Unit title: Value Proposition Strategy
Assignment number and title: 1 Individual report.
Assessment type: Internal and External Analysis Report.
Size or length of assessment: 1600 words (+10%).
Unit learning outcomes:
strategic and marketing information, including financial statements, corporate reports and CSR reports related to the nature and characteristics of strategic issues and problems, identifying and assessing the impacts of emerging issues in value creation.
Deploy analytical tools of strategic management and marketing in relation to both the external and internal environments of organizations to synthesis, evaluate and develop appropriate strategic options in a complex environment.
In order to pass Assessment 1 you will need to:
How do I produce high quality work that merits a good grade?
The following points should be observed: We suggest that you avoid writing in the first person (“I”); rather the third person is recommended (e.g. it can therefore be suggested that…). You may include headings and subtitles and a contents page if you feel this will help you to stay focused and create clearer signposting for the reader.
Use of literature:
Use academic source, i.e. books, journal articles and videos from Henry Stewart’s talks etc. Refer to respected industry sources DO NOT overuse the Internet, do not use and / or quote from Wikipedia.
Reminder:
You are required to use proper in-text reference and the reference list in the end using the Harvard Referencing System. The writing:
Try to approach this assignment in a logical and systematic way. Make sure you have a logical structure, a convincing argument, clear description of the situations which ‘set the scene’, and clear explanation which relate to theories, and a conclusion that draws your argument together.
How does assignment relate to what we are doing in scheduled sessions?
Each session is designed to target a specific framework that will help you to design your report.
Strategic management provides fundamental frameworks that help identify internal and external factors that affect business activities. The organization has continued to excel despite the stiff competition associated with the retail industry. PESTLE analysis and Porters’ five forces provide are crucial tools for analyzing Tesco’s external environment. PESTLE analysis shows qualitative and quantitative elements that affect the retail industry structure, whereas Porters’ five forces portray the industry’s overall attractiveness. Internal analysis entails evaluating internal factors such as resource base, competencies, and skills, which contribute to the organization’s success. Tesco deals with unique and quality products, which improves its brand image and integrity, improving its customer base and competitiveness in the retail industry. Being among the leading retailers in the UK, Tesco has particular internal strengths that help exploit opportunities, mitigate threats, and maintain its competitive advantage. This study provides an in-depth analysis of strategic management at Tesco.
Strategic management refers to the development of organizational policies that aid in achieving its long-term objectives despite a change in its resource base and external forces. It portrays the organization’s current strategy and position in the market and its efficiency in exploiting its capabilities and competencies to improve its value and increase its competitive advantage (Chopra 2016, p. 141). Business organizations utilized strategic management tools such as PESTEL and SWOT to establish their position in the industry. Tesco is a global retail company based in the United Kingdom, founded in 1919, and has sustained its brand position by implementing modern strategies for increasing its customer base (Wood, Wrigley, and Coe 2017, 31). Tesco has utilized different technologies and strategic tools to improve its distribution efficiency and maintain its dominance in the market. Tesco is among the top retail companies in the UK whose strategic management has generated substantial revenue in the sale of its groceries and general merchandise. Tesco’s close rivals include international retailers such as Amazon, Walmart, and Carrefour (Aiello et al. 2020, p. 1). This paper provides an in-depth analysis of strategic management at Tesco by analyzing its internal and external environment.
Political factors– The political stability in the UK and other countries where Tesco operates is highly linked to its performance in the global market (Rosnizam et al. 2020, p. 20). The government of the UK has generally influenced the retail industry in generating massive job opportunities for its citizens (Pulker et al. 2018, p. 12). Tesco has employed several individuals from different backgrounds, including the disabled, the elderly, and students while adhering to the minimum wage legislation.
Economic factors– Economic factors such as demand and supply have affected Tesco’s operations (Monte, A., 2021, p. 75). Unemployment and economic downturn due to the global COVID-19 pandemic have negatively affected the demand for Tesco’s products.
Social and cultural factors– Demographic changes such as the rise in population and the demand for one-stop shopping among UK residents have affected Tesco’s operations (Hamad et al. 2017, p. 128). The consumer shift to health-conscious products has facilitated the company’s shift to selling organic products (Dailymail Online News, 2022).
Technological factors– Tesco uses a wide range of technological innovations such as self-checkout machines, wireless gadgets, electronic shelf labeling, Radio Frequency Identification, and intelligent scale (Nguyen et al. 2017, p. 45). The innovations have enhanced stock operations and the efficiency of the distribution process.
Environmental factors– Tesco engages in corporate social responsibility activities for the protection of the environment (Lukić et al. 2020, p. 859). The company participates in CSR initiatives aimed at reducing carbon and inorganic waste.
Legislative factors– Governmental policies in the retail industry, such as Food Retail Commission, directly influence Tesco (Guo and Wang 2019, p. 331). The commission has adopted strict measures to ban most retail activities, including changing the prices of products prior to informing the suppliers.
Porters’ Five Forces Analysis
The Porters’ five forces analysis is a fundamental framework for evaluating competition in the retail industry, affecting operations and strategy development at Tesco.
Tesco provides its customers with quality groceries and other food items at affordable prices. Hence threats from close substitutes such as small kiosks and organic stores do not influence its performance (Krummel 2022, p.10). However, the company faces a relatively high threat from non-food products like clothing.
The main food dealers in the UK’s retail industry are Tesco, Asda, and Morrison, and these organizations have high reputable brands in the industry (Adewuyi 2016, p. 45). Beating these organizations’ products’ reputation and brand image requires increased investment, which is challenging for new companies (Kar, Bansal, and Mishra 2021, p. 65). Therefore, Tesco faces minimal threat from new entrants.
