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Defining Business Strategy

Discuss about the Artiicle for Develop New Market Strategy for Tesco Plc.?

Tesco Plc. is the retail store giant in UK, but recently the organization is facing huge competitive issues from new competitors in the market. This has resulted in reducing the sustained revenue of Tesco Plc in the recent years (Wood, Wrigley and Coe 2016). The competitors who are affecting the business of Tesco Plc are Coles and Aldi. This has resulted in huge price war in the UK. Most of the consumers are getting huge discounts for their products from both Aldi and Coles. On the other hand, Sainsbury and LIdi are affecting the business of Tesco Plc. Thus, being the member of “Strategic Management Team”, a report will be provided to the CEO of Tesco Plc so that the organization can reduce its business impacts from competition in the recent future.

In this report, four different tasks will be delivered regarding Tesco Plc. This report will consist of strategic vision, mission, goal and competencies of Tesco Plc. Some of the factors of strategic business planning and new strategy will be discussed for Tesco Plc. in presentation. Alternate strategies that would be required for Tesco Plc will be also discussed and finally, the roles and responsibilities that would be required for the organizational personnel will be discussed as well. At the end, SMART objectives will be discussed as well for the implementation of new strategy.

The strategy that Tesco Plc. follows is long-term success. The organization has a core vision, which indicates the alignment with business practices and intermediate strategies to achieve competitive global environment. The organization has seven parts of business strategy that helps in achieving the business vision. According to Imrie and Dolton (2014), the organizational vision is the core inspirational approach that helps the stakeholders to achieve highest outcome with the progress of time. On the other hand, Brannen, Moore and Mughan (2013) pointed out that organizational vision creates the benchmark for the organization to achieve the goals and sustained corporate expansion. Tesco Plc. is built with customers and colleagues that drive the organization in achieving the best strategic decision.

The vision statement of Tesco Plc. is “To be the most highly valued business by: the customers we serve, the communities in which we operate, our loyal and committed colleagues and of course, our shareholders”. From the vision statement of Tesco Plc. five major elements are figured out, which are:

  • Needed and wanted by all over the world

  • An expanding business that is full of opportunities

  • Innovative, modern and full of ideas

  • Local winner and trying to apply skill in international market

  • Earning loyalty and trust from customers, inspiring communities and colleagues (Cushman and Burke 2014)

Factors for Strategic Plans

Tesco Plc. has its goals, mission and vision interrelated with each other, that have helped the organization to achieve the highest market share in the year 2013, but at present, the organization is facing competitive issue with rising duopoly from Coles Supermarket and ALDI Supermarket.

The mission statement of Tesco Plc. is “We make what matters better, together” (Cushman and Burke 2014). From the mission statement, it is clear that the organization is running rapidly to achieve its corporate sustainability and expansion which has to be embedded all though the strategic planning process.

While preparing the strategic plan, an organization has to take care of strategic thinking and planning system. The factors that are related with strategic planning are future direction of the competition; needs of customers; gaining and maintaining competitive advantage; Ansoff’s growth-vector matrix and portfolio analysis. On the other hand, Kumoi and Matsubayashi (2014) pointed out that for planning system, organization needs to comply with informal planning; top-down planning; bottom-up planning and behavioral approaches. For strategic planning, each of the planning components are to be related with business stakeholders, which is true for Tesco Plc. as well.

Various authors gave their respective opinions for evaluating the business techniques for developing their future business plans. According to Chen (2014), which forming business strategies, an organization has to identify its current position in the market and for that the BCG matrix is highly recommended. On the other hand, Zhao (2014) pointed out that Pestle Analysis achieves current business expansion strategy for an organization. Macdonald (2013) pointed out that SWOT analysis helps an organization to identify its internal attributes against external attributes. Thus, from the opinions of the authors, it can be said that of a large-scale organization, both internal and external analysis has to be carried out and for that BCG matrix, SWOT analysis, PESTLE analysis as well as stakeholder analysis are very much important.

According to Haddock-Millar and Rigby (2015), market entry strategy for an organization helps it become stronger in terms of expansion and thus, the organization in able to diversify its products in different market. In this way, the organization becomes more effective and competitive in terms of growth. On the other hand, Ferdous and Aziz (2014) pointed out that with market entry, an organization is not only able to enhance corporate expansion but also at the same time reduce financial risk. Thus, if Tesco Plc. is considered, then t can be said that the organization is facing issues in its home ground, which can be reduced by new marker entries in developing countries.

