Strategic Planning And Environmental Analysis Of Tesco UK Essay.

Learning outcomes assessed:

1. Assess the relationship and the need for compatibility between strategic management and functional management policies.
2. Outline and understand the historical development of corporate planning through strategic management and strategic flexibility.
3. Identify and analyse the internal and external influences on organisational  objectives and strategy.
4. Critically evaluate the need for flexibility in strategic management and the practical limits of quantifying corporate strategy

You are responsible for ensuring you understand the policy and regulations about academic misconduct. You must:

• Complete this work alone except where required or allowed by this assignment briefing paper and ensure it has not been written or composed by or with the assistance of any other person.
• Make sure all sentences or passages quoted from other people’s work in this assignment (with or without trivial changes) are in quotation marks, and are specifically acknowledged by reference to the author, work and page.

For this project, your task is to analyse the chosen organisation/industry. You must identify, with examples, whether your chosen firm is a leader, niche player or follower in its industry/market and once you have done this you must analyse, at an in-depth level, the organisation's environment and what are its competitive strategies now and what options it may have for the long run. Within this you are to:

Section 1:

• Critically discuss the way in which strategic planning can benefit your chosen organisation.
• Critically discuss the role of environmental analysis (internal & external – macro/micro), as part of the strategic planning process.
• Undertake an environmental analysis (internal & external – macro/micro) using different tools discussed on the module, which will be used toinform the rest of the report.

Section 2:

• Prepare an evaluation report, of your findings, via a SWOT (from Section 1) - you should highlight what the analysis reveals about your chosen organisation.

Section 3:

• Finally, make recommendations on the future direction of the firm, for the medium-long term of the organisation.

Section 4:

• Using appropriate change management theory, discuss how employees can be best managed to transition through a period of strategic change and commitment to it could be achieved.

There are many changes occur within the business that companies would handle in their lifetime process. These changes can be related to the internal issues or advancement in the technology. In the context of strategic changes, this kind of change impacts the whole process of the business. The role of the strategic management is huge for the company as it helps to make sure the aims of the company that facilitates to attain the objectives of the company. This report will portray the information related to the strategic planning in which Tesco UK will be selected so that a better understanding can be made regarding this concept. The role of environmental analysis will be demonstrated under this assignment by taking consideration of the selected company. This report will be categorized into four sections in which the first section will compile with strategic planning and its impact on the business of Tesco UK. On the other hand, the second section will provide the evaluation report including SWOT analysis. In the next, section 3 will cover the implications in order to make changes in the business. At last, section 4 will entail appropriate change management theory.

Tesco was introduced by Jack Cohen in 1919. The first store of Tesco was opened in Barnet in 1931 (Tesco PLC, 2018). The operation of the Tesco in the UK is the largest within the group, more than 3400 stores in which around 300,000 employees are working together in order to provide great services to the customers in a better way (Meng, 2018). The store of UK is prominent in providing good quality of services to the customer in the context of the sharper prices, stronger ranges, and better services. Tesco has been giving various products and services to the customers in order to provide a wide range of foods and products to the customer at one place (Cushman and Burke, 2014). Majorly, the company has specialization in food and drink but this is well-known for diversified areas such as internet services, financial services, telecoms, healthcare, dental, clothing and many more. It is the company that has been listed under the London Stock Exchange that had a £18.1 billion market capitalization (Tesco Plc, 2017). The vision of the company is to be a famous and innovative company. The mission of the company is to develop the core values for the customer in order to get their lifetime loyalty.  

A strategic planning is a vital process in developing to undertake the mission of the organization. The strategic planning process gives a model to make decisions regarding allocating the organizational resources and address confronts in order to take the benefits of opportunities that rise along the process (Brito and Harkiolakis, 2017). Tesco can be benefited through an effective strategic planning by which the company can make strategic decisions so that they can attain objectives of the company by keeping all employees on the same pitch. There are some basic steps by which Tesco can make an appropriate strategy to achieve competitive advantages.

