Strategic Management and Business Objectives of Tesco in the UK - Essay Example

? Table of Contents Sl No Particulars Page Number Introduction. 2 2 Business objectives of Tesco in U K 3 3 Tesco’s business strategy 3 4 Market expansion policy 6 5 Product improvement 7 6 Conclusion 12 Strategic Management Introduction: The company selected to identify the strategic management is the Tesco in UK. Tesco is seen to be the biggest supermarket in the United Kingdom and included in FTSE 100 Index. It is also the one of the largest consumer retail super markets in terms of turnover. Tesco group has approximately 4331stores and employs around 470,000 people worldwide. In addition to being the position of foremost retailer in United Kingdom, it also has the inimitable distinction of being the highest emergent Finance Company and also Internet food retailer business. To accomplish real success in worldwide market, pricing and product quality is necessary. Entry strategy of the product is also very significant for successful launching of business in other countries. The strategic preparation will facilitate every manufacture or service organization to do something that is exclusive and greatly appreciated by the customer. The strategic management is the composite, business extensive and the long terms connotation which deals with basic principles of execution and examination. So that effective strategic management helps the Tesco to increase overall profitability and productivity. “Supermarket Tesco put up for sales a wide variety of goods online, consisting of baby items and groceries, flowers, electrical commodities ,toddler things, music, video, books, CDs, , DVDs, personal finance and vouchers” (Supermarkets, 2010). Tesco has, over the years, build its reputation on the trust and assurance, the consuming public have placed on them including the safeguarding of environmental health and ushering in an environmentally friendly policies and procedures Business objectives of Tesco in U K: One of the main objectives of every business enterprises is to earn profit. Like the main objective of Tesco is to attain more profit. Tesco elucidates certain business objectives. Clients are the king of every business enterprises. So that attracts more customers’ helps to earn more profit. One of the significant aims of business is to satisfy the customer requirements and wishes. Tesco offer better environment for purchase goods and other material. Understand the clients to the quality, price and other related items of merchandise.  Tesco introduced new techniques and ideas for achieving the business objectives. Tesco illustrate that the entire retailers are one team.  Tesco also explained that clients enjoy shopping and catch the attention of various new customers by launching new items and to increase their marketplace share. The efforts taken by Tesco does serve as a pointer that the company does seem to have been taking steps for reducing carbon footprints and ensuring a more safer and healthier environmental friendly approach to business. Tesco’s business strategy: Tesco is the chief retailing business and it effectively achieved in the course of purchasing, introducing new things, developing their business in worldwide level. That time sales level raise at the level of 91%. Tesco pleased their customers’ requirements and wants.  Clients are increasing day by day and they are purchasing numerous products from there. They are selling more and maximize the earnings and income increased at the rate of 87%. Without United Kingdom Tesco established their industry in many other states and achieved lot of new clients. “Tesco supermarket has selected to practice strategic industry unit (SBU) crossways the entire of its business parts with the intention of make best use of the amount of competitiveness inside the individual marketplace regions\s. According to one of the famous author Mockler (2002: 49), says about the SBU. It would envelop… the strategic basis; magnitude and range of the operation; tactical push; the types of goods or services sell and distributed; quality of service and image; merchandise/service brand name recognition and image; extensiveness of the merchandise/service line; task carried out by the business; distribution channels; consumer marketplace provided; geographic marketplace provided; possession and monetary targets” (Tesco’s International Business Development Strategy, n.d). Tesco now focusing more on the abroad marketplace since it shows an underperformance in domestic marketplace. Tesco had been losing its market share gradually. More fight in the field, turn down non-food marketplace etc. are some of the causes for this slow development. Thus they try for more diversification in the range of the product offered by Tesco. Tesco’s success strategy was launching as many as shop they can. In UK itself, they are operating approximately 2000 stores. Tesco rival Sainsbury had only 600 shops. Tesco’s strategic move was to locate shops out of the cities. And the shops included a wide selection of manufactured goods range, whatever the consumer wish for. Tesco was the first retailer to enter into non food items in 1970s.  