Strategic Planning


Developing and implementing a strategy at workplace is very important for the organizations. As the name suggests, strategies are that forces which guide an enterprise and provides a pathway through which the firm can fulfil its goals and objectives with ease and comfort (Elmqvist and et. al. 2014). In essence, it may not be wrong to say that business strategies attempt to make firm's operations effective and efficient. Thus, strategies contribute to make the organization sustainable in the market. Since marketplaces have become highly competitive, it is imperative for companies that they possess an adequate business strategy so as to develop as well as maintain its image in the market and also, to ensure that the firm is able to fulfil the demand of customers (Ghemawat. 2002).

The present report has been developed with a view to present a new business strategy to Tesco PLC which is one of the leading retail companies in UK. Various aspects in this regard have been discussed in the report. It consists of an analysis of firms' goals, objectives, mission and vision along with organizational and environmental audit of Tesco as well as the entire retail industry. Also, different business strategies have been discussed in this assignment. Furthermore, resources that may be required to implement a selected strategy are also presented in this report.

Task 1

1.1 Role of mission, vision, objectives, goals and core competencies on strategic planning

Mission: “To create value for customers and to earn their lifetime loyalty” (About Us, 2015).

Vision: “To be highly valued by the customers we serve, the communities in which we operate, our loyal and committed staff and our shareholders, to be a growth company, a modern and innovative company and winning locally, applying our skills globally” (About Us, 2015).

Objectives: Tesco has many objectives which are like:

  • Offering the best value for money at competitive prices to customers.
  • Meeting the demand of customers by providing them high quality products.
  • Providing shareholders with aggressive returns on their investments.
  • Developing talent of its people, i.e. the employees (Chiware, 2010).

Goals: Goal(s) of Tesco PLC are listed as follows:

  • To maximize sales
  • To attain and maintain itself among top spots in the retail industry.
  • To provide goods to customers that are cheap but of high quality standards (Lynch, 1999).

Core competencies: Areas of great strength for the company are listed as follows:

Environment friendly products

  • Customer focused strategies such as Club Card, a loyalty scheme
  • Quality products
  • Competitive prices

All these aspects of business operations have a significant impact over the process of strategic planning (Tallon, 2007). This is because of the reason that company has to be aware of fact that its plans and strategies must be solely developed on the basis of its mission, vision, goals and objectives. Any discrepancies herein can prove to be dangerous and sometimes, catastrophic for the firm. Furthermore, by identifying and analysing the core competencies of organization, management at Tesco can determine the resources available to it along with the strengths that it possess. In this way, the process of strategic planning can be carried out in an efficient and effective manner (Meyer and Tran, 2006).

1.2 Factors to be considered while formulating strategic plans

Strategic planning is a process which holds significant importance for companies, regardless of market or industry that they may be a part of. This is because of the reason that it is a process through which the firm can obtain direction and then work to achieve its targets that essentially would help it in surviving in the market for a longer duration of time (Vezzoli and Manzini, 2008). But it requires utmost attention and precautions to be taken by the management at Tesco while developing such plans. There are a large number of factors and forces which have to be considered in this regard.

One of them is the resources available to the firm. Herein, authorities of the organization would be required to assess and evaluate different kinds of resources accessible by the company (Biedenweg, Monroe and Oxarart, 2013). This essentially will help company in understanding its capabilities and the skills that it requires for the process of developing different strategies and plans. This means that effective strategies cannot be developed in company because simply the firm does not has access to adequate amount of resources through which strategies can be developed and implemented at the workplace. Such resources can be in various forms like human or personnel, marketing, financial, technological or technical, etc. (Jackson, 2012).

External and internal environment also play an important role in the process of strategic planning. In the light of trends currently prevailing in today's retail industry, it can be said that by evaluating the external as well as internal environment, it would provide the management with a wide array of information regarding company's functioning. In this way, the strategic planning process can be carried out easily and effectively (Doole and Lowe, 2008). Herein, the firm would have to identify and evaluate different customer trends as well as the competition. By this way, useful and effective strategies can be developed and implemented in company (Teece, 2010).