Importance of Strategic Planning

With the help of above process, Tesco will be advantageous because it will help out to determine various planning and process in order to review the mission and vision of the company. in the first step, the company would be helpful to prepare the plan which facilitates them to outline the procedure which needs to be followed by all employee to attain the objective of the company, in next step, the vision and mission of the company are to be considered or reviewed. SWOT analysis or environmental scan helps organization to understand the view point of external and internal analysis (Falkner, 2017). Tesco has significant issues related to the strategic as it can be evaluated and examines under this process. The strategic goal facilitates people of organization to work significantly on a similar project in order to reduce the impact of strategic issues within the organization.

The role of the environmental analysis within the business is huge as it facilitates company to look forward after analyzing various issues. Macro environmental factors are those factors that cannot be handled and influenced the decision making process in the company. it is necessary for the division in the organizational environment to look at the company from the theory of the system point of view where companies are considered as open systems fetching information from the external environments and providing the services as well as products  back in to the external environment. Micro environmental factors include the suppliers, distributor & dealers, the public, competitors and the customers. Macro environmental factors include the factor of political, economical, social, technological, environmental and natural.

Micro and macro environments have an effective impact on the growth of the marketing campaigns of Tesco. Hence, it is necessary for Tesco to consider such aspects in depth way at the time of making decisions in the context of the company.  Considering these factors would be helpful for the company to develop the suggestion for the marketing campaign of the organization and the reputation of the brand in the long run.

The external factors in the context of Tesco are defined below which will be helpful in giving better understanding regarding macro environmental analysis.

Macro environment (PESTLE Analysis)

Political and legal factor

Political and legal are the major factor to influence Tesco in higher manner. it ahs been analyzed that Tesco is operating its operations in six countries i.e. Turkey, the Republic of Ireland, Europe, Hungry, Slovakia and Poland. It is the company that get huge support from the government to provide an equal opportunity of job from the lower paid employees to the higher paid employees. There is a free trading bloc in Tesco that give huge benefit to the government. It has been analyzed that Tesco has contracted with China in order to maintain the deliberated series of joint ventures for the aim of enlarging the business in China (Felgate and Fearne, 2015). It would be helpful for the company to keep focus on the expansion on different countries as well.

Discuss the role of environmental analysis

Economic factor

The economic factor is the major concern for the Tesco as it affects the profits, demands and the leverage costs. It is necessary for the Tesco to make aware from any kind of changes in the politics, like changes in the policies, taxation and other factor related to the economic that can impact the convenience of finance. It has been found that the company is working independently but overall it is dependent on the market of UK, where the company has a 30% market share (Okeyo, 2014).

Social factor

There is a variety of social changes in the market of UK that demonstrates the movement of UK in the direction of the bulk shopping and non-stop shopping. There is a number of products that offered by Tesco according to the demand of the customers that are similarly influenced by their beliefs and attitudes. The customers have become more concerned about their health and they are moving for organic foods. The company has involved in social welfare as well in order to increase attention of society towards education for which the company sells the school uniforms and other education equipment by considering all age groups (Felgate, Fearne, DiFalco and Martinez, 2012).

Technological factor 

Advanced technology is using by the company to satisfy the customer from their services and the products. The technologies are shelf labeling, electronic fund transfer system, radio frequency recognition, and self-checkout machines used by the company to maintain its services. Along with that the company is maintaining the distribution process in an efficient manner.

Environmental factor

To make friendly environment, the government has taken initiative to reduce the use of packaging. In the research of National Statistics (2010), it has been found that the most of the customers prefer the reusable bags of Tesco that gives good impression on the corporate social responsibility of the company. The carbon footprint has been considered by the company which gives a better outcome to the company in the context of developing the products such as orange juices, potatoes, dairy products and non-food items. Along with that this company has introduced the Greener Living Scheme in order to reduce environmental issues.

Micro Environment (Porter’s five forces)

Bargaining power of suppliers (low)

It has been found that the suppliers have the tendency of incline towards main grocery retailers and fear of losing their business contract with huge supermarkets (Malik, Fearne and Wu, 2015). It makes the firm position of Tesco in positive manner to get the lowest potential price from the suppliers.

Bargaining power of buyers (high)

The switching cost is lower where products have an insignificant differentiation. It is expected that the customers are getting attracted towards the low price which pushes them to switch from one company to another.

Threat of substitute products and services

The threat of substitute products and services are low because the substitutes of main food retailers are considered as the small chains of organic shops, convenience stores which cannot be considered as the threat to Tesco because it offers quality products to the customers at lower prices.