Tesco’s another winning strategy or policy was making strategic alliance by way of the overseas players. “Tesco supermarket was the one of the first supermarket to broaden its choice away from food, in the early on seventies, in the course of an proposal of Leslie Porter’s that commenced tea towels and other uncomplicated textile goods” (The World Market Store War - Battle of Britain, n.d). The company Tesco initially started a small grocery stall in United Kingdom After that company adopt various innovative strategy so that business achieved their objectives and it turn out to be famous in other London marketplace. Subsequently they established Tesco stores, eight years back the corporation grew successful and again opened number of small stores .It is also located on United Kingdom. One of the strategies adopted by the Tesco business is the Self service Store. This Store established by Tesco in the year 1945. That business is also enlarged day by day and subsequently Tesco developed speedily in United Kingdom. “The primary policy of cost management is one in which Tesco can endeavor to have the buck expenses in the business and recommend its goods and services to a large marketplace at the buck prices. This policy will be based on the Tesco's capability to manage their operating expenses so healthy that they are capable to price their goods competitively and be capable to produce high earnings margins, therefore having a momentous competitive benefit” (Strategic Management of TESCO supermarket: PESTLE analysis, Porter's 5 Forces analysis, Critical success factors, SWOT Analysis, VALUE CHAIN analysis, TESCO'S strategic options, Core Competences & Cultural Web, 2011). Tesco in UK is capable of producing brand faithfulness for their offerings. So that it will help customer loyalty towards the company. Tesco positioned as an authentic retail giant, one whose stature only promised to develop more intimidating to opponents as the decade progressed. One of another recent strategy adopted by Tesco to attract more customers is the E-commerce business in the year of 2000. Tesco Company also started the business into various other products like electronic goods, toys, cookware, and home furnishing in its storerooms.   Most intelligent company strategies propounded by Tesco through its eventful history has sustained it over the years of successful dealing, not only in Europe countries, but other worldwide location were it has retail stores and interest in their business. There have been various causes for the remarkable success of Tesco and in terms of marvelous consumer commitment, proximity to consumers, understanding their desires and executing them are all major subjects that require to be addressed to. One of the strategies adopted by the company is that company gives first preferences to consumer needs so that it will helps to attract more customers. So it adds value to various goods and service provided by the Tesco. Tesco has preserved solid development in sales and earnings over time and is now poised to grow more exponentially once the clouds of recession move away. The competitive benefit of the Tesco in UK could be in terms of a well diversified worldwide format, adding value to merchandise and services and offering the consumer what he wants to purchase and not necessarily Tesco offering the consumer what it require to sell. “Strategy structures and configuration apparatus are key to evaluate the business circumstances. Risk and worth trade-offs are prepared open, leading to tangible plans to add worth and decrease risk. Open plans for action, consisting of efficient planning require to be developed by supermarket Tesco as the tactical alternative ” (Strategic Management of TESCO supermarket: PESTLE analysis, Porter's 5 Forces analysis, Critical success factors, SWOT Analysis, VALUE CHAIN analysis, TESCO'S strategic options, Core Competences & Cultural Web, 2011). Market expansion policy: By entering marketplaces like Japan and China it can serve up as a key development driver of the organization’s earnings and development policy. By entering into other countries market expansion policies are necessary. The accomplishment of the partnership will be associated to three major accomplishment criteria: those three criteria’s are adequacy, viability and sustainability. Product improvement: Alterations in the business circumstances may make demand for the innovative goods and services at the cost of well-known provision. If innovative goods are developed for the marketplaces, then a merchandise development policy has to be believed by management level of the organization. Tesco is fully geared up to get together future challenges and threats in the sustainability of its business from an environmental perspective. Being a large profit-motivated business operating for many years in the United Kingdom and various other global destinations, it is fully aware of the environmental hazards and the necessitate to have proper safeguards in place that could undertake these issues from time to time. For this causes the role and duty of environmental management has been decentralized and powers and privileges conferred to line managers and officers to undertake various missions regarding safety and safeguarding of surroundings and its various impacts. In order to compete with new players in the market innovative strategic management must be maintained by Tesco. And also this strategic management is the one of the main reason that help the Tesco