Importance of Strategic Human Resource Management (SHRM)

The importance of Strategic Human Resource Management in organization: According to my understanding during the lecture period Human Resource Management Strategy as a central philosophy of the way that people in the organization are managed and the translation of this into HR policies and practices. To be affective, policies and practices need to be integrated so that they make a coherent whole that is integrated with the business or organizational strategy (Torrington and Hall)
Strategic Human Resource Management is the vital factor for an organization to achieve its strategic goals as it has increased in importance since 1980’s by considering the following factors which are discussed below:
Globalization is the current phenomenon of the world which has integrated all the business environments under one umbrella where Strategic Human Resource Management in only way to show the business what is the actual goals of that business. By its activities business organization can overcome global needs as SHRM learns organizations to sort out what is their positions and where they want to go in global business arena.
Government rules and regulations which are the important issues for organizations, because it affects the organizations, business activities, through its own policy and procedures. An organization which can be overcome these issues through its strategic Human Resource policy, because organizations prepare its staffs, employees, stakeholders to be aware regarding these issues and do accordingly.
Knowledge and research based activities have impacted the organization dramatically in today’s world, where Strategic Human Resource management helps the organization to nursing their Human Resource management accurately as well as make ready them to overcome future goals.
Labour unions which is the combined activities of Labours in the business that has affected the business strategic activities vigorously, but in this place, Strategic Human Resource Management gives treatments to them to be proactive and taking initiatives regarding labour’s demand and benefits which help the organization to meet up the staffs problems. (According to my own understanding)
1.2 The purpose and contribution of Strategic Human Resource Management activities in an organization: Case Study ASDA
ASDA is one of the reputed retailer companies of WAL-MART which was formed in 1965 by a group of farmers from Yorkshire and its activities are still mainly based in the north of Britain. It expanded south in 70’s and 80’s , in 1989 buying rival change Gateways Superstores which is offering shoppers everything from Frank furthers to Diamond rings. ASDA is the second largest food seller that operates 370 stores from where primarily sell groceries and apparel, also the stores which are situated in different parts of the UK sell CDs, books, DVD’s, House wear financial services, take away meal etc.

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The Strategic Human Resource Management of ASDA which has developed its overall activities, because every year ASDA recruits 10,000 workers, 10,000 permanent staffs to work as little as 10 weeks a year. ASDA always targeted people over 50 and it has already employed 22,000 people aged over 50. For managing their SHRM ASDA’s employees trainings is the highest in the market. Every year they recruit fresh trainee employee to build a proactive team for the management. (
As the part of SHRM management ASDA follows following structures of management:

Corporate level Business level Operational level
Board of Directors All regional managers Line managers
Chief executive officer(CEO) Line Supervisors etc.
Country Directors
Chief Financial Officer (CFO)
Chief Technical Officer(CTO)

Divisional Head
By this structure ASDA monitored and supervised all the activities while they ensure the power and position of that structure by its unique policy. For managing Strategic Human Resource Management ASDA assists organization to meet the needs of their employees in the best way they can, so that company goals can be promoted. It also managing people proactively, because it requires planning ways for ASDA to meet the needs of its employees, thinking ahead and also helping the employees to meet the needs of the organization. This process changes the outlook and affects the way things are done at this business site, in others words it help to integrate modern ideas and models into the traditional Human Resource practices to come up with better solutions which not only benefit the employees, but the organization. It helps the organization from the hiring of employees, to the training, assessment and discipline []
For proper employee management by ASDA it has affected the organization significantly, because ASDA be aware about the employees career and development resulting reducing time frame of recruitment and selection process, retention staff in the organization, creates the productivity of the employee by developing training programs. It also arranges career programs for the employee which builds the employees loyalty towards ASDA which gives them unique efforts to fight with competitors in the market.
Strategic Human Resource Management is the process of Human resource Management for a long period of time which helps organization to achieve its long term goals. As a part of these activities ASDA maintains high standard of Human Resource Management through its unfair and competitive employees selection, motivation and training which given ASDA to be almost a market leader in the UK super market. It has established companies overall growth, revenue and satisfaction of stakeholders. (According to my understanding during the class period)
From the ASDA business site it is viewed that it has announced plans to create 9000 jobs in the UK through a mixture of new stores (20+new stores + extensions to existing stores), product range extensions in terms of non-food selling space named ‘ASDA living’ and others business expansion like home shopping, online shopping via-ASDA direct.
It sounds like an ambitious growth plan, although ASDA needs to keep growing quickly just to maintain its relative market share, where ASDA planed 179000 employees employ in the year. []
President and CEO of Wal-Mart International, Dong McMillan thanked Andy Clarke for his leadership role in the development of the ASDA business during his times as president and CEO and in other roles during his 16 year career at the retailer ”I am extremely proud of the management team at ASDA and the contribution that each of our nearly 170,000 colleagues makes every to serve our customer. We are very well positioned to continue to win in the UK market” []
From the discussion above it has been found that ASDA has been serve the customer promptly through their proactive management team which has impacted ASDA to improve its business growth revenue which attracts stakeholders such as employees, customers, suppliers, government, local community and competitors etc. Nowadays ASDA stakeholders feel confident as they invest as they could. Therefore, as a global company ASDA which is maintain its SHRM policies resulting to achieve overall growth of its business.
As a part of HRM development ASDA has been taking more initiatives in its operation, because every year ASDA recruited highly educated trainee officer in their organization. As well as they arranges graduate programmes for hunting talents to their organization. Moreover, they provide training for improving the skills of employees and prepared them to perform duties for next designation. There are so many others programs which has been conducted by ASDA such as communication with all levels of employees, stakeholders etc. Therefore, the HRM management of ASDA has got success in its operation by which organization achieves its strategic goals.
Human Resource Planning
2.1 The business factors that underpin human resource planning and the human resource requirements in an organization:
Tesco is considered as one of the Britain’s biggest and most profitable super market chain and according to the website of Tesco which states that “is the darling-of the City”.
Tesco PLC which is an overseas retailer that principal activity is retailing and associated activities in the UK, China, Czech Republic, Hungary, the republic of Ireland, India, Japan, Malaysia, Poland etc.
The main activity of the company is that of retailing, retailing service and financial services, retailing services which includes the company’s online shopping channels,,, Tesco personal finance (TPF) and dunhumby which is consumer research business.
Tesco is 2nd largest super market in Europe and 4th largest in the World operates 2318 stores in twelve countries around the world and employs 326,000 people. According to Terry Lehy Tesco is market leader in six out of twelve countries it operates in with its largest stores not in Bristol or Birmingham but in Budapest. It operates 1878 stores in the UK, 261 stores in Europe and 179 stores across Asia and plans to open 184 stores worldwide over the next year.
In the UK there are 83 Tesco extra stores, 4447 Tesco super store, 161 Tesco Metro stores, 277 Tesco express stores and 910 recently acquired T & S stores to be converted. []
Recently Tesco has started business in petroleum named Tesco petroleum as well as it operates Tesco finance and Tesco CNG conversion. Every Tesco involve with so many accusation, joint venture, merger etc. locally and internally. As a part of these expansion activities Tesco maintains high standard of quality staff that have facilitated Tesco to operate its business successfully. However, the business factors that underpins the Human Resource of Tesco which are given below:
Human Resource planning is the term use to describe how companies ensure that their staffs are the right staff to do the jobs. Sub topics include planning for staff retention, planning for candidate search, training and skills analysis and much more.
Tesco has to consider some external factors such as supply and demand, labour market, image/goodwill, PESTEL, unemployment rate, housing, childcare, competitors, spouse/partner career, location etc. and internal factors such as recruitment policy, HR planning, size of the farm, cost of recruitment, travel time, recognition, temporary part time employees, work culture, growth and expansion, timeliness. []
All part of these factors influence the Tesco in case of expanding its business locally and globally, but Human Resource management overtake these factors by its unique features such as training, motivating, recruiting, learning, coaching etc.
World is changing rapidly, where all the business organization has come to the global umbrella. Every year Tesco has to do so many accusation, mergers and joint ventures all over the world to fulfil the global needs of customers, but for these expanded business activities it requires thousands and thousands skilled employees who have proper local and global knowledge to handle the business swiftly.
For example, recently Tesco has started its operation in Asian countries while it requires some skilled people who have local knowledge of Asia, in terms of Asian Language, religion, culture, political and ethical matter. There also need a country director who has capability to lead the business in Asia with his strong hand. He must be well-known about Asian labour market, culture, political and legal situation as well as he should be capable enough to understand language of every people of that country. Manpower is the vital factor for Tesco to operate its business in Asia as it wants to penetrate the whole Asian market chronologically within next couple of years. As part of its activities they should be required to reserve some staffs to employ them in proper expansion. Furthermore, they should be needed for hiring some skilled employees from local organization to overcome competitive market in that environment. Tesco also should be considered employ some local employees by lower cost where they could be given the company better opportunity.
Expansion the business outlets which is the continuous process of ASDA as it tries to increase its outlets locally and globally every year, but for expanding its business HRM is the vital issue, because it ensures the overall expansion activities. As a part of that activities ASDA would be required to take following initiatives:

