A Critical Analysis Of Tesco’s Competitive Advantage And Operational Strategies

Choosing organization and competing it with the business area

Critically evaluate methods of planning and organising efficient operations and networking.

Analyse the problems of controlling component activities and of controlling quality.

Critically discuss methods of project evaluation and of scheduling resources  .

Tesco was founded in the year 1919 and had its headquarters in England. It is a retailer company sells grocery and general merchandise products. Tesco stands second in the world economy of retail market and had it stores across the world in 12 countries (Tesco.com, 2016). In terms of profit making it is the third largest business in the world. Tesco has diversified its business in fields other than retail such as internet service provider, telecom, financial services, etc. The company expanded its business by acquisition of other business and by normal expansion.

The report discusses the planning methods involved in organizing the business and networking. The problems related to the management of the business is analyzed and discussed in the report. For analyzing the business different sources are searched and the resources are scheduled. Several operation strategies are included in the report like operation strategy formulation, implementation, monitoring and control of the operational strategies. Some recommendations are given in the report that helps Tesco or improving the operation strategy used in the company.

The selection of the business organization to compete with the other business depends on some of the factors affecting the business. It was essential for the report to choose the right business and discuss its operational strategies. The selected business must be unique and makes clients more prone to pick the item over the opposition (Grant, 2016). If there is no competitive advantage the business has no novel technique for attracting clients.

Here in this report “Tesco” is choosen for brief analysis of its business process and the competitive advantage it have over other companies in the same business area. Tesco have some competitive advantage over other business process like it have better customer service, high quality of products and the stores are located in convenient locations throughout the country (Hill, Jones and Schilling, 2014). The company reduces its overhead cost and thus it reduces the cost of its product and gain advantage from the companies same product in the market (Ward and Peppard, 2016). Competiting with the other business companies helps Tesco to identify its business strengths and thus the company can take advantage of its strengths for increasing their business.

Operation strategies of Tesco

There are four operation strategy applied by Tesco for competing with the other companies and reach the goal of the company. The operation strategies are as follows:

Operations strategy formulation

Operations strategy implementation

Operations strategy monitoring

Operations strategy control

Business strategy of “Tesco” is developed after its directors have considered numerous elements and settled on some vital choices. These incorporate building up a comprehension of what business the organization is in (the organization’s central goal), breaking down and building up a comprehension of the business sector (ecological examining), and distinguishing the organization’s qualities (center abilities) (Park, Ungson and Cosgrove, 2015). These three components are basic to the advancement of the organization’s long-term arrangement, or business technique. In this area, each of these components is portrayed in point of interest and show how they are joined to detail the business procedure. Evaluation of the current business strategies are deeply analysed and new strategies that is to be implemented in the system is discussed in the report.

In context to the globalization of the business in Tesco it is analysed that they need to have a strong supply chain network and analyse the global market to adopt a strategy for expanding their business. There are fewer competitors that have strong background as Tesco and thus it would be easy for Tesco to emerge in the global business (Piercy and Rich, 2015). Tesco is a strong retail brand and is located in more than 100 countries. Tesco should take corporate social responsibility for the society and the community for whom it is serving. This would attract more number of customers and more number of countries would also be gets attracted and thus helps in the further expansion of the business. The CSR policy adopted by Tesco would give several advantages like free promotion of the brand and increasing the brand value, less cost would be incurred for marketing (Hill, Jones and Schilling, 2014). Social support of the local community would be available to the business and thus if any problem arise in the business it could be solved locally.

The operation strategy can be divided into three categories in the organization like corporate level strategy, business level strategy and Functional level strategy.

The corporate level strategy is the most important strategy that is required to be implemented by Tesco. The implementation of corporate strategy to the business is related with the allocation of the resources to the business and establishing relationship between them (Dooley, 2015). The strategy is expressed as a goal for the company or vision statement.  