develop its functioning in the worldwide marketplace. What criteria has been used to conclude that it has achieved superior performance – through competitive positioning, financial performance, value creation “Tesco has rightfully claimed its dues as the store in the United Kingdom duly recognized by FTSE 100 Index. Besides being the numero uno retailer in UK, it also has the unique characteristic of being the speediest growing finance company and also Internet food retailer business” (Tesco HRM Essay, 2003). The business strategies propounded by Tesco during its eventful history has sustained it over the years of successful business, not only in Europe, but other global location where it has retail stores and other business interests. Thus, it could be said that it is not only one criteria but a series of criteria that has let to its present position- competitive position in the market as the numero uno, excellent dividend payouts of around 10 pence per share and a large number of stores throughout the world. “TESCO carries out its operations through 1,878 stores in UK, 261 stores in Europe and 179 stores in the Asian sub continent and also has diversification plans to build 184 global stores next year” (TESCO: A Corporate Profile, n.d). Thus, a great deal of value creation through selling goods at competitive prices is what differentiates Tesco from the rest. The main strategy of Tesco has been to pile the goods up and sell it as cheap as possible that has led to a lot of competitive advantages. Besides, Tesco's success in recent years has mainly come from expanding overseas, shifting to 'higher margin' non-food merchandise and maintaining a strong UK core business. Its UK success has been built on low prices, cultivating customer loyalty, offering a range of different store concepts and expanding into retailing services, such as banking and insurance. “Tesco’s focal point on non food items has led some to inquire whether it is justified to compare Tesco with other grocery retailers as it has moved out from the food sector to entail a larger consumer goods business” (TESCO: A Corporate Profile, n.d). Tesco’s business position and how it can gain sustainable competitive advantage. Tesco’s business position is indeed top ranking and it is destined for higher gains in business. Tesco could well lay first claim on a well diversified global retail format, adding value to a wide array of goods and services and providing the customer what (s)he needs to buy and not necessarily what Tesco needs to sell . It is more in terms of servicing a wide global community with food, non food products and other services and utilities all under, perhaps under one roof. The benefits that accrue are beneficial to both buyers and sellers. It could be seen in a series of business and marketing strategies that have placed in an envious position in global retail brands. Their acquisition of William Low business with just 57 stores rapidly increased over the decades, and offered Tesco forays in Scotland and the north where it was virtually unknown of. Again, Club card business has been an exceptional success now having around 50 million cardholders all over the globe. Their closeness to the customers through own brands which are available at heavy discounts as compared to other brands. As a matter of fact, Tesco has reinvented the discount shopping as a separate business model. Besides, Tesco has differential shopping experiences for separate genres of customers, like Express, Metros, Extra, One stop and Superstores which cater to different income levels and status groups, including wealthy people with high disposable income. Yet another factor is that Tesco has gained heavily from forays in US and other global markets. It is seen that 28% of its revenues have accrued from abroad, with increasing focus on emerging markets in Ireland, Czechoslovakia, Thailand, India, South Korea and other countries in Europe, Asia and the Far East. “Researcher Taylor Nelson Sofres Plc. states that 75% of grocery market is shared between Tesco and its three rivals -- Asda, Sainsbury and William Morrison Supermarkets Plc” (Wilson, 2007). It is necessary to state that the business of Tesco has evolved with the times, and also it has learned things the hard way. Starting from very humble one room store, it has evolved to multi specialty stores with thousands of square feet in space. Tesco has spread its business tentacles all over the globe and is growing from day to day, opening new stores and entering new markets. Since its products are cheap and affordable, and there is good variety also, people flock to buy it and also they are also benefited and happy with the outcomes. Besides, the newly emerging market trends are captured neatly and in a well organized method by Tesco through its survey and research bureau who feed on the marketing information and secrets to the production staff. Besides, in the event one option fails to come through, the company also has different sets of options which could be used with discretion and tact, so as not to offend the customers, and as the same time, afford opportunities to members of public to buy the best goods at cheapest price. The Tesco tag is indeed an important aspect of business and could earn the customers a great deal of mileage and fame, so it is important that they would buy