Definition of Strategic Management
An organization is mainly influenced by its internal and external factors, and the company needs to be aware of the overall environment of the business in order to prevent any crisis. In several cases, the decision making procedures are highly influenced by the internal and the external factors; as a result, it becomes important for the company to understand the variations of the overall environment through strategic management. Strategic management helps a company to develop appropriate strategies based on the concerns of the company in order to mitigate the issues as soon as possible (Rosenbaum, More and Steane 2018). This assignment discusses the importance of processes taken by the company to evaluate the specific strategies along with the impact of external and internal factors on the business. The UK based company, Tesco, has been selected as the preferred business option for this assignment in order to analyze their strategic plans to develop the overall business.
Strategic management can be considered as an approach of continuous planning, monitoring, evaluating and assessing the important factors related to the organization, which will also help them to achieve their key objectives. Changes can occur at any time in the internal or external environment of the company; however, it is crucial for the company to assess changes and develop strategies in order to avoid complications and crises (Kaletnik and Lutkovska 2020). It is beneficial for increasing the effectiveness of the business operations and managing employees simultaneously in an organization.
The purpose of strategic management is to develop strategies that help in achieving the key objectives of the company at a faster rate. Therefore, it is important for the company to align its strategies with the mission of the company. Tesco is one of the largest supermarket chains based in the UK, and planning to expand its business in several international markets. The main mission of the selected company is to achieve the top rank as the service provider of grocery products, not only in the UK but also in the international markets. Tesco also plans to acquire a larger customer base and develop stable relations with the stakeholders as well as a robust supply chain.
Business expansion requires appropriate research regarding the business environment, most importantly the influencing internal and external factors. In order to understand the internal and external conditions, there are several tools that Tesco implements on a frequent basis. The majority of the companies trust Swot Analysis for evaluating the internal factors and Pestle analysis for evaluating the external condition of the business (Rachinger et al., 2018). The internal analysis provides insights into the strengths and weaknesses of the company, and the external analysis provides the company clarity regarding the external conditions such as political scenarios, customer demands, technological advancements and many more.
A Critical Assessment of the Process used by Organizations to Determine their Strategy
With the help of the SWOT analysis, the company determines the opportunities and threats after evaluating the strengths and weaknesses. The major strength of the company is that it offers high-quality products at low prices, which also provides them with a strong competitive advantage. Therefore, the company has the opportunity to attract the attention of new customers and can penetrate into the international markets easily. In terms of weaknesses, Tesco does not have any promotional or marketing strategies in order to increase recognition of the company (Woohyoung, Kim, and Hwang 2020). Therefore, the threat of increased competition is always noticeable for the company. Therefore, it can be considered that the selection of SWOT analysis has helped the company to gain insights regarding their valuable points as well as the main concerns, which acts as a barrier to their business progress.
In terms of analyzing the external factors, the company utilizes the PESTLE analysis in order to understand the political, economic, social, technical, legal and environmental factors. Based on the political condition, the company tries to develop strategies that will help the company to get governmental help for expanding into more markets. With the help of the economic analysis, the company predicts the sales and revenue structures; they will be getting from a specific market (Lin and Peng, 2018). The economic stability of the customers can also be analyzed. Socio-cultural factors, as well as technological advancements, also help the company to understand the flow of innovative ideas, which is beneficial for increasing the overall business quality. This process also helps the company to prevent any legal offensive measures, as they can follow the legal procedures of the local or national government through analysis in order to sustain in the market for a long time. Lastly, the environmental analysis helps the company to develop strategies that align with the sustainability perspectives of the customers and satisfy their demands. It also aids in increasing the reputation of Tesco among the customers and increasing sales and revenues.
Apart from these two important procedures, Tesco also applies tools like stakeholder analysis models and BCG growth-share matrix. These tools are beneficial in terms of determining the market factors, such as the growth of the competitors and the demands of the important stakeholders associated with the company (Putra and Muzakir, 2020). Tesco, in some cases, contacts consultancies without taking help from these tools to develop strategies. One of the important factors that the company tries to maintain is to check on their resource availability more frequently in order to develop appropriate strategies, which will prevent them from getting into any resource availability issues. A company can develop any strategies to achieve quick success from the market; however, without the accurate number of resources, the company will be unable to proceed with the strategies; therefore, it is important to understand the capacity of the company before developing any strategies. One of the most important concerns of the company is that the strategies that they developed must align with the company’s direction in the market. The strategies need to be developed on the basis of the company’s key objectives, or else the strategies might fail to improve the overall business condition. The company can apply goal-setting theory in this type of situation, which states that it is important to define the goals of the companies before planning actions or strategies to achieve them (Guo, and Wang, 2019). According to goal setting theory, an appropriate set of goals help the company to feel motivated so that they can achieve them with appropriate strategies and methods. The progress of the company despite the external and internal influences is evaluated by the company so that they can identify the remaining issues and mitigate them with the help of strategic management planning.
