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Strategic Analysis

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TABLE OF CONTENTS INTRODUCTION ...........................................................................................................................3 Strategic analysis of Tesco in Food retail industry in UK ..................................................... 3 Value Chain analysis ................................................................................................... 4 PEST analysis ............................................................................................................... 5 SWOT analysis ............................................................................................................ 6 Competitive analysis and growth measures ........................................................................... 7 Porter 5 force analysis ................................................................................................. 7 Strategic options ........................................................................................................... 9 Action plan ................................................................................................................. 10 Branding strategies ............................................................................................................... 12 Adaptation strategy..................................................................................................... 12 Cultural and behavioural factors ................................................................................ 13 CONCLUSION ..............................................................................................................................13

ILLUSTRATION INDEX Illustration 1: Value chain analysis ..................................................................................................4 Illustration 2: Shares of Supermarket in UK....................................................................................6 Illustration 3: TESCO sales figure ...................................................................................................7 Illustration 4: Porter Five force analysis ..........................................................................................9 Illustration 5: Porter Generic strategy ............................................................................................11 Illustration 6: Ansoff's growth matrix ............................................................................................13

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INTRODUCTION Strategic development of the company plays a crucial role in developing high growth prospects for the businesses. Companies critically analyze the internal and external business environment in order to examine the opportunities and threats for the future development. Strategic business development focuses on combining vision, mission and organizational objectives with the market opportunities in order to create effective impact on the overall development of businesses (Nwankwo and Gbadamosi, 2010). Present study evaluates the business prospects of Tesco and examines various strategic position of the business in the competitive market. This study seeks the growth strategies for the companies in order to create a competitive edge within the market.

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Strategic analysis of Tesco in Food retail industry in UK Tesco is one of the leading retail business units which has effectively established its business in the global market. Business operations of the company seek to deliver highly developed services and products in order to enhance consumer perception within the global economy (Palmer and Quinn, 2007). Tesco seeks to create an edge within retail business sector in order to gain high consumer value and perception for the buyers. Company focuses on becoming a market leader to develop high market share and enhance wide sales in the economy.

Tesco food is a successful venture of the company which focuses on developing market growth prospects in the local as well as international market. Food retail segment has developed high market competition within the market. This has lead in limiting the growth prospect of various companies (Bichueti, 2014). To develop a competitive edge and effective position, organizations are focusing on enhancing strategic positioning of the company. Internal and external business factors help in analyzing the effective position of the company in this competitive market. There are following measures that help in analyzing the strategic position of Tesco.

Value Chain analysis

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Illustration 1: Value chain analysis (Source: Cravens, 2006)

The value chain management of Tesco consist of six primary activities. That is as follows, 

Inbound logistics: Inbound logistics in Tesco refers to the transport, storage and delivery of the products that are manufactured. In this process the organization manages the transport and storage of the raw material.



Operations: Further, this stage include the production process, development of goods, testing, packaging and all other activities that transform the raw material into finished products.



Outbound logistics: The next step is distribution of finished products to the customers via warehouse, order fulfillment, transportation and distribution management etc.

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outbound logistics of Tesco takes care of these after manufacturing process (Sellers, 2007). 

Marketing and sales: This step include advertising and promotion of the products.

Marketing and selling activities of Tesco include Channel selection, product promotion, selling, product pricing, retail management etc. Sales and marketing activities in Tesco are performed to monitor that products are transferred in targeted customer groups.



Service: After marketing and promotion service is a crucial factor of value chain management (Wang, 2007.). Because this step focuses on after sales support to the customers. furthermore, there are some secondary activities also to manage value chain of Tesco,

These are, 

Firm Infrastructure: The infrastructure of the Tesco includes the planning management, legal framework, financing, accounting, quality management and general management of the operations of the organization.



Human resource management: Currently Human resource management of Tesco is in critical condition because its main focus was on developing sales and production.



Technology development: To reduce production cost and to develop new products and to increase customer service facility Tesco is focusing on New technologies development.



Procurement: Finally the procurement of products include the purchasing activity of the manufactured products.

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Illustration 2: Shares of Supermarket in UK (Source: Supermarket shares. 2015)

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Illustration 3: TESCO sales figure (Source: Tesco sales growth rate. 2015) PEST analysis 

Political factors - Performance of Tesco's is highly influenced by the country's legislative and political conditions. Global political factors directly influence the performance of the company which includes tax rates, laws and the policies. In this government encourage the retailers to increase their employment (Kotler, 2012).



