Business Strategy Assignment Help

Qualification - Higher National Diploma in Business (RQF)

Unit Name - Business Strategy

Unit Number - Unit 32

Assignment Title - Strategic Management Plan

Learning Outcome 1: Analyse the impact and influence which the macro environment has on an organisation.

Learning Outcome 2: Assess an organisation's internal environment and capabilities.

Learning Outcome 3: Evaluate and apply the outcomes of an analysis using Porter's Five Forces model to a given market sector.

Learning Outcome 4: Apply models, theories and concepts to assist with the understanding and interpretation of strategic directions available to an organisation.

Assignment Brief

You have been recruited as a Corporate Strategy Manager by a well-known large global organisation [an organisation of your choice]. You have been asked to produce an environmental analysis and strategic growth management plan based on the use of recognised internal and external analytical tools.

Part A: you are to complete an internal and external analysis that provides a basis for strategic planning:
• Analysis will include a PESTLE and SWOT analysis of the organisation and an analysis of the organisation's capabilities.
• Analysis of the competitive environment using Porter's Five Forces model.

Part B: devise a strategic plan based on the environmental analysis and findings:
• Evaluation of the different types of strategic directions available to the organisation.
• Justify and recommend the most appropriate growth platform and strategies.
• Produce a strategic management plan with strategies, objectives and tactics.

Solution:

Introduction
Business strategies are essentially the various tactics and plans that are often utilised by organisations with the intention to capture and retain the consumers, while tending to the overall performance of the business (Ghezzi, 2013). In order to ensure that these strategies are in alignment with the organisational requirements of the business, it is necessary to conduct an internal and external analysis of the firm. In this regard, a macroenvironmental analysis helps understand the external factors affecting the organisation, while the internal analysis makes the various underlying factors clear to the marketers so that they can frame appropriate strategies. This report shall analyse these very aspects of Tesco PLC, a multinational organisation that is the market leader in the UK retail sector. The PESTEL, SWOT, TOWS and the McKinsey's 7S frameworks have been utilised, along with the Porter's five forces model in order to understand the market environment and the competitive forces that shape the strategies and business processes at the firm.

Tesco PLC is essentially the most popular retail supermarket brand in the UK, accounting for nearly 27 per cent of the industry market share (Statista, 2020a). The company's mission is to be a champion for the customers while helping them "enjoy a better quality of life and an easier way of living" (Tesco PLC, 2020).The vision of the retail company is to become the most valuable business in the community they serve and operate, and be a role model for the colleagues and shareholders.

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LO1: Impact and influence of the macro environment

Analysis of the macroenvironment (P1)

The macroenvironmental factors that affect Tesco PLC and other businesses are the external elements which have the potential to impact the functions and processes in numerous ways. Typically, the PESTEL and the SWOT frameworks are utilised for developing an understanding of these very factors. These external factors are multiple and can have a positive or even a negative effect on the functions of the business (Ho, 2014). Thus, having a proper understanding of the macroenvironmental factors is fundamental to developing a good idea of the strengths and weaknesses that a business firm has. As far as Tesco PLC is concerned, the PESTEL and SWOT analyses as presented below can give a brief idea of its macroenvironment.

Table 1: PESTEL analysis of Tesco PLC

Table 2: SWOT analysis of Tesco PLC

Critical analysis of the macroenvironment to determine and inform strategic management decision (M1)

Tesco PLC being a large organisation functions on a massive scale, and is therefore subject to be impacted by both the domestic and the international political factors. Any changes to the UK tax rate, along with a shift in the international relations with the supplier countries, are bound to affect the business proceedings of Tesco PLC. Furthermore, the EU laws and legislations are extremely favourable in terms of helping create new job opportunities. The company does not discriminate between its employees on the basis of their age, ethnicity or disability, and provides equal job opportunities to all (Tesco Careers, 2020). However, Tesco PLC does have the issue of being stringent in terms of the wages, since it is among the lowest-paying retail organisations in the UK. It must be noted that the finalisation of the Brexit deal shall also be fundamental to the business processes of the company, since the UK imports most of its produce from mainland Europe (Farrell, 2019), and thus, a delay at the international customs could wreak havoc in the case of perishables. Additionally, this strain on the supply chain could also impact its low-cost strategy, thereby affecting its market position and share in the long run. The heavy dependence on the domestic market also states that Tesco PLC needs to find alternative markets in order to ensure that the revenue streams do not get interrupted.

The socio-economic status of the buyers also has a major impact on the organisation, since they dictate the kind of products and services that are to be stocked. The increase in the health-consciousness of the consumers has forced Tesco PLC to sell healthier and fresher foods, while the demand for self-service has also prompted the company to integrate self-checkout aisles at the physical stores. The inventory movement is tracked through RFID technology (The Workroom, 2016), and stress is now being given on expanding the e-commerce processes rather than the conventional stores.