1.3 Effectiveness of techniques while developing strategic business plans

Numerous academicians and experts have developed a large variety of tools and techniques through which the process of strategic planning can be carried out in an efficient and effective manner. It is important that thorough understanding about such tools is obtained (Glover, Peters and Haslett, 2011). One of them is BCG Matrix. Herein, the matrix is divided into four quadrants on the basis of growth rate of market and relative market share. It was developed by Boston Consultancy Group (BCG) in the 70s and still today, it is used as one of the most prominent tools of developing strategies. Essentially, this tool takes into consideration the products offered by company and analyzes them on above stated parameters. Accordingly, these products are then divided into four categories – Dogs, Question Mark, Star and Cash Cow (Wells, 2013). Dogs are those which have a low market-share as well as a low growth rate. They neither generate nor consume a large amount of cash for company. Therefore, it may not be wrong to say that essentially they are of no use for the firm. Question marks possess very low amount of market share but growth rate of the market is very high. Since they have a low market share, they consume a lot of cash of company but then it does not generate adequate amount of revenues for the firm (Coulter, 2005). Stars are those which have high growth rate and enjoy a vast share of the market. They are the best performers for company. Though they generate huge amount of cash but they are able to recover the investment made by firm. Cash Cows, as the name suggests generate more cash than what they consume. They possess high market-share but the overall growth rate of that particular industry is not very high.

By using this tool of strategic planning, the said process can be carried out easily and effectively. This is because of the reason that it would aid the management in understanding overall performance of company as well as various products that it offers. By obtaining such knowledge, authorities would get an idea on steps that they need to take in order to enhance the same as well as determining the procedures that may be required for the same (Parnell, 2010).

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Task 2

2.1 Conducting organizational audit

In order to thoroughly understand and evaluate strategic position of Tesco, conducting a SWOT analysis of the retail firm can be of great use. SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. This would help the management in effectively understanding position of the company in terms of areas in which it is strong and the areas which needs to be worked upon so as to improve them (Hiriyappa, 2013). By considering trends prevailing in the current retail industry, it can be said that conducting SWOT analysis of the company to analyse its strategic position can be very useful. In the following points such an analysis is presented:

Strengths: One of the biggest strengths of Tesco is the scale of its operations. It can be supported through fact that, Tesco has more than 1500 stores all across UK which makes it   one of the largest retail organizations in the country (About Us, 2015). This way it is able to attract large number of customers and satisfy their demands to great extents. In addition to it, the company is having a superior brand image not only in the UK but around the world as well.

Weaknesses: Major weakness of the firm is that it extensively depends upon UK market. It has been observed on many occasions that, Tesco depends heavily on its UK operations (Newport, Chesnes and Lindner, 2003). Further, since it has operations all around the world focusing on some specific markets become extremely difficult for the company. This has resulted in increased transportation and logistics costs for Tesco.

Opportunities: There are many opportunities present in the retail industry which Tesco can grab and use to its advantage. Emergence of many Asian countries such as India has provided a lot many new opportunities for retail companies (Chen and Mohamed, 2008). Therefore, it can be said that, Tesco can improve its overall operations considerably by tapping into these new and emerging markets. In addition, company can also use modern technologies and contemporary style of business functions, such as e-commerce.

Threats: Though globally Tesco is regarded as the third largest retail firm, but it has to face major threats in UK retail industry (McDermott, 2009). One of them is the constantly increasing competition, not only in the home country but around the world as well. Due to this reason, market share of the firm is shrinking but slowly. Further, different supermarkets in the country are developing new and innovative solutions to serve their customers. Lack of such innovation is another threat for Tesco.

2.2 Environment Audit

Similar to conducting an organizational analysis, environmental audit is of critical importance for Tesco. This is because of reason that it helps in identifying and understanding different factors and forces which are present in the external environment and are taking steps to ensure that, the negative impact on the firm is minimised (Pan, 2014). Through such an analysis, management at Tesco can determine different trends which are prevalent in external environment, along with taking steps that may lead towards improvement in overall organizational functioning. Such an analysis is conducted through PESTLE Analysis.

Political factor is one of the most important and crucial force that can significantly affect functioning of Tesco. Today, the political environment of UK is very stable. Furthermore, the country also enjoys positive and significant ties with other countries around the world; UK based companies such as Tesco can find it much easier to operate in many nations, especially commonwealth countries (Augier and Teece, 2009). But the tax rates have been increased by the UK government. Recently, the country increased its VAT rate from 17.5% to 20% that means sales revenue of Tesco would be significantly affected by it (Owen, 2015). Current economic environment in UK as well as the world cannot be considered to be a stable on but the financial uncertainties are still present in the environment. In this sense, it can be said that purchasing power of people has declined considerably which indicates declining sales performance of companies such as Tesco. Many times it has been observed that, customers are trying to reduce their overall expenditures in a bid to save their money. Retail industry is considered to be the very first sector which has started to suffer due to uncertain economic climate in a country (Jones, 2008).