Economic factors- Economic factors like economic growth and inflation rates directly influence the demand, cost, profits and prices. Company should be more aware about the changes in policies and rates, such as changes in taxation rates could effect the finance accessibility (Mudie and Pirrie, 2012). It is important to figure the growth of company in national and international market. In recession time the rate of unemployment increases Toll Free No: +1 213-929-5632 E-mail: help@instantessaywriting.com

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than the spendings of customer would be decreases and they would switch to lower price products. 

Social factors- In current scenario customers are moving towards the bulk shopping.

Therefore, the type of goods are demanded by the customers is mostly influenced by social changes and their beliefs. Customers are continuously changing their approach about the food because of they are more aware about the health issues.

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

Technology factors- For the Tesco, technology is a critical factor for the supply chain management. Company develops their supply chain management in order to achieve the competitive advantages and it also enhance cost efficiency (Figge and et. al., 2002). They needs to be more attentive to the updated technology because improvements may be an good opportunity, like to improve the company's distribution service mobile technology is better option because customers can select their preferred food through their mobile.

SWOT analysis Strengths 

Company has won awards for its customer service and retail excellence.



In the world company is one of the most profitable and largest supermarket and retailer.



The company have brand name with global recognition and they stands in term of good quality, service and selection.



Improved and enhance the use of technology and service experience.



With the help of 'Tesco Clubcard' its loyalty scheme, they have proven their customer retention strategy.

Weakness 

Some subsidiaries and retail formats have not performed well as they were expected.



For the sales company is highly dependent on the UK and Europe.



They do not spent more time and resources on the development.

Opportunities 

In other countries where company is not performing well, there could be opportunity of joint venture in which local companies can help them in market research to improve their performance.

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

Online shopping is also a great opportunity for them and they can also offer them home delivery service (Olson, Slater and Hult, 2005).



In private label market there are more opportunities.

Threats 

There are more competitors in the industry of supermarkets.



Credit crunches and recessions would continue to threaten the profitability and market share.



Rising of raw material cost also threatens the company's profitability.

Competitive analysis and growth measures

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Illustration 4: Market share of Retail industry Tesco is the largest retailer firm in UK and mentioned company having potential competitors who are significantly affecting the corporate performance as they are giving stiff competition. Mentioned company have major competitors namely Asda, Sainsbury, Morrisons and including Tesco they are treated as big four. Waitrose is another organization which is Toll Free No: +1 213-929-5632 E-mail: help@instantessaywriting.com Get best Macroeconomics Essay Writing Service by the expert writers of Instant Essay Writing, we provide best writing services to students.

coming into the footprint. Apart from these, mentioned companies activities are also affected by German Grocers namely Aldi and Lidl as they are also trying to explore their market in UK. Lidl have almost 10000 stores in 28 countries and Aldi have almost same number of stores in 18 different countries of the world.

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In order to meet all the challenges, this topic explains the Porter Five force for analyzing the competitive position of the country. Along with it, different strategies adopted by Tesco to develop high impact on the growth and development within the UK market. Further, action plan has been prepared by considering Ansoff matrix in order to grow different market of the world either through expansion or by developing new products and services to the tally.

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Illustration 5: Porter Five force analysis (Source: Peng, 2002)

Porter 5 force analysis In order to analyze the competitive position of the company Porter five force model will applied in the study. This will help in creating an in-depth analysis of market position and competitiveness of the company in current market scenario. 

Threats of new entry: The retail industry has developed an effective infrastructure and competitive standards within the market. Tesco is one of the most efficient players of the market. The organization has developed an effective measures of competitiveness. New market entrants will require high amount of investment to develop competitive position within the market (Doole and Lowe, 2005). Moreover meeting competitive standards of Tesco is very difficult for the new business firm. Thus Threat of new entrant is low in the market.



Threats of substitutes: Retail industry has expanded highly in the UK market. Tesco is facing wide range of competition from domestic players such as M&S, ASDA, Sainsbury, Waitrose etc as well as the international players such as Aldi, Lidl etc. The low cost market leaders such as Aldi abd Lidl has shook the UK retail market widely.

This has created wide impact on organizational growth. Thus it can be analyzed that the Toll Free No: +1 213-929-5632 E-mail: help@instantessaywriting.com

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company has high threat from substitute firms as product differentiation within the industry is considerable low. Moreover the loss of 6.5 billion GBP of Tesco has weakened the market position of the company significantly. 