The major strengths that Tesco PLC enjoys is that of its market position and share, both of which are the highest in the UK (Statista, 2020). In addition to having 6,800 outlets in 14 countries (Statista, 2020b), the products and services available at the supermarket chain are also diverse. The major benefit in this case is that Tesco PLC employs the largest number of people in the UK private sector, therefore contributing to the economy in an integral manner.

While the Brexit definitely has impacted the company, Tesco PLC has also had been involved with numerous scandals and mess-ups in the UK. In addition to the Woodside Farms or fake farms scandal (Smithers, 2017), the company was also found to be faking its annual records, resulting in a massive fine in 2017 (Ruddick and Kollewe, 2017).As far as the macroenvironment is concerned, expanding to a developing nation for alleviating the dependence on the domestic market could be a feasible option for the company.

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LO2: Assessment of the internal environment and capabilities

Analysis of the internal environment and capabilities (P2)

For analysing the internal environment and capabilities of Tesco PLC or any other organisation, McKinsey's 7S framework is one of the best approaches that can be utilised. This model was designed with the aim to explain how the strategy, skills, structure, staff, style, systems and shared values of a business function together in order to bring about an effectiveness of the various processes within the company (Ravanfar, 2015). The framework also helps understand how the various internal capabilities or factors of the organisation would undergo change or development, thereby aiding in developing a clear picture of the internal structure and skillset.

Strategy: The strategy refers to the specific plans that an organisation typically pursues with the aim of achieving competitive advantage in a sustainable manner so that it can tackle the market rivals in the long run. In case of Tesco PLC, it follows a low-cost strategy which allows the company to price its products at amazingly affordable rates, thereby helping retain the topmost market position due to its high sales volumes.

Structure: The structure typically refers to the organisational breakdown of the business, and depends on the management that is put in place. This is also the most easy-to-change element within the business. Tesco PLC typically has a matrix organisational structure with various divisions and departments since it is a multinational organisation and functions on a large scale.

Systems:The systems refer to the various business processes and systems that are in place for the smooth conducting of the business activities on a daily basis. This element is a priority especially when advocating for organisational change. The corporate steering wheel strategy as explained by Marr (2019) is utilised by the company for the balanced maintenance and running of the organisational processes.

Skills: The skills refer to the capabilities and talents that the workers have at an organisation, and it also determines the extent to which the company shall be able to deliver its goals and objectives. Tesco PLC often conducts workshops and training programmes to ensure that the workers are up to date with the required skills and can serve the customers in the best possible manner.

Style: The style refers to the management approach that a business organisation adopts, and is therefore necessary for understanding the growth and development of the company. The leaders and managers have a participative approach to management and support the employees to help with their decision-making processes, which helps the workers to be content and satisfied.

Staff: The staff, as is evident from the word itself, are the people or the employees of an organisation and their performance is of fundamental importance to the business. This holds true especially for retail businesses such as Tesco PLC. The company has on-the-job training facilities so that the workers can get the necessary training in order to handle the customers (Tesco, 2020). However, the company does have the practice of underpaying the workers, which might act as a demotivating factor for them.

Shared values: The shared values refer to the core function of any organisation, since it refers to the guidelines and values that a business follows. It directs its behaviour and other proceedings, and is thus the foundation of an organisation like Tesco PLC. The company tries the best for its customers while treating the people the way they wish to be treated. Tesco PLC also recognises that even the littlest of actions make a big difference, and thus, they strive to create value and make a positive contribution to the communities they function in (Tesco PLC, 2020).

Critical analysis of the internal environment to assess the strengths and weaknesses of the capabilities, structure and skill set (M2)

With regard to a critical assessment of the internal environment and outline the strengths and weaknesses that are present with respect to the structure, capabilities and skillset, the TOWS matrix is the best approach that can be applied here. Tesco PLC can essentially make the most of its internal capabilities and counter the macroenvironmental forces if it utilises its strengths to manage the weaknesses and threats while working on the opportunities available.

S-O strategies:Often referred to as the maxi-maxi strategies, the S-O category makes use of the strengths to utilise the opportunities available to an organisation. Tesco PLC can use its advantageous market position and its resources to push forward aggressively with its Jacks outlets, since it would then be useful in terms of competing with discount retailers such as Aldi and Lidl.
S-T strategies:Often referred to as the maxi-mini strategies, the S-T category makes use of the strengths to mitigate the threats that an organisation is subject to. Since Tesco PLC is under the threat of being heavily compromised in terms of its supply chain, there is a chance that the prices might have to be increased in order to keep up with the running costs. In such a position, Tesco PLC needs to find alternative suppliers or perhaps utilise its top market position to bargain and secure strategic deals and alliances with the government so that the flow of goods may remain uninterrupted.

W-O strategies:Often referred to as the mini-maxi strategies, the W-O category makes use of the opportunities available to the organisation to counter the weaknesses. Tesco PLC can consider the expansion of its business into newer locations through foreign collaboration in order tor lessen the dependability on the UK market. This shall also help mitigate the detrimental impacts to the revenue that might arise due to the Brexit referendum.