and use Tesco products for their own sake. Besides, Tesco also have their own brand of products and services, like banking, insurance, thus providing an integrate product and service concept for ultimate shopping experience and consumer satisfaction. “The position of Tesco among main international retailers has resulted out of hard work and enterprise. Their strategies propounded for more than 10 years have bore reasonable results” (A Growth Business, 2009).Improve their ability to manage the organisation process by which strategies get formed & executed. “Tesco has a grounded and dependable strategy for growth. The justification for the strategy is to widen the scope of the business to enable it to deliver robust and manageable long-term growth by following customers into burgeoning markets at home – such as financial sectors, non-food and telecoms – and new markets overseas, at the beginning in Central Europe and Asia and currently in the United States” (Our strategy, 2009). The strategy has four aspects with respect to the different aspects, which considers the established areas of focus plus Tesco’s obligations on society and the atmosphere. It has to be a prosperous global retailer, to grow into a core UK business, bas successful in non food as food and also develops retailing service and put the community interests at the core of all activities.It is necessary for Tesco to consider their powers of managerial judgment that is how to assess business risk, and gain a stronger understanding of competitive challenges of a global market environment. It is important to consider how business risks could occur, especially in a large multifaceted business like Tesco, which owes a lot to its strong group of consumers and loyal clientele. The powers of managerial judgment need to be at the fore while considering competitive challenges in a dynamic and ever evolving business environment.It is also necessary for Tesco to demonstrate ability to design and continuously revise strategies in turbulent and hyper-competitive situations. It could do this not only by using time tested strategies and growth practices but also in terms of dynamic strategies to stay and sustain in a competitive business environment. Besides, although Tesco may be an experienced store with a wide customer base, the kind of challenges that now besiege it needs a complete reorientation of its thinking and business strategies. Besides, there are also unknown factors in business which may confront Tesco which could happen to any company and for which more dynamic and out of the box thinking may be necessary, rather than time trusted business strategies. Conclusions: Business mileage is an important concept in commercial transactions. From the company’s view, there is need for more thrust and direction in business methods, especially in a changing business environment. “Again, there needs to be plans that give impetus to business to grow despite economic reverses and by continuing to invest through the recession - in infra structure and in employees, the company is now well poised to grow more rapidly and improve shareholder proceeds as the global economic environment moves on” (Our strategy, 2009) Moreover, it is also seen that it is believed that by following appropriate strategies that underpin business growth through objective and rational choices, Tesco would well be able to retain its major position in the business and gain more competitive advantages .In today’s business environment, business cannot be done through force or aggressive tactics – instead a more balanced, sophisticated and non toxic approach would be more in place for their own benefits Reference List A Growth Business, 2009. [Online] Tescoplc. Available at: http://ar2010.tescoplc.com/a-business-for-a-new-decade/a-growth-business.aspx [Accessed 11 April 2011]. Our strategy, 2009. [Online] Tescoplc. Available at: http://ar2010.tescoplc.com/a-business-for-a-new-decade/our-strategy.aspx [Accessed 11 April 2011]. Strategic Management of TESCO supermarket: PESTLE analysis, Porter's 5 Forces analysis, Critical success factors, SWOT Analysis, VALUE CHAIN analysis, TESCO'S strategic options, Core Competences & Cultural Web, 2011. [Online] Ivory Research Ltd. Available at: http://www.ivoryresearch.com/sample5.php [Accessed 9 April 2011]. The World Market Store War - Battle of Britain, n.d. [Online] 321books. Available at: http://www.321books.co.uk/catalog/tesco/walmart.htm [Accessed 9 April 2011]. Tesco’s International Business Development Strategy, n.d. [Online] ItchyBrainsCentral. Available at: http://www.itchybrainscentral.com/tesco-business-strategy.html [Accessed 9 April 2011]. TESCO: A Corporate Profile, n.d. [Online] Corporate Watch. Available at: http://www.corporatewatch.org.uk/?lid=252 [Accessed 11 April 2011]. Tesco HRM Essay, 2003. [Online] Business Teacher. Available at: http://www.businessteacher.org.uk/free-business-essays/tesco-hrm-essay/ [Accessed 11 April 2011]. Supermarkets, 2010. [Online] somucheasier. Available at: http://www.somucheasier.co.uk/supermarkets-uk.html [Accessed 9 April 2011]. Wilson, A., 2007. Tesco shares on a high after regulator report. [Online] Independent.ie. Available at: http://www.independent.ie/business/stocks-markets/tesco-shares-on-a-high-after-regulator-report-1209167.html [Accessed 11 April 2011]. Read More