Critically Evaluating Tesco’s Business Strategy Development And Implementation

Discussion

1. Critically evaluate company’s approach to business strategy development and implementation.  Identify the outcomes of the selected strategy?.

2. Identify and discuss the possible strategic direction that the selected company could follow in the future for sustainable competitive advantage?.

3. Discuss the implementation challenges which may be required in the company and make your recommendations upon how the needed changes could be achieved?.

As the ulterior objective of every private organization is profit maximization, it must invest much time as well as money, in chalking out a well organized, strategic plan, which will help the company in achieving its targets within a given time, as well as to improve the performance of its employees. According to Greenly, one of the biggest advantages that strategic management offers to an organization, is that it provides a basic framework to the employees as to which direction they need to work for ensuring maximum possible success to be achieved.  Tesco, as one of the biggest international grocery chains, located in UK, has adopted effective business strategy over the years, so that it can anticipate the future problems and opportunities, exploit fully what is available at present and most importantly can help the company in making quick decisions (Verbeke 2013).

1. Tesco as a multinational UK organization, is one of the leading retailers in the world, and much of its success is being attributed to the effective business strategy, it has adopted over the years, since 1919. Although initially started in UK, the company has successfully expanded its market in various corners of the world, such as China, Czech Republic, India , Malaysia and many more. The reason behind the wide expansion of its market and smooth operation in the business world, was mainly possible due to its seven part strategy plan, that has set goals, over the year for enjoying maximum possible growth over the years. The Vision of the company over the years has been to offer the customers the most modern, convenient and innovative method of shopping, and keeping in mind the point of customer satisfaction, the organization has recruited more than 20,000 employees, in every two years, and has offered promotion and incentive benefits to each deserving employees. The result was employee satisfaction, who did their best, to ensure that the customers feel wanted and they continue to be the consumer of Tesco. The next part of Tesco’s business strategy has been the policy of global expansion. Tesco has expanded its market over different countries and regions of the world, and the total number of stores Tesco has, at present, sums up to 6,784, which has benefitted the organization in achieving wide recognition globally, as well as earning an enormous sum of revenue (Wood et al. 2016). Tesco has always prioritized the convenience and comfort of its customers, and keeping in consideration, its vision to provide maximum customer satisfaction, Tesco has introduced much innovation in its way of serving the consumers. In fact, one of the biggest disadvantages of today’s world is that the people are too busy with their scheduled duty hours, to find out time to visit the grocery shops physically. Tesco has discreetly turned this disadvantage into a benefit, as they have introduced the idea of virtual shopping, whereby the consumers can order, at their convenience, anything they need and the staffs of Tesco, will be more than happy to serve them. Tesco has however also put much importance to train its employees, in acquiring technical as well as communication and soft skills, to help them adapt to the changing method of shopping.

Tesco’s business strategy development and implementation

Figure 1: Training Program Introduced for Employees by Tesco

(Source: Babajana et al. 20140

Finally, one of the most important part of the business strategy adopted by Tesco, is that although it primarily deals with food and grocery products, it has started diversifying its market, by selling some other products apart from grocery products, such as consumer goods, financial services, etc (Imrie et al. 2014).

The implementation of the business strategy has largely benefitted Tesco over the years, since its inception. Tesco has set up its stores, in many countries across the globe, which has helped the company, not only in gaining a huge amount of revenue, but also gaining worldwide recognition, and has created much brand awareness among the companies.

Figure 2: Bar Chart Representing the Market Expansion of Tesco

( Wood et al. 2014)

Further, it has helped Tesco in getting cheaper workforce, opening up an inclusive workplace, and interchange of new ideas and policies, for planning a better future for the organization. Hence, Tesco, like other major companies, such as Wal-Mart or Metro, is expanding its business in other countries, to compensate the sluggish growth in the local market (Lowe et al. 2012). Mobile payment, virtual shopping, regular consumer-organization interaction through customer programs, has largely benefitted the sale growth rate of Tesco. In fact, Tesco was the first supermarket chain to have introduced digital experience in marketing, long back in the year of 1997, and consequently the sale of the company has doubled to £ 6.25 Billion. Tesco knew that it is not sufficient to incorporate the concept of innovation and technology in their market, but the employees must be well trained and equipped to operate the new mode of retail marketing. As a result of good training in vocational as well as communication skills, the employees are being praised by the consumers to be very responsive, flexible and productive in their process of serving them.