Recruiting highly educated employees as a fresh trainee officer.
Hiring highly experienced employees from others similar organization.
Recruiting staff to adapt with new environment.
Giving promotions to tolerate the new business outlets.
Recruiting highly experience CEO or Country Director specially for global expansion.

Therefore, the requirement of Human Resource is very important issue for Tesco to expand its business locally and globally. So, it should be aware about HR management through proper selection, recruiting, motivation, communications, trainings etc.
Development of a human resource plan and its contribution on the meeting of organizations objectives as well as purpose of human resource management policies and impact of regulatory requirements on this policies in organization
Human Resource development plan for an organization is the important issue to on how the organizations are managing their activities well in the market, this includes following steps:

Job analysis which identifies a job regarding specific roles and responsibilities and abilities, skills, qualifications need to perform the jobs successfully.
Human Resource planning which is the initiative through which an organization tries to ensure right number of qualified people in the right jobs at the right times.
Employee recruitment that is the way for seeking and attracting a pool of applicants from which qualified candidates can be selected for the organizations against of that job vacancy.
Employees selections which involves offer the employee for recruitments from the available candidates applied for this job.
Performance appraisal that is associated with identifying how well employees are performing their jobs, communicating that information to the employees and taking initiative for measurement their performance by their activities, i.e. arranging promotion for good performance.
Training and development which help employees learn how to perform their jobs, improve their performance and prepare themselves for more senior positions.
Career planning and development by which organization identifies employees career goals, possible future job opportunities and personal improvement by which it is ensured qualified employees are available when needed.
Employee motivation which is the vital factor for any organization which focuses to make employees productive and lower rates of absenteeism and turnover.
Every year Tesco collects so many bi-data from different sources from qualified applicant from which they select some people for recruitments. After recruiting they arrange training for fit themselves for their assign jobs. They also motivate staff by giving incentives, bonus, refreshment leave for motivation of employees, resulting a good employees structure for Tesco to implement its strategic goals.

Human Resource plan for an organization is the curse of action by which organization can manage its Human Resources efficiently and effectively by which achieve the organizations objectives. The role of Human Resource functions is explained by the key objectives to be achieved. The following diagram shows the role of Human Resources which is helped to organizational objectives.
Human resource plan can be contributed the organization for meeting its objectives by following ways:

It strengthens human resource structures which helps organization to utilize all of the efforts of human resource into the organization resulting to achieve strategic goals.
It keeps balance between management of employees & management of financial resources which brings results for the organization.
It helps organization to create skilled employment by which organization could expand its business locally & globally.

These activities help organization to involving acquisition, merger & joint venture etc. in the own country as well as for operating business in the international countries.
It ensures good practices for employees employment policies such as promotions, retention, rewards, punishments, health & safety rules & regulations which ensure the loyalty of employees towards the organization resulting to achieve organizational goals by these joint efforts.
Tesco, making a human resource plan to set up a highly skilled person in the branch as a manager by whom it monitored & implemented all of the activities in the operations levels. As a result, a lot of outlets which are giving service to customers resulting to achieve good turnovers which make sure the overall goals of tesco.[ According to my own research & company websites of tesco]
Purpose of human resource management policies in the organization is important factors that ensures the right, rules & regulations of employees for doing works in the organization.
Impact of regulatory requirements on human resource policies confirms the right of employees & employers. These policies focus to ensure the best practices of human resource management & achieve organizational goals by employing them. Human resource policies revive all the rights of employees by which the inspire to invest all of the merits & talents to the organization resulting to achieve of company’s long term goals. These policies include getting best employees in the company paying employees all benefits , ensuring training, ensuring compliance to regulation, implement fair, safe & equitable work environments, sustaining its performing employees & non- profit human resources.
All the policies mentioned above have unique features of its own by which organization can implement all of its strategic goals.
For example, Tesco, the largest superstore in UK which is assuring high standard products & services for customers through its performing team members while it reserves some rights for employees in the organization which has been sustained each employee management. According to part of that policies, Tesco maintains minimum national wages for employees, fixing up highly pay rates for its skilled employees where the arrange some training programmes, graduate programme, motivation, coaching, face to face discussion which has built its to make relationship with its employees. It also always aware about the health & safety policies of its employees as it ensures some free medical treatment, health & hygiene training for its employees for ensuring these policies. Tesco nowadays sustainable situation on human resource management. For proper human resource management gives Tesco power to bargain with customers, compete with rivals in price war, making bondage with its stake holders.
In an organization regulatory policies ensure discipline of organization because it limits it into its system as well as employees in their organizational activities. More over into increases the loyalties of employees towards employers resulting to achieve organizational goals. Furthermore, it teaches employees to be motivated, dedicative, energetic into their duties as well as ensures their present lives, future lives & family lives easier & happy. The important matter to consider that these factors protected everyone in the organizations from the discriminations in terms of age, sex, ethnic groups, dis ability etc. while it ensures equal opportunities for all levels of employees & making good relationship between employer & employees.
For example-When Tesco recruits people the meets these regulatory factors in their recruitment process as they make criteria for those people who are vulnerable for our society such as dis able, ethnic groups as well as they prioritize all levels of employees with their equal opportunities policies. In Tesco superstore who is working they do not know what is their origin of country, but they only know that they are the members of Tesco team which makes it very confident towards its staff management.
Reviewing Human Resource Management
4.1,4.2,4.3 : Impact of Organizational structure, culture and effectiveness on Human Resource Management: Organizational structure and Human Resource Management practices are two special factors involved in corporate entrepreneurship which achieve organizational goals. By selecting and implementing the appropriate structure and practices, Human Resource professional can systematically foster and facilities innovation and entrepreneurship within the organization. The more that new and different entrepreneurial activities are needed, the more that complete structural arrangement as well as policy and procedures flexibility are needed.
Proper organization structure is important for company to function effectively. Communicating clear paths of responsibility is key for a company to meet the needs the future growth as well as help in streaming the organization. The following diagram which shows the organizational structure for a company.
There are some important points which are essential for the structure of an organization which is given below:
Organizational Chart: Organizational chart which is the ideal manner for mapping the organization. It is an instrument for assessing personnel and managing the work force effectively. An organization which needs to visualize the company’s structure in order to find out the role of each employee plays in the Human Resource chain.
Human Resource Software: Human Resource Software which assist management of Human Resources to take decisions for the following matter:

Succession Planning
Organizational development
Human Resource management
Corporate re-organization
Efficient management of resources.

