Tesco Plc. Strategic Management Analysis (Essay Sample)

Tesco Plc. Strategic Management Analysis Presented By Name Institution Instructor Course Title Date of Submission Table of contents Introduction……………………………………………………………………………….4 Retail industry analysis……………………………………………………………………4 Tesco Plc. market analysis………………………………………………………………...7 Tesco’s position within a competitive market…………………………………………….7 Porter’s five forces analysis ………………………………………………………………9 Tesco’s five forces of Porter……………………………………………………………..10 Tesco Plc. resources and capabilities ……………………………………………………11 Tangible resources…………………………………………………………...11 Intangible resources………………………………………………………….12 Summary of Tesco’s Resources and core competencies ……………………12 Evaluation and justification of the strategies available to Tesco………..……………….14 Appendix………………………………………………………………………………...16 Table A……………………………………………………….………………16 Table B…………………………………………………………….…………16 Table C……………………………………………………………………….16 Table D…………………………………………………………………….…17 Bibliography……………………………………………………………………………..18 Introduction Proper strategic management is very important in any industry. A company with that has a well-structured strategic management benefits in increased financial gains and better coordination of the workers and other resources of the company (Hitt, Ireland, and Hoskisson, 2011). Therefore, it is important for in company to have strategic management in order to gain competitive advantage. Retail industry analysis The UK changed its planning regulations in 1990s. The new regulations restricted local firms to open new large-scale out of town supermarkets. These regulations are at times seen to limit productivity in the retail industry. Additionally, other EU members have also experienced low productivity in the retail industry. Land use regulation by the government is the main cause of this slow growth (Griffith and Harmgart, 2008). The retail companies have to change as a result of the Financial Reporting Standards. According to PWC (2012), the Retail industry is regulated with both direct and indirect taxes. There are other taxes included such as environmental and property taxes. Since employees are very important in the development of any large retailer, retailers are adopting newer methods of recruiting innovative employees. The retailers are also developing new products that best fit in their target market. To best fit in a society many retailers have developed the Corporate Social Responsibility strategy. Under this strategy, retailers get a chance to market their products and at the same time gain new customers. Ko and Lee (2011) noted that retailers are rebranding products in Asia to match the cultural heritage of the many Asian countries. Advancement in technology has greatly improved the retail industry. For instance, many retailers in the world have developed online shops. Customers can purchase products then the retailer delivers to the provided addresses. According to Accenture (2012), retailers require to change new technology in order to analyze customer data, to increase the company’s competitive advantage and to improve efficiency. Technology has improved efficiency in the retail industry. Products manufactured and packaged under technology are of high quality. As a result of high quality products retailers have acquired larger market shares and have attained high rates of customer retention. In the United Kingdom market and many other markets business are required to operate under the laws of the country. There are various laws that regulate the retail industry. The industry players have to consider the employment laws and the consumer protection laws of the country. According to Directgov (2012), any industry operating in the United Kingdom must respect the rights of the employees. For instance, all employees have a right to minimum wage, working hours and equal pay to all workers. Consumers in different markets are protected by the consumer laws of that country. In Europe consumers are protected by the weight and measure act and consumer protection act. The retail industry is very much involved with customers both directly and therefore has to observe the rules in all countries. Retailing is very significant to the country’s economy. Bhatia (2008) noted that the United Kingdom economy has grown as a result of the shift from the manufacturing industry to the retail industry. In fact, many other countries have improved their economic growth through development of the retail industry. The industry is also affected by some economic factors. For example, government rise in the interest rates may force the retailers to increase on the product prices. Bhatia (2008) also noted that an increase in disposable income by the government improves the retail industry. Many retailers deal with food product. Special emphasis is therefore placed on green products. Retailers are adopting green products as part of rebranding to attract customers. Additionally, some countries require retailers to have a strategic plan detailing how they are handling environmental issues. Several products have been rejected in certain markets for their contribution in environmental degradation (Polymath, 2011). Tesco Plc. market analysis This is an international retailer currently operating in 14 countries including the United Kingdoms and the United States. In addition to its retail banking, the company also provides insurance and retail banking services through its Tesco Bank. It also owns online businesses which include online grocery and Tesco Direct. According to Reuters (2012), the company’s brands include Tesco Express, Life Span, Tesco Bank, Tesco Phone Shop, and Tesco Extra. The company is the largest supermarket in the UK with 48 outlets in the country. Belfast Telegraph (2011) noted that the company employs more than 9,000 in the retail business in the Republic of Ireland. Further, the company expected to create more employment opportunities in the construction sector. According to Yahoo Finance (2012), Tesco headquarters are located in Cheshunt in the United Kingdom. Tesco’s Position within a competitive market The company operates in grocery stores, convenience stores and truck stops, financial information, communication, and local exchange carriers industries. Its main products are the food products (Hoover’s, 2012). The company does well in all the business line it operates. Hoover’s (2012) noted that the company is the world’s fourth Grocery retailer and the best retailer in the United Kingdom market with a total of 5,380 stores in the country. In addition, the company’s online retail shop is the market leader in internet delivery services in the country. A comparison of the company with its competitors in the retail business shows that it is among the best retailers in the world (Table D). In all the markets Tesco operates in, competition is stiff. For example, in the United States Market the company competes with other large retailers such as the Trader Joe’s, Wild Oats, Bristol Farms, Albertsons, Wal-Mart, Pavilions, and Ralphs (The Guardian, 2007). Most of these retailers are multinational retailers and have successfully captured the market. For instance, the Guardian (2007) noted that Trader Joe’s is well organized and has a large market share. In 2010, Amazon entered the UK market to compete with Tesco. According to Wallop (2010), though Amazon is famous for its low prices, its management acknowledged that it would be hard to compete with Tesco given the market share it holds. In order to remain competitive in such a market the company has developed several strategies that have seen it retain its competitive advantage. The company is constantly expanding into developing markets. This strategy has received a lot of criticism from some of the competitors. According to Stamp (2006), there are concerns in developing countries that large companies such as Tesco are taking advantage of weaker regulations in those countries to expand and destroying the existing firms. Corporate Watch (2004) noted that the company’s rapid growth both in size and competitive advantage could only be attributed to the investments overseas. An increase in market share has resulted in low prices thereby attracting more customers. In addition, despite starting as food products retailer, Tesco has incorporated other businesses such as banking and insurance. The non-food industry has contributed much to the development of Tesco both in the UK market and internationally. According to Global Sources (2012), currently Tesco holds a 4% market share in non-food related business in the United Kingdom. Additionally, the company is strategizing on developing its non-food business in all its major stores around the world. The company offers gifts to its customers in order to increase sales. An example is the current promotion of Tesco books on Tesco. Com. Any customer who spends more than £15 gets free delivery (Tesco, 2012). These promotions have made the company’s online retail shop to be the best in the market. There are also other attractive competitions for customers to participate in. th...