The Mission of the Company
The business environment differs from one organization to other. The internal factors can be controlled with the help of developed strategies; however, it is difficult for Tesco to control the changing external environment on a regular basis. Globalization is one of the most important external factors for a company that cannot be controlled (Singh and Misra, 2021). The global markets are expanding, and the companies can easily access the customers of the international markets in order to develop a strong customer base. However, these types of changes influence the company to develop better strategies that fit the current situation and help in preventing any issues (Fuertes et al. 2020). Another major external crisis is the current global COVID 19 pandemic scenario. In order to prevent the outbreak of the deadly virus any further, the government imposed lockdown restrictions. In this situation, customers were unable to take the services of the company, and the stores of Tesco were also closed, which led to a huge financial loss for the company (Monte, 2021). However, with the help of strategic management, the company was able to improve the financial condition of the business. One of the main strategies of the company was to provide offers and discounts to the employees, such as Bumper Christmas offer, in order to increase the sales and increase the profit return. The strategy was considered successful because the company managed to earn 2.6 billion British pounds through this strategy and revamp the condition of the customer base (Herold and Lee, 2019). Brexit was another major issue that changed the business policies of several UK based companies. After Brexit, UK based companies like TESCO had to change their financial structure and business policies to align with the changed political laws. This process was time-consuming, and the company had to invest a lot of money in order to successfully manage the changes (Tang 2018).
The internal factors can also be referred to as the corporate culture of the company, which differentiates them from other competitors in the market. It includes the mission, vision, values, practices, and people of the employee, on whom the company has full control. The mission and vision are the main purposes and key objectives of the company. Tesco plans to become the largest grocery product service provider in the UK and gain recognition in the international markets as well. In terms of values, Tesco prioritizes its customers by satisfying their every need, as well as maintaining the corporate culture. Tesco is known for implementing corporate social responsibilities and their concern regarding the social, environmental and economic factors. Tesco has been currently focusing on the environmental sustainability factors in order to safeguard the environmental condition from getting any worse and developed several child education programs to help the children who are in need of special care. The company has also developed corporate governance in order to mitigate several rising issues, which has the capacity to obstacle the company to grow in the market. Some of the issues are continuous changing of the leadership, various factors of social responsibility, increasing fraud cases, rapid globalization, lack of shareholder interests and takeovers, as well as mergers of the companies. One of the major influencers of the business strategies is the economic variations. During the pandemic situation, the profits o the company declined due to the pandemic related costs, almost by 892 million British Pounds. This indicates that external factors can also impact negatively the company, for which the company might re-structure every planning and plotting of the business strategies they have done before. Currently, the UK government has invested in R&D facilities to welcome more technological advances in the country (George, Walker and Monster, 2019). Technology plays a crucial role in Tesco as it is important in terms of bringing innovation to the company and increasing the quality of the products in order to attract the attention of the customers.
Company Processes for Determining Strategies
Tesco was founded by Jack Cohen in 1919, with the purpose of satisfying customers’ daily grocery needs under one roof. Currently, as of the latest reports, Tesco has become the third-largest grocery retailing store on a global basis, with revenue of 53 billion British pounds, which is much higher than other supermarket chains in the UK. One of the important strategies that Tesco has followed is to increase their number of stores within the UK markets so that the consumers can take grocery products from this one company only. At present, Tesco has employed over 2,80,000 employees, among the 2100 stores, in the UK markets (Emma 2022). Tesco currently focuses on the competitive positioning of the brand in the market, with the help of porter’s five force model analysis. It has helped the company to understand the five important factors in the market, such as powers of the company, threats of new entrants, substitute threats, suppliers and the position of the competitors. It has been observed that Tesco has a simple business plan, which can be easily imitated by the other new entrants in the market (Sparks 2019). The shareholders, as well as the suppliers, are one of the most important factors of the company, as the company is highly dependent on the suppliers who provide them grocery products from all around the world. It can be a concern for them, as the number of new entrants threats is rising gradually. During the global pandemic situation, the stores of the company were shut; however, Tesco initiated its online delivery services in order to provide services to the customers and deliver services to their homes. This process has helped them to maintain the connection with the customers and revamp their business conditions even after the worst situations.
Tesco has successfully developed strategic management within the workplace, which will help them to grow in the market. However, there are still several weak points that the company struggles with, which indicate that they have a scope of improving the strategic planning process. The company can make a formal process of the plan and decide whom to include and decide the activities, such as decision making, incorporating executives of the company in strategic planning and organizing the plans one by one (Krummel 2022). The company needs to focus on the growth opportunities in the market before deciding on a strategy because it will help them to achieve a competitive advantage and increase overall sales revenues. Monitoring and reporting the entire progress of the company is also important in order to identify the issues and gaps, which can be solved using appropriate strategies. The company needs to address their strategic issues, such as technical problems, planning disruptions, disagreements and many more (Damanpour, Sanchez?Henriquez and Chiu, 2018). Until and unless the company is comfortable with defining their problems and worries, they will not be able to develop strategies that will help them to mitigate the internal as well as external issues.