An organizational chart is specialized tool used by Human Resources professionals to be able to get a solid picture of the organization. An organizational chart is generally deployed in situation when management wants to identify areas throughout the enterprise that present opportunities for downscaling also known as down sighing.
Organizational culture is the workplace environment formulated from the interaction of the employees in the work environment. It is defined by all of the life experiences, strengths, weakness, education, up-bringing and so forth of the employees, while executive leaders play a great role in defining organizational culture by their actions and leadership, all employees contribute to the organizational culture. []
Organizational culture and its environment factors in which organization exist determines the way of managing the organization(Saffold,1988:547).The relationship between Organisational Culture and Human Resources practices can be explained as follows:
When the member of organization i.e. employees, understand and internationalized the organizational culture which can be said as the way things are done around here, it will enable for employee to choose strategy and behaviour that fit with their personality as well as with the main routines of organization activities.
Human Resource Management policies which directly influence and are influenced by Corporate Culture, also significantly impact supply chain members. That is, Human Resource decisions are important because when firms hire personnel that meld with their company culture, these actions enhance shared social knowledge and increase consistency between employee and firm goals (Wilkens &Ouchi 1983), shared social knowledge guides employees in making the right decision when confronted with novel situation(Weitz and Jap 1995). []
Organizational effectiveness depends on having the right people in the right jobs at the right time to meet rapidly changing organizational requirements. Right people can be obtained by reforming the role of Human Resource function.
According to Bratton, J&Gold.J(2003),Human Resource Management is defined as a Strategic approach to managing employment relations which emphasizes that leveraging peoples’ capabilities is critical to achieving sustainable competitive advantage, this being achieved through a distinctive set of integrated employment policies, programmes and practices.
According to this definition there is seen that Human Resource management should not merely handle recruitment, pay and discharging, but also should maximize the use of an organization human Resources in a most strategic levels.
Stuffing, training, compensation and performance management are basically important tools in the Human resources practices that shape the organizations role in satisfying the needs of its stakeholders. Team work among lower levels of staff and the management should be created and maintained to assisting various angles that would deem necessary in eliminating, communication breakdown and foster better relationship among workers. The management should emphasize a good corporate culture in order to develop employees and create a positive and conducive work environment.
In the summarization of Human Resource management there should have aim to capture ‘the people element’ of what an organization is hoping to achieve in the medium to long term, ensuring the following things:

It has the right people in place.
It has the right mix of skills.
Employees display the right attitude and behaviours, and
Employees are developed in the right way.

An organization which wants to achieve its goals it has to think before regarding the following Human Resource related issues in the organization:

Work force planning issues.
Succession planning.
Workforce skills plan.
Employment equity plans.
Black economic empowerment initiatives.
Motivation and fair treatment issues.
Pay levels designed to recruit, retain and motivate people.
The co-ordination of approaches to pay and grading across the organization to create alignment and potential unequal pay claims.
A grading and remuneration system which is seen as fair and giving proper reward for contributions made.
Wider employment issues which impact on staff recruitment, retention, motivation etc.

A consistent performance management framework which is designed to meet the needs of all sectors of the organization including its people. []
Recommendations to improve the effectiveness of human resources management in an organization
Human Resource Management is the essential part of an organization as it ensures the strategic goals of organization. The effectiveness of Human Resource management could be improved by the following ways-

Recruiting and hiring highly educated and skilled employees for the organization.
Training and development of Human Resource plan for the organization.
Appraising the performance of employees for preparing them for performing jobs in the higher rank.
Motivating employees by giving incentives, bonus, rewards etc.
Strengthen communication among all levels of employees.
Maintaining regulator factors for employees such as health and safety, pension, promotion etc.
Maintaining equal opportunities system into the management.
Forming different committee to monitor and supervised the employees roles and regulations such as compensation committee, audit committee, ethic committee etc.
Ensuring job rotation and job analysis for each employee at different department.
Doing job enrichment for employees.


The Nature Of Strategic Management Journal Commerce Essay

Strategic management is ideas and injunctions that enable the organization achieve its objective or long-term target to perform a better performance. The purpose of strategic management is to seek the opportunities for better future of the organization. Generally, good strategic management practices can improve the organization performance and achieve the organization target objectives. The strategies on an organization are made by the management itself to ensure the successful of the organization. The strategic management process consists of three stages which are strategy formulation, strategy implementation and strategy evaluation.
Today, there are many definitions of strategic defined by various authors and by refer to Mintzberg et al. (1998), the definition of strategic is universal and there is no single. The others author, Chandler (1962) as the American business historian is the first person that defined strategic as determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out those goals. In the context of construction, Channon (1978) defined strategy in term of the extent of diversification, international activity and acquisition policy. Mintzberg (1994) portrays strategy as a plan – a direction, a guide or Strategic Management Practices in Malaysian Construction Industry 142 course of action into the future – and as a pattern, that is, consistent in behavior over time.

