cost, and hence, more power is take backed to buyers. As theorized by Porter M. (1980).3.4 Threat of SubstituteThis threat can make great impact on Tesco plc when it comes to a product being substituted for another product which can make a customer switch to the alternative. This is mostly caused by the introduction of other small-scaled operations in the market. The demand of a particular product can be reduced if a customer minds an alternative in another market and for these modestnesss, Tesco are trying reduction of prices and modificat ion of such products in the other banners they are operating on congressman Tesco Metro to avoid such threat.3.5 Bargaining Power of CompetitorsThere are total range and variety of competitions in the grocery business either on the small and large scale. Tesco in the grocery business has long witnessed a significant growth in size since its establishment in 1924, though not the first to be establish in UK but currently the first of the top 10 grocery in operation in UK and the third largest global retailer based on revenue. Over the years, grocery business has remained so free-enterprise(a) that it triggered a high level of development by major competitors comparable Asda, Sainsbury, Iceland and Safeway which has made Tesco to be more innovative thereby making them the largest grocery business providing employment for millions of people in UK either in manufacturing or in retailing and since been known for their market dominance.4.0 SWOT ANALYSISSWOT analysis is a tool which cou ld be used to audit an organisation and its internal and external environment. Tesco is the first of the top 10 grocery in UK with an excellent record in product and format innovation. And with the introduction of online shopping, Tesco became the totally food retailer to make online shopping profitable which puts them ahead of other competitors.4.1 STRENGTHSProducts with range of Prices Tesco has several kinds of product in the market. These products range from food, non-food products, home appliances, medicines and so with different prices on all the products. In Tesco you can get whatsoever product you want at an affordable price. The prices vary anyway, the higher the forest, the higher the price and vice versa and this depend on the choice of the customer.Growing supermarket blank space Tesco in the grocery business has long witnessed a significant growth in size since its establishment in 1924 and this is as a result of the growing population of consumers patronising the c ompany and their increasing demand of several products.Strong brand image Tesco is a household name in UK known for their market dominance in good quality and certain product. It is because of Tesco strong brand image that most customers see great value in their services and this has earned the company lots of profits.Tesco Online Online marketing has also influenced the development of many TESCO products and this benefits both the company and its customers. This personalised service makes shopping more convenient for the customers and currently being used by over one million customers in UK. The use Tesco Online in marketing is one of TESCOs expansion strategies. It has enabled customers to pay their bills electronically thereby reducing long queues indeed bringing simplicity and value to the market.4.2 WEAKNESSPrices Their price of goods poses lots of problem for Tesco plc. Trying to satisfy their customers needs by cutting cost of their products even their services can lead to a reduced profit adjustment for their business.High reliance on UK market Tescos reliance on UK market is also one major weakness because if at any clock era the economy faces any challenges, this will definitely affects the business of Tesco, so it very much advisable for Tesco to look beyond UK and increase its foreign outlets and change other commercial items.4.3 OPPORTUNITIESInternet Tescos online successes is one great opportunities. Since the introduction of Tesco online, the use of technology in shopping has grown in quite a short space and moved into profitable status. Their website is so fully encase totally different from all other grocery site and since there are no matches in terms of comparisons, it remains an advantage on the side of Tesco.Intervention in Asian market Tescos intervention in the Asian market has serious positive implications in their growth worldwidely and this in no doubt will give Tesco an opportunity to develop its brand more so make Tesco much larger than they were due to Asias massive economies with huge growth forecast.Growth of non-food sales Tesco known for their cut-cost grammatical construction can initiate same strategy to non-food retail and it is evident that Tesco capitalising on these opportunities are opening new store basically for the sales of non-food items which has give Tesco a tremendous result in increased market share in UK4.4 THREATSEconomic instability The unstable, unpredictable nature of the economy and political changes in UK pose lots of threat to Tesco and one critical example of these changes is the credit crunch which strokes the UK. This impacted on the consumers a lot because sacking by their low income, they had to go for products with low prices thereby paying little attention to higher priced brands and this can force a switch in Tescos price social system.Competition