W-T strategies:Often referred to as the mini-mini strategies, the W-T category is aimed at suggesting strategies that would counter both the weaknesses and the threats. Tesco PLC needs to ensure that the company does not get involved in any more scandals, and take into account the various business proceedings involved with report formulation. Having a positive market reputation is of utmost importance, and thus, this must be kept in mind in case the organisation wishes to maintain its position in the industry.

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LO3: Evaluation and application of Porter's five forces model

Application of Porter's five forces to evaluate the competitive forces (P3)

The Porter's five forces framework is a model that can help understand the level of competitiveness present in any given industry or market. This tool analyses the five kinds of competitive forces that an organisation can be subject to due to the presence of competitors, thereby helping determine the strategies that can be applied to counter the challenges (Dobbs, 2014).

Bargaining power of suppliers:In case of Tesco PLC, the bargaining power of the suppliers is low. This is because of the availability of a large number of supplier alternatives in the retail sector. This allows the company to maintain its prices, thereby giving a stiff competition to the market rivals.

Bargaining power of buyers:The bargaining power of the buyers in case of any retail organisation like Tesco PLC is usually high. This is because there are many options available to them in the UK market, making it imperative for each organisation to have their own USP in order to attract the maximum number of customers. It is to be noted that while the company's low-cost strategy does help its revenue generation, deep-discounters such as Lidl and Aldi are slowly taking over and causing the company much worry, since the cost of switching over for the customers is very low.

Threat of new entrants:The threat of new entrants for Tesco PLC is quite low, since a large amount of capital investments are required to enter and consolidate a market position in the UK retail industry (Huang, 2015). Thus, it is nearly impossible for a new brand to enter, more so because there are already a large number of prominent retailers present in the sector.

Threat of substitutes:The threat of substitutes is moderate, since there are some affordable options available to the customers. For instance, shoppers who prefer to buy from the farmers' markets, or purchase clothes from specialty stores such as Next and Primark are the ones who have found substitutes to the products as available at Tesco stores. However, the low prices and the variety continue to advocate for the popularity of the organisation.

Competitive rivalry:The competitive rivalry is high for the company, since there are many prominent competitors in the market, such as Sainsbury's, Morrisons, and Walmart-owned Asda (Griffith and Harmgart, 2012). This makes it difficult for Tesco PLC to maintain its market share, and threatens its topmost position.

Appropriate strategies for improving the competitive edge and market position (M3)

Based on the analyses conducted so far, the strategies as discussed can be applied for improving the position in the market and for gaining a competitive edge.

1. The low-cost strategy of the firm needs to be maintained at all costs. This is the major reason as to why the customers are attracted to the stores in the first place. Care must also be taken to ensure that the quality of the products does not falter.

2. The focus of the organisation should be equally distributed between its grocery and non-foods section. This shall help redirect the interest of the shoppers to Tesco PLC instead of Next or Primark.

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LO4: Models, theories and concepts for understanding the available strategic directions

Application of theories, concepts and models for strategic planning (P4)

Two theories or models can be stated here for the purpose of strategic planning in case of Tesco PLC - Porter's generic strategies, and Bowman's strategy clock.

Porter's generic strategies:As Tanwar (2013) explains, these strategies had been formulated by Michael Porter for helping understand the strategic direction of an organisation, while analysing how it pursues market differentiation.

In case of Tesco PLC, market differentiation should be the approach since there are already a huge number of rivals in the market. This states that the competition is high. The cost-leadership strategy as followed by the organisation helps it appeal to that price-conscious section of the UK market, thereby helping capture those potential customers who prefer deep-discounts.
Bowman's strategy clock:As Radut (2015) explains, this model is necessary for developing an understanding of the competitive positioning of an organisation.

Tesco PLC's major competitors are Sainsbury's and Asda, since all these retailers have a very similar product line and price range. On the basis of this framework, Tesco PLC seems to be following a hybrid strategy since the prices of the items are low in addition to having a high value, thereby allowing the company to maintain its top market position.

Strategic management plan with tangible and tactical priorities and objectives (M4)

Based on the information that has been analysed and accumulated so far, the table below can be utilised as a strategic management plan for the retailer.

Table 3: Strategic management plan for Tesco PLC

Summary and evaluation: The plan as indicated in the table above states that the strategies as suggested are suitable, appropriate and feasible (SAFe), since the SWOT and PESTEL analyses revealed that Tesco PLC is dependent mostly on the domestic or the UK market. Thus, deflecting the revenue stream to a new region or country can help, since an emerging economy is highly likely to help with the profit generation. Since the company is a large-scale organisation, it also has access to the necessary resources for ensuring that the plan can be successful.

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Conclusion
Tesco PLC has thus been quite successful in the UK market, owing to its low-cost approach and hybrid market strategy. However, expansion into India can be useful since it shall alleviate its high reliance on the domestic market and multiply its revenue streams. This will not only lessen the market competition it faces in the UK but also help increase its international presence in a secure and reputable manner.