2. It is an indisputable fact that Tesco has been successful in introducing a very effective business strategy that has benefitted the organization incredibly over the past few years and consequently the organization has succeeded in becoming the third largest retail store in the world. However, further recommendation can be done, in terms of the business strategy of the organization to ensure future success of the organization. In the present world of technological innovation and scientific advancement, any company is largely benefitting from the interaction with consumers through social sites. The sales growth of Tesco is dropping each year by 3.8 % in UK, and on a thorough investigation, it was being discovered that Tesco is the second least engaging organization on social sites. The matter is indeed quite surprising that Tesco has as many as 1.4 million followers on Facebook, and yet the engagement rate of the organization is as low as 0.98 %, which is much lower than the rival organizations, such as Aldi (Jones et al 2013). Even a tesco spokesperson has said that the company believes in interacting with the customers, when required, but it does not believe in advertising its products. However, this approach has to be amended as even large and most reputed organizations are also engaging more in the use of social media tools, such as Facebook, Twitter, Instagram, to keep their customers updated about their products and service. Tesco should engage more time in social media, to keep its customers updated about the recent offers and latest products. Although, Tesco is a very reputed organization that may not need much recognition, yet it can benefit largely from social media, as it will help the organization gain a huge number of consumers. They can also interact with the consumers on a daily basis, and answer their complaints, grievances, and other sort of queries related to the organization. Further, it will enable the company to know its target group of audiences, by enabling the targeting option on Facebook and Google+ (Aral et al. 2013). Tesco is not the only retail market in business, and in the presence of Mark and Spencer, Saintsbury’s and others, the organization is facing real trouble, as the other retail markets, are providing huge discount on shopping, as compared to Tesco. Tesco, if decides to retain in top position, in future, it must prioritize the benefit of the consumers. It should introduce attractive offers, lucrative vouchers and coupons to its customers, as a gesture of rewarding them for their loyalty. Most of the consumers were found to say that they prefer to avail the service of Aldi, because the organization offers them huge discounts. Tesco can also increase its customer retention, by offering Buy One Get One Free offer, or Free Tuesday offers. These offers have largely benefitted retail supermarkets, such as Woolworths. Besides, the organization should also engage itself more in CSR activities. The company should employ energy efficient methods of production, scientific method of disposal of wastes, practice of contributing a share of its revenue for the promotion of some greater social cause, such as bearing educational expense of village children. However, it is not sufficient to employ CSR programs, unless it is publicized among the masses. The wide recognition comes from the publication of stories about these CSR activities, through the official website, as well as the social sites of the organization (Soroka et al. 2014).

Possible strategic direction for sustainable competitive advantage

3. The formulation of a strategy plan is easier than its implementation, as the proper execution of the business strategy is very resource intensive, and as research suggests 90% of the organizations fail to fully materialize their business plan. Hence, Tesco should also be very mindful of the potential challenges, it can face in the process of implementation of its chalked out, future business strategy. First, Tesco will require to choose the officials of the organization, who are capable of performing the roles of the leader. In most of the cases, it happens, that after the formulation of the strategy, the employees and even the management authority lose interest in the implementation of the plans, and the plans start collecting dust. Hence, the management authority of Tesco should select leaders, who will be chiefly responsible for the implementation of the business strategy plans (Rothaermel 2015).

As it has been recommended, that the organization should be more active on the social sites, such as Facebook, Twitter, etc, however, the organization should be well aware of the possible negative consequence of the same, if not managed properly. According to a survey that was conducted by Cisco Systems, most of the organizations using social networking sites, have no formal process of managing the same, and hence 1 out of every 5 organizations are becoming the victim of negative feedback from the consumers (Yu et al. 2013). The consumers can now more openly express their frustrations and disappointment with the particular organization, and as such the negative comments, shared publicly, on these social sites can also go viral, and harm the overall reputation of the organization. Keeping this in mind, the organization, is required  to have a well-organized marketing team meant solely for the social site management. This team should be able to keep a track on the consumers, and every time they post something negative about their organization, these employees must resolve the dispute at once (Aral et al. 2013). If this team does not reach out to these disappointed customers at once, and seek an apology or explain the situation, it may aggravate the thing, ultimately running the organization’s reputation. Tesco will need to have a very organized social marketing team, and this will imply a huge cost for the company. The next thing to be considered, is the question of allowing discounts. Although offering discounts, will attract many consumers, Tesco should remember that allowing too much of the same, may make the consumers devalue the brand value of Tesco, as a whole. As Stephanie Bulls states, that offering discounts can cheapen a brand to the consumers. Further, adding too much discounts, just to be in the competition, can ruin Tesco, by bringing a huge loss for it. CSR will be able to provide competitive advantage to Tesco, yet this whole process is not free from challenges. The installation of pollution free devices, energy effective means of production would require huge amount of investment. Tesco would also need to train its employees, would also need to pay for different environmental products, discontinue the use of polythene packets, and also be more careful about the way it disposes its waste products (Servaes et al. 2013).

Implementation challenges and recommendations

Tesco is one of the leading organizations in the retail sector, and hence it must adopt proper business strategy to ensure future success as well. However, the foremost point to be remembered, here is a very organized plan, and effective team planning, whereby each employee should be aware of the business strategy, and each should work like a cohesive team towards the achievement of the same. Although, CSR activities and social media marketing would imply a huge investment, if the company can manage to interact with the maximum possible number of consumers, and can publicize about their CSR activities widely through the official website of the company, it will be able to draw a huge number of consumers (Lee et al. 2013). The potential consumers can easily be influenced to use the service of Tesco, through the online presence of the organization, and this can compensate the huge amount of investment. To boost the sales, the company can introduce coupons, discounts, and offers, but it must ensure that it also sets a limit for the same (Akerlof et al. 2014).

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