Evaluation of Factors

According to Foster and Noh (2013), vertical integration is the procedure for an organization to expand its business. This is because an organization will be able to achieve acquisition of such organizations that are under similar market chain. Thus, for Tesco Plc., the vertical integration will help in acquiring certain supermarkets that are running parallel with it but with considerably less revenue. In this way, the organization will be able to acquire more companies in similar chain. On the other hand, Wood, Coe and Wrigley (2014) pointed out that for super-retail stores, vertical integration is the best way as an organization will be able to acquire the suppliers and distributors, which will Later reduce the cost of business.

According to Ozdemir and Kortunay (2013), limited growth indicates that an organization needs not to do anything for expansion if it is facing serious competitive issue, but rather needs to enhance the product quality so that more consumers are retained. On the other hand, Han and Chu (2016) pointed out that only through product development, existing consumers can be retained. Furthermore, Petljak and Štulec (2015) pointed out that combination between product diversification and quality enhancement will help in achieving the best consumers. Thus, for Tesco Plc, it might go for limited growth but it will not be able to achieve business growth in future.

According to Chakraborty et al. (2014), through cost reduction, an organization will not able to hike its price in future, as consumers’ loyalty will be discouraged. Samuel, Shah and Sahay (2012) pointed out that asset reduction through retrenchment would reduce the operating cost. Thus, it can be said that for a growing business such as Tesco Plc, which is even the market leader, it will not be suitable to cut cost and reduce asset, as it was loose its position in the market.

From the above discussion, it can be said that the best suitable strategy for Tesco Plc. would be to follow Substantive Growth. This is because it has been already found that the organization is facing serious competitive issue and for that, market entry will not be the best option. The best strategy would be to follow vertical integration strategy and in this way, lead-time can be reduced by the organization and even it can reduce the price of products. If Tesco buys the suppliers and manufactuers, then in future it can regulate the competition by following monopoly and the other rising competitors will not get enough product diversification as all the suppliers would have been already acquired by Tesco Plc.

Alternative Strategy

The roles are responsibilities for strategic development is mostly related with the top executives of an organization. The top-level people include directors, managing heads and marketing heads. This is because long-term goal will be restored with the marketing heads and investors of the organization. According to Končar, Stanković and Leković (2016), the investors will be responsible for providing fund for vertical integration. The top-level management will coordinate with the middle level executives. These middle level executives will be the super-market departmental executives will need to create price fixation with other similar organizations. Moreover, in order to keep the plan, process and price similar with the organizations, several meetings will be done among the business stakeholders between the organizations, which fall under the duopoly. The lower level management will be even monitored by the upper and middle level executives.

The responsibilities for the top management will be to keep the flow of business in parallel with other competitors. This is because any change in business will lead to corporate restructuring. Thus, Tesco Plc. needs to have monthly meeting with the organization that will be under duopoly so that availability of products, price discrimination and discounts are even throughout the business.

Financial Resources

According to Sparks (2014), the main requirement for business strategy is finance, as the budget allocation will lead to actual determination of revenue at the end of the year. Within the required time, the accurate amount of budget that will be required will need to be planned so that any discrepancy and risk is mitigated prior to the implementation of strategy.

Duopoly does not need increase in human resource, but effective strategic decision has to be done by the higher-level executives (Petljak and Štulec 2015). This is because proper decision-making has to be taken from executives who are having the best experience or who are old enough.

Organizational structure has to be highly consistent throughout the time of implementation of duopoly. According to Brannen, Moore and Mughan (2013), any new strategy formation does not mean that post implementation will not be taken care of the top executives. Thus, Tesco Plc. will need to sustain the business with required resource time to time.

Specific

·         Ensuring same price of products between both of the organization

·         Ensuring same product diversification between both organizations

·         Ensuring same process of corporate sustainability

Measurable

·         Increased customer satisfaction

·         Enhanced customer loyalty

·         Increased market share

Attainable

·         Organization under duopoly will have enough strategy to support

·         Financial condition of the organization supports the new strategy

Realistic

·         Same pricing and product will lead to enhancement of competition

·         Coles and ALDI is practicing duopoly which gives the realistic picture

Timely

·         Strategy will need to be done with the next 5 months

·         Balancing of price and product availability will be done in next 6 months


Table: SMART Objective

(Source: Končar, Stanković and Leković 2016)

Conclusion

While concluding it can be said that Tesco Plc. needs to develop new market strategy, which can be named as duopoly. The competitors such as Coles and Aldi have started duopoly from the year 2015 in the UK, which has largely affected the business of Tesco. It has been found that a price war between the organizations started in the year 2015, which affected the revenue earning of Tesco. Therefore, from the analysis it can be seen that the organization needs to follow duopoly with Asda. The organization will be able to increase its business with same pricing strategy with Asda and even same process so that the consumers are sustained for longer term with involving more capital in the business. From the above report, it is sure that Tesco Plc. will be able to stand up its business in future with innovative marketing strategies.