The demographic structure of UK consists of large number of old age people, who have the financial capability to spend more but still, try to save more money. This again has created a very bad economic environment in the country. On the other hand to it, salaries of young people are also not very good because of which they cannot afford different luxury products. Furthermore, since the UK is a diversified country, companies like Tesco need to take steps to ensure that demands of all such people are fulfilled to great extent (Standing and Jackson, 2007). In this sense, it can be said that social environment in the country is not very stable and effective, which means that, management of the company is required to be cautious of the same. UK is one of the many developed nations around the world in terms of technology. Today technologies that are used in functioning of retail industries is changing at a very rapid pace, due to which companies like Tesco need to be aware of technological developments and changes. For instance, the cited organization now focuses on using e-commerce platform to sell its products to target customers (Peng, Wang and Jiang, 2008).

Environmental factor is another very crucial external force which affects functioning of firms. Global warming and global pollution along with rapidly declining availability of natural resources are some phenomenons that have forced Tesco to take steps to control the same on its own part. For instance, management of the company are modifying their store layout so as to minimize firms' negative impact on natural environment (White and Conant, 2003). Legal environment is another external force which influences working of firms like Tesco. There are a number of laws and legislations in UK that govern and monitor working of retail companies. For instance, the UK government recently reformed its agricultural policy. Herein its focus is on allocating direct subsidies to farmers. Due to this reason, there are chances that farmers may not be able to meet standards and benchmarks set by Tesco; indicating that a decline may be seen in overall performance of the organization (Elbanna, 2009).

2.3 Significance of stakeholder analysis

Stakeholders can be defined as those individuals or bodies which are associated with cited enterprise and are directly affected due to its functioning. It includes likes of competitors, government, customers, suppliers, etc. For companies it is of utmost importance that, they take steps to understand the needs and expectations of these stakeholders (Biedenweg, Monroe and Oxarart, 2013). If they are happy and satisfied, then it can be said that, not only performance of the cited retail firm would be very good but it can also enjoy positive brand image in the market. Therefore it may not be wrong to say that, if the firm wants to sustain in the market for a longer duration of time, then stakeholder analysis would be of great importance.

Considering current trends in the retail industry and regularly changing customer demands, conducting stakeholder analysis can be very beneficial (Jones, 2008). By undertaking the said process, authorities of the company can determine best and effective ways to ensure that stakeholders do not get negatively affected. In this sense it can be said that, through the tool of stakeholder analysis company would get thorough understanding about needs and expectations of these business associates and then develop ways through which the same can be fulfilled easily and effectively. Therefore, it may not be wrong to say that, with the help of stakeholder analysis tool, management at Tesco can develop positive and effective relations and also keep them satisfied as well as retained (Coulter, 2001). Furthermore, company can develop effective strategies and take better decisions that may help the company to sustain in the market for a longer period of time.

2.4 Presenting a strategy

There are a large number of strategies that can be considered and used by management of the company because it has become all the more important that the same is selected very carefully. Any mistake can prove to be very dangerous for the company and hamper its very functioning (Newport, Chesnes and Lindner, 2003). Considering highly volatile nature of retail industry, Tesco's management must focus on using limited growth strategies. They can prove to be very beneficial for the firm; largely the company would have to face least amount of risks by using it. There are many types of tactics in this strategy but the best one for the cited firm would be to use market development plan. It is a strategy in which companies attempt to develop existing marketplaces through its existing products and/or services. By using this tactic, the company can find new target customers. In this sense, it can be said that with the help of market development strategy, firm can identify the untapped marketplaces and develop them to be used by the company (Vezzoli and Manzini, 2008).

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Task 3

3.1 Different strategies available to company

Some strategies which can be used and applied by management at Tesco are as follows:

Market entry strategy: This is the planned method of expanding services to the foreign market or to any other new market. There are various marketing strategies that Tesco can adopt to establish themselves in the new market (Cassidy, 2005). In the case of Tesco, organization can use this strategy so as to expand and to attain sustainable development. There are opportunities for the organization to expand the business in the different areas of world. For this purpose, Tesco can adopt the joint venture, acquisition, exporting, licensing, franchisees etc.

Substantive growth strategies: Under this strategy, an organization can take decision of diversification in either related or unrelated market. This approach provides growth to the firm and develops  new opportunities which bring improvements in the existing services (Johnson and Scholes, 2002). If Tesco has adopted diversification in the related market, then company has to bring innovation in its existing product range. This will attract new target customers and can increase market share.

Limited growth strategies: In case, if Tesco go with the limited growth strategy than firm has to lower down the prices of the products so it is easy to penetrate in the market in the right manner. With the help of this tactic, the organization can easily identify success rate of this strategy (Delener, 2000). On the other hand, if Tesco has adopted market development then it is important to introduce new services and products in the existing market. In that case, nature and characteristics of these commodities should be different from each other.

Retrenchment: In this strategy, organization can transform its any loss making unit into the profit generation unit. Generally, two methods can be used in case of retrenchment that is divestment and liquidation (Chiware, 2010). In case when unit of Tesco is at the declining stage then company should follow disinvestment strategy and firm can shut down the unit. On the other hand, in case of liquidation, Tesco can sell out loss making unit or assets to cover those funds which has losses in the part.