Undertake an environmental analysis

Threat of new competitors

The threat of new competitors is low because newcomers need huge capital investments to enter in the supermarket industry. There are major brands exist in the food retail market such as Asda, Tesco, Morrison, and Sainsbury (Vu, 2016). These brands are reported for 80% of all shopping in the UK.

Intensity of competition rivalry

The company faces intense competition in the supermarket industry as there is number of direct competitors such as Sainsbury, Morrisons and ASDA, which are rivaling with each other over promotions, products and price irregularly. ASDA gives intense competition to Tesco as the market share of the company is amplified from 16.6% to 16.8% at the time of fiscal year 2010.

SWOT analysis has revealed many facts in the context of Tesco Company. The strength section of the SWOT analysis shows the main aim of the company is to keep focus on the affordability of the product that ensures the customer to get products as per their budget (Rahman, 2015). With respect to weakness, it has been found that in 2009 number of products are recalled that put negative image on the company. The main focus of the company is on expanding the business globally. In the context of the threat, it has been analyzed that the company faces a massive challenge due to decline in income and rise in unemployment rate (Yamoah, Fearne and Duffy, 2014).

It is recommended to the company to keep focus on the Matrix as it is necessary for the company to set up the strategy in order to attain the competitive advantages. Cost leadership strategy should be adopted by Tesco for the purpose of attracting large number of customers towards the services. This strategy is relied on the ability of Tesco to control their operating costs so well in order to give price their products as per the competitive market. The cost leadership strategy will be helpful for the company to attain high margins value. On the other hand, the company should focus on the differentiation strategy through which the company would be able to differentiate their products in comparison of other products. The company should develop its own products at affordable rate so that the customer can get attracted towards the products and services.

Above image depicts narrow and broad scope of competitive advantages. It is recommended to Tesco to focus on increasing profits by decreasing costs, at the time of charging industry average prices. It has been found that Tesco has some competitive strategies in order to compete with the rivals. The company have strategies such as making their shopping journey in order to reduce the price of the products so that customer spends less. The cost leadership strategy can facilitate in attaining high competitive advantages to Tesco through which the company can lead globally in the supermarket industry. It is recommended to the company to keep focus on the issues as well while adapting the cost leadership strategy as it focuses on the company and not on consumer demand. Tesco should focus on the decorum of the company and along with customer demand the company should satisfy the employees as well.

Tesco can develop Lewin’s Change management theory within the organization in order to manage employees in the strategic change. It entails three steps such as unfreeze, transition and freeze.

Unfreeze

It is the first step of this model in which the company endeavors to overcome resistance to change (Burke, 2017). There are various factors within Tesco such as low tolerance to change, the shock of the new policy, employee resist change which causes the resistance to change (Cummings, Bridgman and Brown, 2016).

Transition

It is the phase in which Tesco can implement the strategies to make changes within the company and provide them description that they will be getting benefitted from amendments. However, in this case many will raise voice against change but it is the responsibility of the company to move ahead with planning and demonstrates them about the benefits of changes (Hossan, 2015). Training should be there so that the employees do not get afraid due to involvement of new technologies.

Freeze

It is the last step of Lewin’s model that takes place in the organization when the people have embraced changes. It is necessary for Tesco to ensure that the amendments are taken into consideration all the time (Samantara and Sharma, 2015). With a new environment and confident attitude of the employees with the help of the management will boost employees to work more efficiently.

Conclusion

It can be concluded from the above discussion that strategic management and change are a prominent factors for the organization as it helps the company to move ahead with the latest technology and an effective planning. The report has been made on Tesco in order to elaborate the strategies in a more effective manner. The discussion has been made on the macro and microenvironment tool in which PESTLE analysis and Porter’s five forces analysis have been done on Tesco. SWOT analysis has been made in order to bring a better understanding regarding internal and external factors. The recommendations have been shown in the tabular form with involving prior level, duration, benefits and implications. At last, the change theory has been implied so that employees of the company can involve in the strategic change in an effective manner.

References 

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Burke, W.W., 2017. Organization change: Theory and practice. Sage Publications.

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

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Falkner, R., 2017. Business power and conflict in international environmental politics. Springer.

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