Buyers power: The consumers in the retail sector are not loyal. High market competition has developed high buyer power within the market as the effective promotional measures offered by the firms helps in attracting new buyers efficiently towards the products and services with attractive offers and attributes within the market (Elbanna, 2010). Thus bargaining power of buyer is very high for Tesco. Effective promotional measures of Aldi are attracting more and more new consumers towards the company. This reflects the low impact on company's market position.



Supplier's power: The raw material and good demanded by tesco are not exclusive and are easily available within the market. The company thus keeps a close check on price effectiveness of the supplires in order to gain cost leadership within the market. Thus it can be analyzed that supplier's power is low for the company as it can easily switch to other suppliers to take cost advantage.



Competitive rivalry: Tesco is operating the business operation in perfect competitive market. Increasing rate of competition form national as well as international sellers has increased the rate of competition for the organization thus creating high competitive rivalry for the firm. The retail market of UK is highly competitive which has posed wide challenge for the organizational growth.

Strategic options and action plan

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Tesco recorded a loss of 6.4 billion GBP in the year 2015. This downfall cause wide impact on the organizational growth measures. Increasing market competition and ineffective management practices of the company has posed wide threats to the organization. In order to deal with such situation the company should implement effective strategic options for growth.

In order to develop international leadership within the market Tesco may implement variety of measures. The following analysis will help in examining the best measure to develop high growth prospect for the company.

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Il lustration 6: Ansoff's growth matrix (Source:Wang, 2007) 

Market penetration: Current market analysis of the company represents high market competition for Tesco. This poses wide range of challenges for the organizational growth.

The company thus must develop effective focus on the UK market to create and enhance market sales within the selected segment. Tesco foods should develop product range to create a differential market position within the company. Moreover enhancing promotional measures will help it in fighting competition form companies such as Aldi, lidl etc.

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

Product development: Enhancing the range of products will helps the company in enhancing market sales for the unit (Figge and et. al., 2002). Developing new products for UK market will help Tesco in generating high demand within the current market.

Moreover offering customized products will help the company in developing the competitiveness of the firm.



Market development: This measures may prove to an strategic move for the business to enhance market share within the competitive environment. Markets of Asia has high potential for growth and development of food industry. High rate of population within the sector will help the company in creating an effective impact on the development of Tesco. Thus the company must develop an effective infrastructure for food industry in the Asian market in order to develop high market sales. Various measures such as joint venture and new market entry may helps the business in enhancing the market share.

Moreover franchising is yet another effective strategy of market development which will helps the company in enhancing market growth.



Diversification: This is most risky measure for developing growth prospects of the business. The current market position of Tesco is critical and demand effective analysis on developing market share in order to enhance the profitability and competitiveness of the company. Thus Tesco should not indulge in the diversification activities to enhance

In order to develop the competitive advantage of the company Tesco must closely examine the following factors.

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Illu stration 7: Porter Generic strategy In order to analyze the firm’s competitiveness with the market application of Porter generic forces will help in delivering the effective results for the growth and development of the company. Strategies adopted by Tesco foods to develop high impact on the growth and development within the market are: 

Cost leadership: Tesco has adopted effective measures to enhance the cost effectiveness within the market. Company has developed a system of developing supplier relations which has helped business in enhancing the cost effectiveness within the market.

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Moreover focusing on managing and maintaining low cost factors has helped company in creating high impact on market demand (What is marketing management. 2015).

Company's ability to control operating costs has helped it in enhancing its competitiveness within the industry.

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

Differentiation: This strategy focuses on developing a wide variety of products and services within the market in order to enhance the competitiveness of the firm. Tesco food delivers high quality of food options to the consumers through managing the quality and standards of products. Company has effective measures to develop product range in order to attract new consumers within the market.

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

Focus: This segment deals with creating a well-developed impact of cost leadership or differentiation on a narrow segments of the market to enhance high market sales. UK market is one of the most prominent markets for Tesco. Company has developed an effective means of business measures in UK (Cravens, 2006). However developing high range of products as per the tastes and preferences of UK consumers will help company in enhancing its growth measures.

On the basis of given analysis it can be effectively determined that Tesco hs developed high cost leadership within the market. This has helped the company in developing effective brand image within consumers. Developing product range and enhancing focus of the company in UK will help it in developing effective competitive edge.