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Strategic management has evolved into a more sophisticated and potentially more powerful tool (Stoney, 2001). The strategic management stages need a person who is competent to handle this process more effectively and to make sure that its success (Stahl and Grigsby, 1992). To ensure firm success and can overcome any barriers that occur during strategic management process, the top management of an organization must play their roles through involvement in the process, through dialogue and participation. The aim purpose of the process is to achieve the understanding and commitment from top management and employees.
2. Strategic Management in General STRATEGIC MANAGEMENT IN GENERAL
There are many definitions that are defined by various authors. According to David (1997) strategic management is the art and science of formulating, implementing, evaluating cross functional decision that enable organization to achieve its objectives. Wheelen and Hunger (1984) say that strategic management is a set of managerial decisions and actions that determines the long-run performance of an organization. It includes environmental scanning (both external and internal), strategy formulation (strategic or long-range planning), strategy implementation and evaluation and control. Wheelen and Hunger (2003) noted that people at all levels, not just top management, need to be involve in strategic management; scanning the environment for critical information, suggesting changes to strategies and programs to take advantage of environment shifts, and working with others to continuously improve work methods, procedures, and evaluation techniques by working with other people in the organization.
Stages in Strategic Management
Strategy Formulation
The first phase is strategy formulation. Certo and Peter (1991) stated that strategy formulation want to ensure that the organization achieve the objectives that they have been made. David (1997) said that strategy formulation includes the decision on what business to conduct, how to allocate the resources, and whether want the business join or enter to international market. Besides, David also stated that strategy formulation phase includes developing a vision and mission, identifying an organization external opportunities and threats, determining internal strength and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing the best alternative strategy to be pursue. He also said that issues in strategic management includes deciding what new business to enter, what business to abandon, how to allocate resources without hostile takeovers, whether to expand operations or diversity, whether to merge or form a joint venture, whether to enter international markets and how to avoid a hostile takeover.
Good intelligence is not necessarily going to make a great strategy while successful strategies are derived from good intelligence concerning a company’s total business environment including the competition. There is some intelligence role in strategy formulation. Among them are: –
– Describing the Competitive Environment.
Intelligence analysis must to carry out their responsibilities, so that the company can compete with the challenging environment over time. Besides that, intelligence should also determine the causes of the company’s competitive environment, including competitors, customers, products, the structure of the industry in which they all perform, and the type of competition, such as price performance, and technology.
Forecasting the Future Competitive Environment
Intelligence department can provide predictions of future business for the company, especially in the competitive environment in which the company is likely to find itself. Business intelligence estimate is the most appropriate intelligence products to reflect the competitive environment in the future, as being one entirely different from the business environment that it competes in today.
Identifying and Compensating for Exposed Weaknesses.
Company’s own weaknesses and vulnerabilities can be identify and assess by using intelligence department. Usually when a company is about to launch a new strategy or enter a market or business that it has never participated in before, this ability is particularly valuable because the competition is likely to have assessed the newcomers strengths and weaknesses and will exploit those weaknesses that are truly vulnerabilities. Before entering the new business arena, companies must be aware of his own weaknesses before the occurrence of a competition. This is to ensure that the company is always ready to take corrective action or formulate new strategies so that the company is not affected.
Using Intelligence to Implement and Adjust Strategy to the Changing Competitive Environment.
After the new strategy have been designed and tested, then it goes through two distinct phases of implementation. Initial implementation of the first phase is when competitors began to detect and respond to the strategy’s salient features. While the second phase is developing a more complete and appropriate set of actions to counter your strategy. The intelligence that you gather during both distinct phases of implementation are critical to the long-term viability of your new strategy because comprehensiveness, timeliness, objectivity and analysis are required in these two phase. Few US companies are capable of managing such effective business intelligence operations and thus formulating the appropriate ongoing business plans necessary to continually adjust their strategy to the changing competitive environment.
When open innovation models are being introduced in the industry, innovative firms must taking more and more open forms, so that a firm can create the innovation process in a knowledge-based society. In addition, the firm also can  build porous borders to incorporate their own knowledge and competencies with others. The first step is to identify useful knowledge among employees and stakeholders of the NTBF (new technology based firm), so that they do not require further discussion. However, in the external environment, identify useful knowledge is not as easy as I thought. There are several questions that must be answered to proceed from knowledge identification to transfer knowledge :-
Who has the requested knowledge?
This question is more relevant when searching among the members of the NTBF but also a “who knows the whereabouts of the requested knowledge?” which is more relevant when the requested knowledge lies outside the firm.
What are our relations with the actor holding the requested knowledge?
Question like this is to identify ways to strengthen ties in the relation with the actor/partner holding the requested knowledge. What drives this relationship? Is it based on friendship, a strategic alliance, a mutually-beneficial business relationship, or a potential partnership etc.?
What is the nature of the requested knowledge?
The third question is related to the knowledge complexity that determines the ability to accomplish the knowledge transfer because it is has to be regarded within the framework of a specific knowledge transaction, between specific persons in a specific context.
How can we transfer this knowledge and what is the compensation requested for this transfer?
The fourth question related to the readiness of the “owner knowledge” to share knowledge because knowledge transfer process cannot be determined in advance, and this depends on the complexity of knowledge and the absorptive capacity of the recipient to make the transfer.
Apart from compensation, are there additional costs associated with the transfer?
The fifth question tries to examine the non-monetary cost associated with the transfer of knowledge. As mentioned earlier, a NTBF’s resources are limited and valuable and the cost to absorb a knowledge transfer might prove costly in terms of man days of key members of the NTBF.
Does this knowledge transaction contribute to the formation of a “collaborative” competitive advantage?
The final question concerns the examination of the probability that this knowledge transaction is part of the formation of a knowledge-based strategic alliance forming a sustainable competitive advantage that is difficult to imitate.
Strategy Implementation
The second phase is strategy implementation. In this phase, Sharplin (1995) said that all the organization activities or business strategies must be based on the strategic plan made. Organization must establish the objectives and policies of the company so that all the employees know what they should do to achieve the company objectives. Besides, the company also needs to do something to ensure that all the employees are motivated to do the job, and resources need to be allocating to execute formulated strategies. Effective strategy implementation is really important to the organization. Based to Certo and Peter (1991), effective strategy implementation is really important to get the benefits of performing an analysis of organizational, establishment of organizational direction and formulating.
They are various point of views to define and describe the strategy implementation. Strategy implementation may be define as a process inducing various forms of organizational learning, because both environmental threats and strategic responses can make something happen for organizational learning processes (Lehner, 2004). Strategy implementation is a combination process of implementing strategies, policies, programs and action plans that helps a firm to take the benefits of opportunities in the competitive environment by using wisely and usefully its resources (Harrington, 2006). Strategy implementation is also can be described that the companies can identify the future opportunities as a lively process (Schaap, 2006). On the field of studies in strategy implementation, it must be done with the international perspective. In Hrebiniak conceptual framework there are some suggestion about the key factor for strategy implementation which include of leadership, facilitating global learning, developing global managers, having a matrix structure and working with external companies for international environment. Besides that, there are other framework introduced by Yip, that involved organizational structure, culture, people and managerial process (Okumus, 2003). There are two groups of variables which is operational (budgeting, structure) and managerial (culture, leadership) that had been identify in this study of measuring the strategy implementation.
During an action, strategy implementation is a managing forces and focuses on efficiency. It is primarily an operational process, requires special motivation and leadership skills and requires the combination among many individual.
There are some several of issues that involve in strategy implementation which is :
Strategies are not lead to action and have to be activated through implementation.
Plan should be lead in strategies. Result of plan in different kind of programmes.
Formulation of projects must lead to programmes. Separate allocation of fund is requires and it must be completed within a time given.
The needed infrastructure for the day-to-day operations create of Projects create within an organization.
Strategies implementation is not limited to formulation of plans, programmes, and projects. Resources would require in projects. After it has been provided, it would be essential to see a proper organizational structure is designed, systems have been installed, devised the functional policies, and various behavioural inputs are provided to make sure the plans may work.
Below is the issues in strategy implementation that are to be considered :
Project implementation
Procedural implementation
Resource allocation
Structural implementation
Functional implementation
Behavioural implementation
The effectiveness and importance of strategy implementation
In some of organizations from South African, it was found that the strategy implementation is more important than strategy formulation and can be see that the ability to implement a strategy in an organisation is more likely important than the ability to formulate a strategy in an organisation. Strategy implementation can be more difficult than the strategy formulation. This study was founded that the effectiveness of strategy implementation in South African organizations can help the organisation to gain the effectiveness of organisation. It can show that, the strategy implementation more effectiveness to be used it within the organisation.
Barriers to effective strategy implementation
There are some barriers to achieve the effectiveness of strategy implementation :
The workforce are poorly to understanding of the strategy and the most of important barriers to effective strategy implementation is there are an ineffective communication of the strategy among the workforce
Another major barrier to an effective strategy implementation is strategic leadership is not perceived.
Drivers of strategy implementation
The importance of the drivers of strategy implementation :
The most important driver of strategy implementation is strategic leadership.
Strategic leadership contributes positively to the effective implementation of a strategy within an organization
Many all of authors stated that the key of strategy implementation is strategic leadership (Hrebiniak 2005; Collins 2001; Useem 1998, 2001; Locke & Kirkpatrick 1991; Freedman & Tregoe 2003; Hitt et al. 2007; Hsieh & Yik 2005; Bossidy & Charan 2002; Thompson & Strickland 2003; Hussey 1998; Kaplan & Norton 2004). In fact, the effectiveness of strategy implementation is based on the strategic leaders of the organisation and to get the effectiveness to implementing strategy within the organisation, it is only through effective strategic leadership. (Hitt et al. 2007).
The role of strategic leadership actions in strategy implementation
The most important role in effective strategy implementation is the strategic leadership. The other of the important roles in strategy implementation is development of human capital, the exploitation and maintenance of core competencies. The development of social capital is the strategic leadership action is to play the least important role in effective strategy implementation.
Strategy Evaluation
The last phase of this management process is evaluation. Weiss (1972) define the purpose of evaluation as measuring the effects on given task whether it is according to the goals and objective of the organization. Thus, an improvement or corrective action should be taken after the evaluation has been made. It is really important to use a SWOT analysis to figure out the strengths, weaknesses, opportunities and threats for both external and internal factors. This may require taking certain precautionary measures to change the entire strategy. Research methodologies need to be used to quantify the outcome from the evaluation against the goals that has been made to create a success. Weiss agree that goals are really important in an evaluation to improve the performance. Evaluation done by reviewing current strategies, measure the performance and take the corrective actions. The need of an evaluation is to know the success of the organization. Certo and Peter (1991) stated that the evaluation needs information about strategic performance to compare it with existing standards.
Balanced scorecard (BSC) is an example of one of the popular approaches to evaluate the organization performance. It was first introduced by Kaplan and Norton (1992. 1996a). The BSC typically is a method that allows an organization to indicate its vision, develop and communicate a strategy to achieve the established vision and convert the developed strategy into action.
4. Conclusion
In general, strategic management can be used to determine mission, vision, values, goals, objectives, roles and responsibilities. Strategic management is important in the organization to know the objectives and the aim of the organizations. The nature of strategic management also involve about the process or stages. This study was focused on the strategic management process. Strategic management process has three stages which is strategy formulation, strategy implementation and strategy evaluation. The strategic management process is becoming more widely used by small firms, large companies, nonprofit institutions, governmental organizations, and multinational conglomerates alike. It represents a logical, systematic, and objective approach for determining an organization’s future direction. All the three stages of the process were important for all the organization. This is because those process are more likely as a guideline to the organization to manage their organization. Without a proper strategy the successful and the effectiveness cannot be occur. A good strategist plans and controls his or her plans, whereas a bad strategist never plans and then tries to control people. We can conclude that the strategy is important within the organization which as a direction for organization to manage their management.
“Without a strategy, an organization is like a ship without a rudder, going around in circles. It’s like a tramp; it has no place to go. ” – Joel Ross and Michael Kami