Currently, Tesco is facing stiff competition from close competitors such as Asda, Morrison, Sainsbury, and Waitrose. Activities of retailers such as branding, pricing, and marketing strategies indicate the level of competition (Hökelekli, Lamey, and Verboven 2017, p. 12). However, Tesco has continued to sustain a high market share despite the increased competition in the UK market, as shown below.
Available at: https://www.statista.com/statistics/280208/grocery-market-share-in-the-united-kingdom-uk/
Tesco’s customers have high bargaining power. Tesco utilizes online trading platforms and low pricing policies to attract and maintain its customer base (Neger and Uddin 2020, p. 93).
The suppliers’ bargaining power at Tesco is relatively low. Top suppliers of food products in the UK’s retail market face being outcompeted if they set high bargaining power (Rofin and Mahanty 2021, 98). Therefore, Tesco can engage in positive negotiations with suppliers to lower prices.
Core Competences-Resources
The large pool of resources at Tesco’s disposal allows the company to position itself to satisfy the current consumer market (Fatricia 2017, p. 73). The company owns several warehouses of different sizes that allow for a continuous supply of basic commodities to its customers (Kar, Bansal, and Mishra 2021, p. 69). Tesco also owns a robust home delivery model that is efficiently scalable to the increasing demand (Suel and Polak 2017, p. 151). Additionally, the company has a substantial pool of financial resources that can be utilized to enhance operation by recruiting more staff according to the existing demand.
The brand has developed over the years generating organizational trust and honesty (Youn et al. 2017, p. 388). Tesco’s introduction of Clubcard has helped the company increase consumer loyalty and acquire more relevance in the retail market (Shin, Kim and Kim 2020, p. 102088). Tesco realized that the overall customer satisfaction experience could result in loyalty towards its product and hence has better accumulative effects on direct promotion and marketing. Tesco realized a spontaneous increase in customer usage by 17 % after the introduction of the Clubcard, which promoted the management of customer relationships and experience (Kleinman, 2020). Tesco can then utilize the information from customer relationship management to identify the most valuable group of customers and find ways of retaining and rewarding them (Joseph and Sharaf 2016, p. 68). Therefore, the strategy effectively reduces customer targeting costs while improving customer satisfaction and the organization’s service quality. Tesco has unique strategic human resources that aid in decision-making and strategy formulation (Awadari and Kanwal 2019, p. 92). Tesco staff play a crucial role in establishing the competitiveness of Tesco by promoting the internal efficiency of the company. Similarly, the employees’ commitment to achieving the organization’s long and short-term objectives through teamwork, innovation, and creativity is also a significant element in Tesco’s performance (Wood, Coe, and Wrigley 2016, p. 480). Tesco’s employees possess a high level of experience and training efficient for building and sustaining a good relationship with the customers (Are 2017, p. 789). The company’s core competence is based on quality customer service that increases customer satisfaction.
Valuable– Valuable strategies at Tesco are crucial for exploiting the existing opportunities and mitigating the effects of threats. Valuable competencies enable the company to grow and expand its market share (Lehn 2020, p. 638). Powerful brand image and relationships with suppliers are the key valuable competencies at Tesco (Ibrahim, Wang, and Bourne 2017, p. 329). The company enjoys excellent brand recognition through brand equity and integrity. A good relationship with suppliers enables the company to maintain an efficient and consistent distribution channel.
Rare– The skills and competencies possessed by Tesco’s employees are competencies that enable the company to prevent potential threats and exploit opportunities (Eng, Ozdemir, and Michelson 2016, p. 5710). The employees’ creative skills and ability to engage in teamwork have contributed to the company’s competitiveness.
Inimitable– Tesco’s high quality and unique products are key to building a good brand image (Ahmed and Moosafintavida, 2020, p. 149). Increased and continuous quality results in the repeat of purchases and hence a higher level of consumption.
Organization– Tesco’s financial ability and technological advancement portrays the unique organization of resources for business growth (Li 2021, p. 574). Through mergers and acquisitions, the company’s stable financial base has facilitated the innovation of products and quality improvement (Loonam 2018, p. 105). Tesco’s finances have also encouraged its engagement in research and development schemes.
Competitive Advantages
The company has continuously managed to build customer trust and consumer loyalty through quality improvement hence strengthening its brand reputation (Son et al. 2018, p. 16).
Available at: https://yougov.co.uk/topics/consumer/articles-reports/2016/07/20/five-ways-tesco-has-strengthened-its-position
Additionally, Tesco has managed to build a good relationship with its suppliers through its high bargaining power in the retail market (Jelassi and Martínez-López 2020, p. 108). Finally, the company is well-endowed with fundamental competencies and resources, which makes it extremely suited to develop into a better performing organization.
The above strategic analysis of Tesco indicates that businesses in the retail industry are faced with various external and internal factors which affect the efficiency of their operations. Tesco is one of the leading retail companies in the UK and has continued to extend its operations across the globe by exploiting the existing opportunities and mitigating the threats. Based on the macro-analysis, Tesco and other retailers in the UK industry enjoys a fairly stable business environment based on the social, economic, and political factors which affect business operations. The government has also played a key role in supporting legislation and economic stability in retail activities. The internal analysis shows that brand recognition, high bargaining power, and a stable financial base promote Tesco’s competitiveness in the industry. The organization uses a low pricing strategy and Clubcard to increase its customer base and increase customer loyalty. However, effective utilization and consistency of the company’s distribution channels as an online business have allowed Tesco to achieve substantial business growth. Despite the competition associated with the retail industry, Tesco’s brand reputation and technological advancement have enabled it to continue growing and expanding its operations in different parts of the world.
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