Market growth

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International expansion is one of the most effective measure for growth and development of business. Enhancing the target market market helps the companies in creating a wide impact on developing market share and sales well. As discussed above Tesco must develop the market in Asian market in order to enhance the sales of the company and developing the profitability measures as well (Mudie and Pirrie, 2012). In order to develop a global brad in the region Tesco food segment must adopt the adaptation strategy. In order to expand the Tesco market into international market the company will adopt the expansion measures through strategies such as Joint venture and franchising. These measures will helps in developing market share and revenue for the firm in the current critical situation. Consumer behavior analysis is one of the most significant factor that the organization must examine closely to plan growth measures as retail industry seek high volume sales. Mraket such as India, Europe and Australia has high prospects for growth.

Furthermore, different strategies will help Tesco to grow a new market which will increase more of the productivity and revenue. Furthermore, Tesco is a popular brand and and it has been recognized whole around the globe. Moreover, for expanding the business, Tesco have to conduct a mirco and macro environmental analysis for that particular area so that company will focus on demanding the product which is mostly demanded by individuals.

Adaptation strategy to adopt behavioural factors

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This strategy focuses on developing an effective brand image of the company the international market by adopting the cultural and demographic differentiation of the place. The adaptation marketing strategy, forgoes universality in favor of tailoring marketing to appeal to the cultural or demographic particulars of customers in the new market. Tesco food must adopt this measure in order to develop the strategic position of the products and services in the international market. The strategies those will help the company for the same are: 

Brand adaptation: To develop the effective brand image of products and services within the Asian market Tesco must develop an effective measures of enhancing the organizational growth by enhancing localization of the brand. The use of foreign language tools and element will help in re-positing Tesco efficiently in Asian market ("The effort of marketing our brands needs to have a more positive impact on society" Marc Mathieu, 2015). Marketing messages for a brand that work in one market or market Toll Free No: +1 213-929-5632 E-mail: help@instantessaywriting.com

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segment can fail spectacularly for others thus Tesco must develop effective brand image adhering local needs. 

Product adaptation: The products and services offered by the company must be modified to meet the local supplies and demands as well. Tesco foods should develop product range as per the local needs to enhance demand within the market. This measure will help the organization in creating cost effectiveness within the market.

Cultural and behavioural factors The cultural and behavioral factors which will help the Tesco in enhancing the sales within Asian market are as follows: 

Cultural values: This factor is significant for analyzing the local needs of the consumers.

To develop business prospect of Tesco within Asian market the company must effectively cultural values of the market. For example Indian market demands vegetarian food while Chinese market has huge cultural significance for rice and fish. Thus effective analyzing of cultural values will help the company in developing effective brand image for the organization.



Consumer perception: Analyzing consumer demands efficiently helps the company in creating wide impact on the growth measures and international development of the company. Tesco must closely analyze the consumers needs and preferences in order to develop a global brand within the market (Fripp., 2012). Effective analysis of consumer perception will help the company in promoting and developing the product meeting local needs and demands. For example perception for beef in Indian market is contradictory from that in Chinese and Japanese market. Thus the production process and promotional measures has to considers consumer perception efficiently.

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CONCLUSION The above report reflects the effective measures that are demanded by Tesco in order to create an effective impact on the growth of the company in both national and international market. The effective implementation of strategies helps in examining that the company has high prospects for growth globally. Thus effective measures strategies adopted by the company may helps

in

enhancing

organizational

growth.

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Doole, I. and Lowe, R., 2005. Strategic Marketing Decisions in Global Markets. Cengage Learning EMEA. Elbanna, S., 2010. Strategic planning in the United Arab Emirates. International Journal of Commerce and Management. 20(1). pp.26–40.

Figge, F. and et. al., 2002. The sustainability balanced scorecard–linking sustainability management to business strategy. Business strategy and the Environment. 11(5). pp.269284.

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Mudie, P. and Pirrie, A., 2012. Services marketing management. Routledge.

Nwankwo, S. and Gbadamosi, T., 2010.Entrepreneurship marketing: principles and practice of SME marketing. Routledge.

Olson, E. M., Slater, S. F. and Hult, G. T. M., 2005. The performance implications of fit among business strategy, marketing organization structure, and strategic behavior. Journal of marketing. 69(3). pp.49-65.

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Sellers, N., 2007. What is Niche Marketing. Clinton Gilkie.

Wang, C. L., 2007. Guanxi vs. relationship marketing: Exploring differences. Industrial Marketing Management. 36(1). pp. 81-86.

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