Models of Strategic HRM: British Airways Case Study

Strategic human resource management may be observed as an address to the management of human resources that furnish a strategic framework to sustain long-term business goals and outcomes. The approach is concerned with longer-term people issues and macro-concerns about structure, quality, culture, values, commitment and matching resources to future need.
Comparison with the Model:
Fiedler Contingency Model
Bath People and Performance Management
Leadership membership Relationship which is the most important variable in determining the situation favourable (Accept and respect by followers)
The development and successful implementation of high performance work practices, partially those concerned with job and work design, flexible work resourcing (recruitment, Selection and Talent Management), employee development (increasing skills and extending the skills base), reward and giving employees a voice;
The degree of task structure which is the second most important input into the favourableness of the situation(structured task)
The formulation and embedding of a clear vision and set of values (the big idea)
The leaders position power obtained through formal authority which is the third most important dimension of the situation.(Great deal of Authority and power are formally attributed to the leader position)
The provision of support and advice to line managers on their role in implementing HR policies and practice.
Reason for the importance of HRM in Organisation:
Human resources are great significance to organizations in 10 specific areas, to extent from strategic planning to company goodwill. HR practitioners in a small business who have well-balanced expertise equip a number of services to employees. The areas in which HR maintains control can enhance employees’ perception of HR throughout the workforce when they believe HR considers employees to be its internal customers and renders services with that in mind. There have ten importance of Human Resource Management in the organization.

Training and Development
Employee Satisfaction

HR improves the company’s bottom line with its knowledge of how human capital affects organizational success. Leaders with expertise in HR strategic management participate in corporate decision-making that underlies current staffing assessments and projections for future workforce needs based on business demand.
HR compensation specialists develop realistic compensation structures that set company wages competitive with other businesses in the area, in the same industry or companies competing for employees with similar skills. They conduct extensive wage and salary surveys to maintain compensation costs in line with the organization’s current financial status and projected revenue.
Benefits specialists can reduce the company’s costs associated with turnover, attrition and hiring replacement workers. They are important to the organization because they have the skills and expertise necessary to negotiate group benefit packages for employees, within the organization’s budget and consistent with economic conditions. They also are familiar with employee benefits most likely to attract and retain workers. This can reduce the company’s costs associated with turnover, attrition and hiring replacement workers.

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Employers have an obligation to provide safe working conditions. Workplace safety and risk management specialists from the HR area manage compliance with U.S. Occupational Safety and Health Administration regulations through maintaining accurate work logs and records, and developing programs that reduce the number of workplace injuries and fatalities. Workplace safety specialists also engage employees in promoting awareness and safe handling of dangerous equipment and hazardous chemicals.
HR employee relations specialists minimize the organization’s exposure and liability related to allegations of unfair employment practices. They identify, investigate and resolve workplace issues that, left unattended, could spiral out of control and embroil the organization in legal matters pertaining to federal and state anti-discrimination and harassment laws.
Training and Development
HR training and development specialists coordinate new employee orientation, an essential step in forging a strong employer-employee relationship. The training and development area of HR also provides training that supports the company’s fair employment practices and employee development to prepare aspiring leaders for supervisory and management roles.
Employee Satisfaction
Employee relations specialists in HR help the organization achieve high performance, morale and satisfaction levels throughout the workforce, by creating ways to strengthen the employer-employee relationship. They administer employee opinion surveys, conduct focus groups and seek employee input regarding job satisfaction and ways the employer can sustain good working relationships.
HR recruiters manage the employment process from screening resumes to scheduling interviews to processing new employees. Typically, they determine the most effective methods for recruiting applicants, including assessing which applicant tracking systems are best suited for the organization’s needs.
HR professionals work closely with hiring managers to effect good hiring decisions, according to the organization’s workforce needs. They provide guidance to managers who aren’t familiar with HR or standard hiring processes to ensure that the company extends offers to suitable candidates.
HR workers ensure that the organization complies with federal state employment laws. They complete paperwork necessary for documenting that the company’s employees are eligible to work in the U.S. They also monitor compliance with applicable laws for organizations that receive federal or state government contracts, through maintaining applicant flow logs, written affirmative action plans and disparate impact analyses.
Explanation and analysis of an HRM framework
Explanation of an HRM Framework:
External Context
(Fixed Effect)
Labour Law
Labour Market Condition
Characteristics of labour supply.
Factory Specific Characteristics
Location, size, age, capital investment, product, vertical integration, buyers and work place philosophy.
Defect Rate, Employee Turnover, Absenteeism and Production efficiency.
Output , Sales, Profits.
Explanation of the HRM process and how strategies are developed
Human Resource Management Process
There could sub functions in the HRM Process in practice.
The key areas of HRM Process are