Justification of Selected Strategy

Reference List

Brannen, M.Y., Moore, F. and Mughan, T., 2013, September. Strategic ethnography and reinvigorating Tesco Plc: Leveraging inside/out bicultural bridging in multicultural teams. In Ethnographic Praxis in Industry Conference Proceedings (Vol. 2013, No. 1, pp. 282-299).

Brannen, M.Y., Moore, F. And Mughan, T., 2013. Strategic Ethnography and Reinvigorating Tesco Plc: Leveraging Multicultural Teams Using Ethnographic Method.

Chakraborty, R., Dobson, P.W., Seaton, J.S. and Waterson, M., 2014. Market consolidation and pricing developments in grocery retailing: a case study. World Scientific, Singapore, pp.3-29.

Chen, Z., 2014. The Effect of Consumers’ Lifestyle on Trade Area Size--A Study of TESCO in Ireland and the Czech Republic (Doctoral dissertation, Department of Geography, University of Wisconsin-Madison).

Cushman, D. and Burke, J., 2014. Introduction: Tesco PLC—an Open Business. In The 10 Principles of Open Business (pp. 10-23). Palgrave Macmillan UK.

Ferdous, J. and Aziz, M.N., 2014. Consumer Perception, Behavioral Gap, and Response to Ethical Business: The UK Perspective. Journal of International Business Ethics, 7(2), p.46.

Foster, M.J. and Noh, T.J., 2013. Tesco strikes out into Asia. Frontiers of Business Research in China, 7(2), pp.289-310.

Haddock-Millar, J. and Rigby, C., 2015, January. Business Strategy and the Environment: Tesco Plc's Declining Financial Performance and Underlying Issues. In Global Conference on Business & Finance Proceedings (Vol. 10, No. 1, p. 127). Institute for Business & Finance Research.

Han, A.F.W. and Chu, Y.C., 2016. A multi-start heuristic approach for the split-delivery vehicle routing problem with minimum delivery amounts.Transportation Research Part E: Logistics and Transportation Review, 88, pp.11-31.

Imrie, R. and Dolton, M., 2014. From supermarkets to community building: Tesco PLC, sustainable place-making and urban regeneration. Sustainable London?: The future of a global city, 173.

Končar, J., Stanković, L. and Leković, S., 2016. Development Of Retail Internationalization In Multichannel Environment. Business Logistics in Modern Management.

Kumoi, Y. and Matsubayashi, N., 2014. Vertical integration with endogenous contract leadership: Stability and fair profit allocation. European Journal of Operational Research, 238(1), pp.221-232

Macdonald, R., 2013. Global Corporate Social Responsibility of Tesco (grocery Retailer, Uk). GRIN Verlag.

Özdemir, Åž. and Kortunay, N., 2013. A New Market For Global Retailers: Transition Economies In Europe. Journal of Economic Perspectives, 16(1), p.3.

Petljak, K. and Štulec, I., 2015. Explorative analysis of corporate social responsibility reporting: the case of leading European food retailers.InterEULawEast-Journal for International and European Law, Economics and Market Integrations, 2(1), pp.45-58.

Samuel, M.V., Shah, M. and Sahay, B.S., 2012. An insight into agri-food supply chains: a review. International Journal of Value Chain Management,6(2), pp.115-143.

Sparks, L., 2014. 07 tesco’s supply chain management. Logistics and Retail Management: Emerging Issues and New Challenges in the Retail Supply Chain, p.149.

Wood, S., Coe, N.M. and Wrigley, N., 2014. Multi-scalar localization and capability transference: exploring embeddedness in the Asian retail expansion of Tesco. Regional Studies, pp.1-21.

Wood, S., Wrigley, N. and Coe, N.M., 2016. Capital discipline and financial market relations in retail globalization: insights from the case of Tesco plc.Journal of Economic Geography, p.lbv045.

Zhao, S., 2014. Analyzing and Evaluating Critically Tesco's Current Operations Managemen. Journal of Management and Sustainability, 4(4), p.184.

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