3.2 Justification of selection of market development strategy

Tesco has to go with the market development strategy for achieving growth and for the purpose of expansion. The aim of the company is to establish brand at the international level and deliver value to the customers. The reason behind suggesting this strategy planning is to identify and develop new market segment for current products for the purpose of growth and expansion of the Tesco (Johnson and et. al, 2007). This strategy is important for growing businesses and to create goals and objectives to implement the strategy so that, company growth and revenue do not stagnate. With the help of market development strategy, it will be easy for Tesco to manage funds and revenues. Along with this, it will be helpful for Tesco to create balance between existing operations and expansion of business in the new market areas with the help of new product (Andersson, 2011). This strategy will result in achieving success of the firm and also help in developing long term plans to meet the objectives of business.

Task 4

4.1 Roles and responsibilities for implementation of strategy

For successfully implementing the market development strategy, different parties associated with Tesco would have to perform different kinds of roles and carry out various responsibilities. Herein it would be very important that precaution is taken while performing such steps, as any mistake here can prove to be catastrophic for the firm (Biedenweg, Monroe and Oxarart, 2013). There are numerous kinds of roles and responsibilities in this regard. For instance, the management would have to be patient in obtaining results (whether good or bad) of this strategy. Many times it has been observed that, authorities do not remain patient with implementation of a new strategy. But it is important to note that, successfully executing any strategy at workplace can be a very time consuming process. Therefore, it may not be wrong to say that management at Tesco would have to wait for a considerable amount of time while applying the said strategy (Rendtorff, 2011).

Another type of resource which the company would need to procure is human resources. Requirement of these resources can be justified through fact that, company would need to conduct a thorough analysis of the market in a bid to identify those sectors or areas that retail industry does not cater. In this sense, it can be said that a marketing research department would have to be set up in the enterprise (Teece, 2010). It would be the responsibility of this department to conduct extensive analysis of the market and use different statistical tools to determine ways to develop the market.

4.2 Resources required to implement the strategy

In order to successfully implement above mentioned business strategy at the workplace, Tesco would require various kinds of resources. It would include human resources, financial, technological, marketing, etc. If the company is not able to gather them, then there are very less chances that strategy of market development may be implemented successfully and effectively (Pan, 2014). Measures would have to be developed in order to arrange or acquire these resources. But procuring these can become a very daunting and difficult task to perform as the authorities would be required to pay attention to a wide array of factors and forces.

One of the resources which company would require is personnel. There are two options available to management at Tesco, in context of human resources, to effectively implement the strategy of market development (Doole and Lowe, 2008). One of them is to hire an agency to conduct the process of market research; while the other is to set up its own marketing research department. In either of these two options, the company would have to arrange for adequate amount of manpower whether directly or indirectly. Another kind of resource that Tesco will need is time. To successfully implement the said strategy, it can be suggested that, a time period of 1 year would be required. Within this time period, the company can easily execute the strategy and also obtain results of it (Hiriyappa, 2013).

4.3 Contribution of SMART objectives to implement the strategy

SMART objectives are an acronym for Specific, Measurable, Achievable, Realistic and Time. By developing these targets, the management at Tesco can easily and effectively implement the strategy of market development (Newport, Chesnes and Lindner, 2003). These objectives are important primarily because they guide authorities about ways in which the strategy can be implemented. In the following points, SMART objectives have been developed:

Specific: Exploring and entering new untapped markets.

Measurable: Since, this strategy largely is used for the purpose of increasing customers base, attainment of target can be measured by computing number of customers that company caters in different markets. If a new marketplace has been added to the list of all markets that Tesco serves to, then it can be said that, the target is achieved (Glover, Peters and Haslett, 2011).

Achievable: This objective can be achieved easily as there are many Asian countries like India, where still Tesco has not set up its operations. Due to this reason, this objective can be attained easily and effectively.

Realistic: It is a realistic objective the company has access to all kinds of resources that it needs for effectively implementing the said strategy (Standing and Jackson, 2007).

Time: Total time period of 1 year would be required so as to execute and bear the results of this strategy.

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Business strategies have a very crucial role to play for companies, regardless of market that they may be a part of. This is because they guide the firm in the best way to function and achieve its goals and objectives. During the present study it was reported that, Tesco must use market development tactic of limited growth strategy. Main reason behind suggesting this strategy is that, the firm would have to face fewer risks in regard to its daily operations. In order to implement this tactic, the company will require resources in terms of personnel, technological, time, etc. A total time period of 1 year would be useful in effectively implementing the strategy.


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