Human resource planning
Attraction – also called as recruitment
Training and development
Performance appraisal
Promote, demote or transfer regarding to performances

The HR Strategy development process should contain the following steps:
HR Information Gathering – The team has to complete the information about different HR Processes, their performance and their impact on the profitability of the organization. The profitability can be difficult, but the team can always make a good estimate about the impact of the process to the results of the organization.
Organizational Development Information – the information about the development of the organization in the past and its current status. Each organization has several stages in its organizational lifecycle and some trends in the organization are healthy and some trends are extremely dangerous and can impact the future profitability.
HR Workshops – when the input information are gathered the HR Team has to organize the workshops inside Human Resources, where the piece of the new HR Strategy can evolve. The teams should discuss the findings one by one and all the ideas should be gathered as they can impact the overall HR Strategy.
HR Managerial Workshops – the information from the previous HR Workshop with employees should go to the next level and the HR Managers should talk about the trends and the topics, which should be included in the HR Strategy and what is the impact on the whole organization and the HR team. The results of the HR Managerial Workshops have to be recorded and the priorities of different parts of the story have to assign.
Preparation of the HR Strategy – a dedicated HR sub-team has to prepare the story of the HR Strategy from the approved outcomes from the HR Managerial Workshops. The story has to be strong and appealing for the audience and HR employees.
HR Strategy Feedbacks – the HR Management Team has to present the pre-final version of the HR Strategy to the fellow managers in the organization and their feedback has to be appreciated and fully and honestly discussed with the managers. The same session has to be organized for the HR employees as they can say their feedback to the HR Strategy Story.
HR Strategy approval – the HR Strategy has to be approved by the top management as they are the final customers of Human Resources and they should fully agree with the way, the HR wants to operate in the organization within several years.
An Assessment of the Roles in Strategic HRM
HRM is central to a firm’s strategic management policies. For starters, the business cannot implement its operating strategy, however astute, without the full cooperation of its personnel. Consequently, corporate leadership makes sure to get employees’ buy-in before rolling out operating tactics. HRM also enables organizations to take a peek at what rivals do and what personnel management strategies they use to trump others. Another HRM advantage is that it allows a firm to ensure regulatory compliance in its operations, which is generally a money saver and reputation builder.
Assignment Two
British Airways Human Resources (HR) strategy
a. Human Resources Management (HRM) models
There are many HRM models out there (Harvard, Michigan, etc€¦) but there are mainly three different approaches (Torrington, Hall and Taylor 2008) to achieve competitive advantage through HRM. The universalist approach described by Guest (1989) as a one size fits all i.e. derived from the best practices philosophy also supported by other academics e.g. Delery and Dory (1996), Pfeffer (1994) but some others are also questioning how easy it may be to shift focus of the organisation (Whipp 1992) and even to achieve the goals (Purcell 1991). The fit or contingency approach that can be found in Fombrun et al (1984) is based on both internal and external fit and focus on selection, appraisal, development and reward. This model has been criticised mainly because of its one-way relationship with organisational strategy. The resourced-based approach (Boxall 1996) is built on attributes of resources. To achieve competitive advantage, resources should be Valuable, Rare, Inimitable and Non-substitutable (VRIN).
B. British airways HRM aspects:
To define the HR model used by British Airways, we should first analyse the main aspects of its HR Management:

creating motivation and commitment of all employees which continue to play a major part in the success of the company.
some of HR measures are clearly designed to improve and support employees’ motivation (British Airways Plc. 2010).
a remuneration scheme with profit sharing and encouraged share ownership, this is an effective way for employees to feel more involved in the company’s results (British Airways Plc. 2010),
training and development are instrumental to ensure resources will be able not only to feel valued in the company but also will be able to enable business objectives achievement (British Airways Plc. 2010)
diversity and inclusiveness is seen as a key aspect in the recruitment strategy, this includes genders, ethnicities, religions, etc€¦ (British Airways Plc. 2010)

c. HRM model used by British Airways:
The aspects depicted in the previous paragraph show that the internal resources are linked (KPIs, ownership, etc€¦) including the human resources. As described above we also realise that human values are in the middle of British Airways strategy. As quoted page 236 of the 4th edition of Managing Change (Burnes 2004), Hax and Majluf (1996 p. 10) state that: “The essence of the resource-based model €¦ [is] that competitive advantage is created when resources and capabilities that are owned exclusively by the firm are applied to developing unique competencies. Moreover, the resulting advantage can be sustained due to the lack of substitution and imitation capabilities by the firm’s competitors.”
British Airways used a Resourced Based Model to achieve above average profitability by developing VRIN (Value, Rare, Inimitable, Non-substitutable) resources (Barney 1991). To substantiate this (Parker 1999), let us go back to the mid-nineties when the group started a portfolio analysis and defined the level of criticality of its operations. Based on this review, decision has been made to outsource resources (including human resources) that are not key to the core business. As other major corporations, they retained the strategic components (VRIN) and outsourced the routine activities. This decision helping the group to achieve outsourcing goals i.e. costs reduction, higher quality of services, agility and better focus on core business to meet the business objectives as defined in the introduction.
d. Limitations of the Resource-based model
There is no perfect model, or else there would only be one. But what are the ones of this model used by British Airways? Burnes (2004) mentions the lack of empirical support and also the complexity and ambiguousness of the resources definition. By design, the model is more focusing to the internal resources than on the external competition e.g. there is no link with the product markets, it may be difficult to find VRIN resources. There is also little evidence that many firms have adopted the model.
Task 2: British Airways merged with Iberia in 2011. Analyse the impact of the merger on strategic HRM at British Airways.
This M&A briefing note provides an overview of the merger of British Airways and Iberia which led to the formation of a new firm – International Airlines Group (“IAG”)

BA and Iberia had developed strong links over many years:
BA acquired a 13% stake in Iberia in 1998
BA & Iberia started co-operation and route-sharing in 2003
BA first made a bid for Iberia in 2007
Impact of the continued economic downturn led to the resumption of merger talks in 2009

The Deal
The initial announcement:

Merger of British Airways and Iberia announced in November 1999.
BA shareholders get 55% of the new company; Iberia shareholders get 45%
BA and Iberia to continue their existence as airline brands
New company called IAG plc, with shares listed on both the London and Madrid stock markets
IAG initially estimated £349 million of annual cost savings by the fifth year after the merger
A quarter of the cost savings to come from IT and back office efficiencies + savings on maintenance and purchasing
Implementation cost of the merger estimated at £350 million.