Operational Strategy	Issues
Corporate Level	Which type of business should be focus by Tesco? Which business should be acquired or divested? How to allocate the resources to the business? How to establish relation between the businesses?
Business Level	How to compete in the business? What is the goal of the business? What are the strategies adopted in the business?
Functional Level	How the business strategy is contributed by the function? What are the strategic objectives in the function? What are the technologies used in the function?

Operation strategy formulation

Table 1: Different operation strategies implemented in the business

(Source: Martínez-Ruiz et al., 2016)

The business level strategy is mainly concerned with the exact business unit of Tesco that compete inside the organization and focuses on their aims and objectives of the strategic development (Simons, 2013). The business strategy is built depending on the corporate strategy of the business and the business strategy may lack in resource supply. The main aim of the business level strategy is to achieve the goal of the business. The business level strategies also consist of the strategies adopted for the growth of the business.

The Functional level strategy is implemented as a bottom level strategy (Haddock-Millar and Rigby, 2015). It comprises of the individual functions like marketing, operation, finance etc. The functional level strategy manages the resources and it is concerned about the contribution of each entity to the business process. The main objectives are identified in the function level and the technologies that are involved are also stated here. 

The application of too many strategies to the business process of Tesco might have no fruitful result for growing the business. Evaluation of the strategy is necessary that is to be applied to the business process and monitoring the work process for the proper implementation on the specified field (Costa et al., 2013). It is also necessary to identify the issues in the business process and the goals of the company. The advantage of monitoring the strategic plan involves that the organization is working according to the plan (Zhao, 2014). A document should be made describing the strategic plan and it should specify the role of the individuals who are allocated each task to achieve its goals. There are some key questions that should be followed for the monitoring and evaluation of the strategic plan like if the goals of the organization are achieved following the strategic plan, check the goals that are achieved within the time limit, check if the individuals have adequate amount of resource available for completing the task assigned to him (Mukoyama and Dawson, 2013). The task should be monitored at a regular interval of time and the management committee should use reports for the annual operation plan and they can identify their progress of their work. Therefore it is necessary that whoever is allocated the task their record should be kept so that their progress can be monitored.

The implementation of a strategic plan in the current business process of Tesco requires economic support. Cost of deploying skilled labour, infrastructure cost and other expenses related to the marketing should be controlled by the manager (Fernie, 2013). The operational control of Tesco manly focuses on two major things that are whether the strategy is being implemented in the business system as it was planned and the outcome result for the implementation of new strategy is expected before. The operational control can be carried out in four types such as implementation control, special alert control, premise control and operation monitoring (Ittner and Keusch, 2016). The managers should review the progress of the work assigned to the individuals and analyse the performance of the employee. Strategy for controlling the organization should be developed based on the goals of the organization and the strategy that establishes specific objectives perspective of the overall strategic plan adopted by Tesla. The control of the operation in Tesla acts as a benchmark for the progress of the company and reaches its goal (Braithwaite and Christopher, 2015). The operational implementation provides additional cause to forward the information. The control to the access of operational implementation states that whether the implemented strategy has a need to change or small modification is required or is perfect for the business. Some analysis like value chain analysis, benchmarking, and quantitative measurement of the performance should be carried out in order to have a proper evaluation of the business system.

Implementation of Operation Strategy

Conclusion

From the above report it can be concluded that Tesco have high competitive market in the current changing market environment. Tesco have adopted new operation strategies to expand their business and have the leading position in the present market. Tesco must adopt its business according to the change in the marketing circumstances. The business strategy followed by Tesco should be continuously learning process because the market is changing at every moment of time. Thus the effectiveness of the implemented strategy and the time taken for the implementation of the new strategy is dependent on the growth of the company. The strategy should be analysed before implementation and established at all the levels of the business. All of the strategies adopted by Tesco should be related to each other and supporting the strategies. Thus the operational strategy adopted by Tesco defines the business process and focuses on the resource that converts the characteristics of the competence to its competitive advantage. Customer social responsibility can be implemented in the business to increase the brand value and reach more customers. This also increases the loyalty of the customer towards the brand and thus the Tesco can gain more profit from the business adopting this policy.