This has also been a persistent threat and this one major reason why Tesco will keep up with the price cuts so as no t to lose their customers to major competitors like Asda and Sainsbury.High price of raw material The upsurge in cost of raw materials from both food and non-food could trigger poor production and this can impact Tesco overall profit margin.5.0 VISION AND MISSION STATEMENT FOR TESCOThe study of military mission statement stated in the early 1970 s, and Drucker (1971) referred to them as a forerunner to clear and realistic business objectives. As stated by Harrison and Enz(2005), An disposals mission statement provides an important vehicle for communicating ideals and a sense of directions and adjudicate to internal and external stakeholders. It can inspire employees and managers. It can also help organizational managers in resource-allocation decisions. With these definitions, it can be further explained that mission is what the organization is and its reason for existing whereas a vision is a forward-looking view of what the organization wants to become. Drummond and Ensor (199 9) defined the mission of an organization as the unique use of goods and services that distinguishes it from other companies and defines the boundaries of its operations.5.1 VisionTescos vision is concentrated basically on their customers. They see themselves in many years to come as being the only grocery business in UK due their market development strategy.5.2 commissioning statementTo ensure continued income streams to the business from our key customers in all segments by removing the impediments which prevents them from the pick outimal enjoyment of our product and services.With the above mission statement, it is fictive that Tescos mission is to permanently dominate the market giving no room for any competitors or competition.6.0 CRITICAL SUCCCESS FACTORSObjectivesThe objectives of an organization govern the potentials value of the organisation and it also shows the platform on which the organisation is built in terms of profitability. The following describes Tescos object iveTesco aims to minimize the cost of products and at the same time aim to earn high. Profit maximization is one major reason why a business will stand and Tesco sees selling at low price will attracts more customers thereby giving customers split up chances of making choice in the quality and quantity of products at a valued price.Tesco need to ensure 100% customers satisfaction by whirl good customers services and excellent Value for their money which differentiates them from their competitors.Dedication to their employees as well as to customers, ensuring that all their wants and needs are met7.0 KEY PERFORMANCES powerFor Tesco to remain on top rather to maintain its position in the top 10, the following measures need to be critically assessdTesco employees need have sound knowledge of their products so as to make shopping not too complex for their customers. This can also give customers ideas of some products they are not aware of more so forcing out a change of choice in the ir decision to buy more.Customers satisfaction is one life-sustaining key to business success. If a customer is not satisfied with either the product or the service then it will be difficult for such business to exceed. In other words, Tesco actually need to modify more in their customer service.Tesco at all time need to assure customers quality brands and also services by investing more in employee training.8.0 CORPARATE AND BUSINESS STRATEGIESTesco is an organization more voluminous in terms of revenue acquisition and customers than any other grocery market in UK and for it to maintain its current standard or create a wide margin in the market, a lot need to be through with(p) to accomplish it objectives.Firstly, Tesco need to divert the attention of customer from non-food products to food products. To do this, they need not to concentrate their advert more on non-food products but also encourage their customers to eat more sea foods, fruits as well as vegetables. They should also emphasis more on sales forwarding of their own-labelled products on advert so re-directing the customers usual orientation of branded products.The charge need to put the quality of staffs into consideration not only the quality and quantity of their products. Arranging training programs will be appropriate to evaluate their employees quality, such programs will enable them gather vast knowledge of their products more so keeping the goals of the organization alive in the employees.Theoretically Tescos strategic development can also be analysed using Ansoffs matrix and BCG matrix.For Tesco to achieve high sales level, they need to penetrate the market and this will sure maximize profit level. Penetrating the market could be in two ways from my point of view Tesco due to its voluminous structure can choose to merge with another grocery in the UK to expand its market and increase its market share. Another method of development suggested for Tesco is to look into international a lliances especially with the Asian market like china for this strategy can be used to exploit current recourses.Market development of Tesco can be achieved if they concentrate in developing new markets by creating more portfolios which is one major success secrets of an organization. More so, their alliance