The final merger agreement

Definitive (legally binding) merger agreement finally signed in April 2010:
Merger details took two years of complex and often strained negotiation
Creates Europe’s third-largest airline group: behind Lufthansa (90 million passengers p.a.) and Air France-KLM (70 million passengers p.a.)
Combined scale would have an aircraft fleet of 408 planes, carrying more than 58 million passengers a year
Willie Walsh (previously CEO of BA) to become the new CEO of IAG
On the day that the shares of IAG first traded (Jan 2011), the market capitalisation of the firm was £5.6bn

Key motives and drivers of the merger:

Very much a merger that looks to the long-term.
Industry consolidation – a process that has already begun and is expected to continue over the next 10-20 years
2010: combined airline losses (whole industry) of almost $3bn in 2010
BA and Iberia seen as well-matched businesses that complement each other
BA strength: North American & Asian routes and destinations; Iberia strength: Latin America
BA gains better coverage of key routes in Latin America
Structure designed to allow IAG to participate in “further consolidation” (i.e. more takeovers)
Further takeovers by IAG would be judged on whether they could meet or enhance a target of 12 per cent return on capital.

What happened next?
IAG takeover of British Midland International (BMI)

Announced November 2011
BMI – a loss-making subsidiary of Lufthansa (losing approx £160million per year)
Deal subject to clearance from the Competition Commission and the European Union
Significant opposition from Virgin Atlantic – the main competitor affected by the deal
Main rationale – BMI’s extensive landing slots at Heathrow – which will be used to add British Airways flights to destinations in emerging markets
A possible short-term drawback to IAG: the takeover adds to the groups capacity at a time of weak demand for air travel

The main risks facing IAG

Unforeseen external events (e.g. disruption to travel caused by volcanic ash)
Industrial relations – a constant thorn in the side of management at BA & Iberia
BA’s pension fund liability – a shortfall of £3.7bn
The global economy – demand and profits closely linked to the global economic cycle

Key quotes relating to the merger
Prof Peter Morrell (Cranfield University):
“They’ve come up with various cost savings that they can get out of the merger of the companies. These are on things like procurement, IT, maintenance. These are the things they can get from a merger which aren’t really available from alliances.”
Ashley Steel, head of transport at KPMG:
“the creation of IAG heralds the start of an exciting era of airline consolidation, with further marriages of convenience as pressures on costs and revenues continue to increase.”
Willie Walsh on the day the merger was confirmed:
“Our goal is for more airlines-but, importantly, the right airlines-to join the group. Today is the first step towards creating a multinational, multi-brand airline group.”, 23/12/2012, 20:46 PM
Impact of Merger in British Airways:
British Airways’ and Iberia’s stock stopped trading Friday as the BA-IB merger officially took effect, to be replaced in both the London and Madrid markets by International Airlines Consolidated Group stock on Monday.
Based on combined passenger count, IAG is now Europe’s fourth largest carrier group after Lufthansa Group, Air France KLM Group and Ryanair. Both airlines’ shareholders approved the merger in late November (ATW Daily News, Nov. 30, 2010). The carriers will continue to be separately branded.
The commencement of IAG was clouded Friday by Unite union’s notice that BA cabin crew “voted overwhelmingly” to take further strike actions, the latest salvo in the long-running dispute between the airline and its flight attendants (ATW Daily News, Dec. 22, 2010).
“Surely BA management must now wake up and listen to the voice of their skilled and dedicated employees,” Unite stated.”This dispute will be resolved by negotiation, not litigation or confrontation, and it is to negotiation that BA management should now apply itself. We are ready.” The union said 75% of 10,220 eligible voters cast ballots, with over 78% voting in favor of more work actions.

Tesco: Strategic Management Analysis

This unit discuss about the strategic management and leadership of the organization. So in this report discuss about the relationship between strategic management and leadership and impact on strategic decisions. As next question discuss about the support of management and leadership theory on organizational direction and consider about the impact of management and leadership styles on Tesco PLC’s growth strategy and discuss about the leadership strategy of the Tesco. In the third part determine about the leadership requirements and about the current and future leadership requirements of Tesco. Then discuss about the development of leadership requirements and usefulness of selected methods to develop the leadership skills.