A Critical Evaluation of the Impact of Internal and External Environmental Variation on Organizational Strategy
Conclusion
The overall discussion in this assignment concludes that strategic management is important in terms of making appropriate strategic choices in accordance with the internal and external demands of the business. It has been observed that Tesco undergoes several analysis tools and methods to determine the overall condition of the business. Analysis of the internal and external factors also allows the company to understand the main concerns, and in order to overcome the issues, the company can develop appropriate strategies. One of the major factors that make the company develop specific strategies is the influence of various factors like customer demands, social scenarios, environmental conditions and technological advancements. In addition, strategic management also helps the company to satisfy the demands of the important aspects by predicting their needs through the analysis procedures. The reason behind the need for developing accurate strategies is to achieve a competitive advantage from the market and reduce chances for the competitors to acquire a larger number of market shares than the company. Implementing business development strategies becomes appropriate when the company is aware of its certain strengths and weaknesses. Therefore, it can be concluded that, in order to satisfy the demands of the important business factors and reduce the negative impact of the internal and external factors, it is important for the company to analyze their overall business condition, which will also prevent them from getting into any crisis situation.
References
Damanpour, F., Sanchez?Henriquez, F. and Chiu, H.H., 2018. Internal and external sources and the adoption of innovations in organizations. British Journal of Management, 29(4), pp.712-730.
Emma Bedford., 2022. Tesco: Revenue 2019. Statista. Available at: https://www.statista.com/statistics/490931/tesco-group-finance-revenue-united-kingdom-uk/ [Accessed March 13, 2022].
Fuertes, G., Alfaro, M., Vargas, M., Gutierrez, S., Ternero, R. and Sabattin, J., 2020. Conceptual framework for the strategic management: a literature review—descriptive. Journal of Engineering, 2020.
George, B., Walker, R.M. and Monster, J., 2019. Does strategic planning improve organizational performance? A meta?analysis. Public Administration Review, 79(6), pp.810-819.
Guo, L. and Wang, Z., 2019. Ratio analysis of J Sainsbury plc financial performance between 2015 and 2018 in comparison with Tesco and Morrisons. American Journal of Industrial and Business Management, 9(2), pp.325-341.
Hanelt, A., Bohnsack, R., Marz, D. and Antunes Marante, C., 2021. A systematic review of the literature on digital transformation: Insights and implications for strategy and organizational change. Journal of Management Studies, 58(5), pp.1159-1197.
Herold, D.M. and Lee, K.H., 2019. The influence of internal and external pressures on carbon management practices and disclosure strategies. Australasian Journal of Environmental Management, 26(1), pp.63-81.
Kaletnik, G. and Lutkovska, S., 2020. Innovative Environmental Strategy for Sustainable Development. European Journal of Sustainable Development, 9(2), pp.89-89.
Krummel, D., 2022. Expansion in the Retail Sector—Market Entry Strategies in Consideration of Formal and Informal Institutions: A Tesco Case Study. Open Access Library Journal, 9(2), pp.1-19.
Lin, C. and Peng, J., 2018. Analysis and Solution of the Problems in the Distribution of Suning Tesco. Transportation Management, 1(1).
Monte, A., 2021. A study of value chain reconfiguration processes under Covid-19 pressures: the case of Tesco PLC in the United Kingdom.
Putra, Z. and Muzakir, M., 2020. Competitive Environment Analysis in Global Retail Companies Operation Strategy: A Data Envelopment Analysis (DEA) Based Approach. AFEBI Management and Business Review, 5(1), pp.16-36.
Rachinger, M., Rauter, R., Müller, C., Vorraber, W. and Schirgi, E., 2018. Digitalization and its influence on business model innovation. Journal of Manufacturing Technology Management.
Rosenbaum, D., More, E. and Steane, P., 2018. Planned organizational change management: Forward to the past? An exploratory literature review. Journal of Organizational Change Management.
Rosnizam, M.R.A.B., Kee, D.M.H., Akhir, M.E.H.B.M., Shahqira, M., Yusoff, M.A.H.B.M., Budiman, R.S. and Alajmi, A.M., 2020. Market opportunities and challenges: A case study of Tesco. Journal of the Community Development in Asia (JCDA), 3(2), pp.18-27.
Singh, K. and Misra, M., 2021. Linking corporate social responsibility (CSR) and organizational performance: The moderating effect of corporate reputation. European Research on Management and Business Economics, 27(1), p.100139.
Sparks, L., 2019. Tesco: how supply chain strategy supports retail success. The Business & Management Collection.
Tang, X., 2018. A Multimodal Critical Analysis in Business Discourse: the Case of the Corporate Annual Report of Tesco.
Woohyoung, K., Kim, H. and Hwang, J., 2020. Transnational corporation’s failure in China: Focus on Tesco. Sustainability, 12(17), p.7170.
Yang, D., Wang, A.X., Zhou, K.Z. and Jiang, W., 2019. Environmental strategy, institutional force, and innovation capability: A managerial cognition perspective. Journal of Business Ethics, 159(4), pp.1147-1161.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