with this Asian market can introduce a new business in the nation of high technology. Another development is their freight service. TESCO Freight services in every Tesco stores also boost the companys sales. The services include free pick-up and close of the box.Tesco has focused their attention now on non-food products and as such developed new products in the grocery market. It is also evident that the high demand for these new products is as a result of these changes in the market and has differentiated Tesco from other grocery market. Since Tesco non-food products are developed for existing markets, it has forced other grocery market to consider this product development st rategy.Tescos ability to supply a value added services, cost advantage s and high value products than the competitors is said it be their diversification strategyThe power of Tesco brand name generate a wealth of good consumer products and its market sales for clothing and grocery items are doing well which is the star product of the company. And this is because these products have warlike pricing which gives higher profits so, Tesco Obviously has to do more advertisement and produce more to meet up with the consumers demand.The galvanising and electronic products like mp3 players, I-touch, I-pod, and other appliances are considered as the cash cow in the market since the market share is high and the industry sales is not because of its quality. Although Tesco is producing cheaper electrical supplies but when it comes to safety, the consumers go for value and quality. The dog products of Tescos are the CDs and DVDs, these products are valuable in any way. Although these are orig inal copies, low income and budgeting consumers still opt to watch movies over the net or download music instead. agitate the buy-one take-one free for every CD or DVD a customer may buy. If sales for the dog products are still stagnant, the store may resort for CD DVD movie rentals. And the problem child of Tescos business is the own-labelled products and this caused by its inability to compete successfully with the competitiveness in the UK grocery market.9.0 IMPLEMENTATIONStrategic development is the identification and leverage of the resources and competences of the organisation which yield new opportunities or provide competitive advantage. (Johnson Scholes 1999, p.25.)There is need for new strategy development and new strategy implementation which is essential for a highly competitive business like Tesco with the current market situation.There is a need to consider the external and internal factors of Tesco to set the structure of the implementation and guidelines for its new strategy. For a huge market like Tesco, we need to evaluate the market opportunities for market development, product development and integrationAnother very important influential factor of Tesco new strategy development is their innovative and diversified culture which is responsible for the implementations in the market.Feasibility psychoanalysis To implement the proposed strategy, one need to do the feasibility studies of the subject. This study will look at how Tesco projects in terms of funds and will also help Tesco identify potential target areas for the products. Tesco funding requirements and profitability in the future can also be illustrated using Feasibility Analysis. rating of opportunities if a big grocery like Tesco wants to enter a new market within the country or other countries considering its dominance in UK grocery market, there will lots of opportunities and growth prospect thus the market attractiveness can be evaluatedResource allocation product market pen etration and Implementation of cost leadership strategy will involve lots of resources. It is essential for Tesco to allocate these resources appropriately. These resources will include financial, tender resource, material and time resources.9.1 Monitoring and evaluationMonitoring measures the effectiveness and cleverness of the desired outcome of the strategic plan of an organization and it is a regular, on-going management activity which through reliable record-keeping provides information to managers. It is essential that Tesco monitor and evaluate the develop of the implementation process to enable them identify good lucks and areas of alterment. The gap analysis is logical framework which Tesco can use to review progress and enable them identify the progress of the strategy according to the specific time duration.9.2 RECOMMENDATIONSTesco, as Britains largest grocery market should maintain its position on the top and to support this, I recommend the company must open add itive 24/7 Tesco Express on high streets but with additional self-service facilities for this will increase market sales. To boost the companys sales profit and image more, recommended promotions should be done every season. Like raffle draws with corresponding prices. Tesco can also increase their sales by providing free wellness services like free medical check-up for the aged, nutritionist and medical practitioners to involve blood-pressure monitoring and free eye test. The customers will benefit the free quotation and at the same time will gain points for their clubcards. Also for Tesco to mitigate its position, they will need to add new products more so improve on the quality of product they provide to their customers