The report discusses about the formulation and implementation of the operation strategy in the Tesco and some of the recommendations for the implementation of the operational management are given below:

Implementation of CSR strategy: This would help Tesco to increase its brand value and consumer awareness towards the brand. The CSR if adopted by the system would increase the value of the brand towards the country and it can get help from the government. It would also be easy for Tesco to expand its business to other countries.  

Improve the customer service: Tesco should increase the value of its goods to the customers and become loyal to them and induce trained staff at all the levels of its business. This would make their process easy and they can get the best output from the trained employees.

Application of cost leadership strategy: A cost leadership strategy can be applied in the production unit of Tesco, this would reduce the manufacturing cost of the products and Tesco would be able to gain highest margin of profit or reduce their product cost to compete with its competitors.

Investment in new technologies: Tesco can apply new technology like implementation of RFID system in their business process to automate the tracking of the product such as input and output of their products. The staffs can also search for the product and serve the customer in a less amount of time.

References

Braithwaite, A. and Christopher, M. (2015). Business Operations Models: Becoming a Disruptive Competitor. Kogan Page Publishers.

Costa, A., Keane, M.M., Torrens, J.I. and Corry, E. (2013). Building operation and energy performance: Monitoring, analysis and optimisation toolkit.Applied Energy, 101, pp.310-316.

Dooley, K. (2015). The business case for environmental sustainability: embedding long-term strategies that enhance environmental and economic performance. SUSTAINABLE FUTURES IN A CHANGING CLIMATE, p.191.

Fernie, J. (2013). Distribution strategies of European retailers. Logistics Information Management.

Grant, R.M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Haddock-Millar, J. and Rigby, C. (2015). Business Strategy and the Environment: Tesco Plc’S Declining Financial Performance and Underlying Issues. Review of Business & Finance Studies, 6(3), pp.91-103.

Hill, C.W., Jones, G.R. and Schilling, M.A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Ittner, C.D. and Keusch, T. (2016). Incorporating Risk Considerations into Planning and Control Systems: The Influence of Risk Management Value Creation Objectives. The Routledge Companion to Accounting and Risk, London: Routledge.

Martínez-Ruiz, M.P., González-González, I., Jiménez-Zarco, A.I. and Izquierdo-Yusta, A. (2016). Private Labels at the Service of Retailers’ Image and Competitive Positioning: The Case of Tesco. In Handbook of Research on Strategic Retailing of Private Label Products in a Recovering Economy(pp. 104-125). IGI Global.

Mukoyama, M. and Dawson, J. (2013). 3 Global portfolio strategy as a new strategic paradigm. Global Strategies in Retailing: Asian and European Experiences, p.55.

Park, S.H., Ungson, G.R. and Cosgrove, A. (2015). Co-aligning Strategies with Management Structures and Systems. In Scaling the Tail: Managing Profitable Growth in Emerging Markets (pp. 91-107). Palgrave Macmillan US.

Piercy, N. and Rich, N. (2015). The relationship between lean operations and sustainable operations. International Journal of Operations & Production Management, 35(2), pp.282-315.

Simons, R. (2013). Levers of control: how managers use innovative control systems to drive strategic renewal. Harvard Business Press.

Tesco.com. (2016). Tesco | Online Groceries, Homeware, Electricals & Clothing. [online] Available at: https://www.tesco.com/ [Accessed 11 Aug. 2016].

Ward, J. and Peppard, J. (2016). The Strategic Management of Information Systems: Building a Digital Strategy. John Wiley & Sons.

Zhao, S. (2014). Analyzing and Evaluating Critically Tesco’s Current Operations Managemen. Journal of Management and Sustainability, 4(4), p.184.