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1.1 Understand the relationship between strategic management and leadership
1.1.1 Relationship between Strategic Management and Leadership
The organizational strategy is determine by the first person or top management of the organization, then the strategy was formulated and implemented as two parts. The using effective management of strategy process can be express as a strategic management. The strategic management helps to achieve the organizational goals and objectives to create competitive advantage. The strategies are not only created by the top management but due to forces of the leadership the strategies were implemented and carrying out by the organizations. Sometimes the leadership created the situation for need of strategic change in the organization. The leadership is very influential and motivates the people in terms of achievement of the organizational expectations. Therefore the leadership was affect to the organizational activities and the strategic management process. Therefore these are a relationship between strategic management and leadership. The different leadership styles of affect to the organizational establishment of vision, mission, goals, establishment of organizational management/ structure/ culture, rules and regulations and etc of related activities of strategic management process. (Hill and Jones 2007)
1.1.2 Impact of management and leadership styles on strategic decisions
The management styles
The management style of Peter Drucker explained the setting of objectives of the organization, plan & organize the work in to a specific manner, motivate the employees and other managers to work, performance / achievements/ communication measuring based on the objectives and employee development. This clearly identifies the influence from the management style to the strategy process of the organization, means the strategic decisions were also impacted on management style of Peter Drucker. As next management style is F.W. Taylor’s scientific management system of management of organizational activities. In this style the manager provided the specific way of doing each an every task to utilize the work, the employee will motivate through paying incentives and all tasks were change according to the scientific management style. That means the strategic decisions were affected by the scientific style of management.
The leadership styles
The trait theory provides the leader was born to lead the others with specific characteristics (appearance, personality, voice, participation, capacity) and qualities. The employees accept his decisions in any time that means this leader can influence to the strategic decisions of the organization. The next leadership theory discuss was about situational theory with change according to the situation of the organization. The four situations of (a) tell- the leader tells to the subordinates about specific instructions (b) sell- the subordinates receives the independence to work under investigation of the leader (c) participate- the employees will take collective decisions about the organization (d) delegate- leader look at until the subordinates come up to the targets. These all four situations impact to the strategic decisions of the organization.
1.1.3 Leadership styles can be adapted to different situations
The strategy of the Tesco was a long term strategy to growth of the customer expansion in high market share all over the world. This strategy express the correct decision of the leader, that means the market share cannot be instantly increase, more time is required. On the other hand within the last two to three years the economy was down turn very much, most of the companies face to the loss of market share. Therefore the improvement of market share within a short period of time was not practical. The decision making of Tesco was due to successfulness of long term strategy implementation.
The other decision of the Tesco was the diversified the business. Due to this diversification reduce the complex within the business affairs. Each sub set earn own profits and different growth rates and provides the way for easy to benchmark purposes and improve performance, diversified decision making and all.
Tesco invest in the recession time to improve the customer facilities, infrastructure, customer offers and for employee contribution. Through this strategic decision in recession time the customers and employees was happy and it was a competitive advantage over other organizations in for being a recession time. According to the situation of the business environment Tesco take the correct strategic decision to improve business affairs and profits.
1.2 Apply management and leadership theory to support organizational direction
1.2.1 Impact that selected theories of management and leadership have on organizational growth strategy
The Tesco was diversified the business in to groups to perform. Therefore the groups discuss their strategy in regular basis. The whole group also gathered and discusses strategic issues by taking two full days in the Board meeting. As the teamwork management style the Tesco provided the directions to understand the individual group tasks and perform in the diversified business unit of Tesco.
The participatory leadership style is more appropriate to discuss about the leadership style of the Tesco. The leader provided the group decisions about the organizational policy making and organizational activity planning. The employees, customers and other stakeholders were gathered and considered their implications. Due to this leadership style the organization created the leaders to handle the international and UK business of Tesco.
1.2.2 Leadership strategy that supports future direction of Tesco
The Tesco has a vision of building the high returns to the shareholders, achieve the customer loyalty and quality of satisfaction from Tesco products and services and satisfy the all stakeholders involved in the business of Tesco. This clearly express the Tesco has a clear vision. Through the vision leadership strategy the Tesco has a vision of the current organizational position in the world market, conducted a capacity of vision in the future growth, has a clear vision of the organizational current pathway and has a goal of the future growth perspectives. Therefore the vision leadership strategy supports the directions of Tesco. (Source:
1.3 Assess leadership requirements
1.3.1 Appropriate methods to review current leadership requirements
In the Tesco Plc. employee were empowered by the organization to improve their performance and motivate them. The best performance rewards the share options as well. Therefore to lead the employees in to a correct way the leadership required a, communication between employees, encourage them, adapt them to changes, increase the responsibility among employees, eliminate the conflicts and so on are required in the current organizational context of Tesco. Therefore the Tesco required a leadership to develop communication among the employees, identify the interest of the employees and take the decisions, solve the conflicts among the employees, improve the flexibility among the employees and the management.
1.3.2 The development of future leadership requirements
The Tesco is operating as diversified business units. Due to globalization the retail business will growth very fast as well. Then the Tesco needs different sophisticated technological techniques to develop and carry out the organizational complex operations. The competitive advantage helps to achieve the market share in the global market. The one of the main objective of the Tesco is also the achievement of high profit margins through international and UK market. Therefore the leadership will be highly influential on achieving the competitive advantage to the organization. Some of the employees in the Tesco has stakes of the Tesco, therefore they can be overconfidence and empowered in the future due to the size of their stakes, so the leadership must be there to control them in ethical manner to eliminate the badly influence in business affairs.
1.4 Plan the development of leadership skills
1.4.1 Development of leadership skills for a Tesco Plc
There is diversified business units required a leadership therefore to lead these diversified business units the Tesco required to develop professional skills of the employee to perform according to the condition of the business units business affairs. The Tesco is a global business therefore the most of the leaders must have to work in the outside of the UK of home country, when working in other country there are different behaviors, cultures, ethics and social environment. Therefore the Tesco required improving the different leadership skills of the employees to communication skills, negotiation skills, decision making skills and so on.
1.4.2 Usefulness of methods to plan the development of leadership skills
The professional skills can be improved through discussion with senior managers of the Tesco. The discussion with the senior managers help to get the information about the leadership methods, different behaviors needed in different situations, different aspects of leaderships and etc. And there are nearly 34% of the managers have at least one year experience of working outside the home country, so the discuss with about their experience help to identify the different behaviors, cultures, appropriate leadership styles of those countries. On job training will improve the decision making skills, negotiation skills and etc. the improvement of these skills help to leader to manage any critical situation in the organization and will be able to control the situation. The informal learning will improve the communication skills of the individual leader. Through the communication skills the leader can change the minds of the employees to acceptable condition in any situation (Lussier and Achua 2009).
The leadership influence to the strategic management of the organization. The Peter Drucker, F.W. Taylor of leadership styles influence to the strategic decisions and the leadership styles of trait theory and situational theory were also impact on strategic decisions of the organization. Teamwork management style was suitable to discuss the management style of the Tesco and the participatory leadership style help to identify the organizational strategy. The vision leadership strategy expresses the future direction of Tesco. The Tesco required a leadership to fulfill the current requirements of communication, negotiation, responsibility, eliminate conflicts and so on. Due to diversity and need of competitive advantage create the future leadership requirements to the Tesco and these can be develop through on job training, discussion with seniors and informal learning.

Air China SWOT Analysis and Strategic Advantages

Air China’s SWOT Analysis and Strategic advantages in the Chinese market
China Ltd. is one of the largest carriers in the People’s Republic of China.
They are a very well-known airline. In the airline industry, there is a lot of
rivalry among different carriers. Air China Ltd. was a recipient of the 2017
“Most Popular Chinese Airline.”  (Air
China Ltd, 2017) Air China has been increasing routes domestically and
internationally connecting China to the rest of the world. This study is to
analyze Air China Ltd.’s business and strategic position in the airline
industry. Air China strives to become a world-class airline and has created
strategies such as expanding routes due to the growing number of Chinese
travelers, joining the Star Alliance to better serve its loyal customers as
well as subsidiary divisions of smaller airlines to boost revenue. The study
will conduct a SWOT analysis, strengths such as its massive route expansion,
and the Star Alliance, and financial ratios. Weaknesses are negative reviews
from passengers, as well as racial profiling will be covered along with financial
ratios of the company. Opportunities such as growing Chinese travelers will
create an opportunity for Air China to target them and create more routes, as
well as bilateral trades with the United States. Threats such as flight delays
and unruly passengers negatively affect the airline, lastly, terrorist attacks
have been a problem causing fewer people to travel due to the sense of
security. The Chinese market is very competitive as Air China faces competition
with local Chinese carriers China Eastern Airlines and China Southern. The
airline has the better market share in its own hub airport of Beijing, but
other airports and international destinations other airlines have the higher
market share. Although it is tough, a huge carrier well known to the world will
strive to become one of the best Chinese carriers in the world.

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Traveling outside of China for Chinese citizens twenty years ago were limited to the wealthy elite, and government officials, as today the Chinese airline market is growing tremendously. According to the Civil Aviation Administration of China, there is a total of 487 million domestic and international flights made in 2016. (Pham, 2017) China has a large population of 1.4 billion, and China is expected to surpass the U.S. in the airline market by 2030. (Pham, 2017) Air China is one of the main carriers in the People’s Republic of China. Air China has successfully expanded their market to connect to the rest of the world and maximizing their profit by taking advantage of China’s growing population of travelers. This is a strategic advantage in the Chinese market, and internationally. It is crucial for Air China to maximize its opportunities and minimize its threats in the airline industry, and finally, understand the strengths and weaknesses of Air China. Understanding these factors will not only make Air China one of the best airlines in the world, it will improve their strategic management.
Air China Ltd was founded in 1988. The company was known as Air China International Corporation. In October 2002, China’s central government implemented a reform plan, which caused the airlines at that time to merge. Air China International and China Southwest Airlines merged. On September 30, 2004, the company was rebranded as Air China Limited. (Air China Ltd., 2017) Soon the airline company became a publicly traded stock in Hong Kong’s Stock Exchange as well as London’s. (Air China Ltd., 2017) Air China is in the People’s Republic of China (PRC) and its major hub is in Beijing Capital International Airport. On December 15, 2004, Air China signed an agreement to become part of the Star Alliance, one of the largest airline network in the world. Air China is “China’s only national carrier.” They are the only carrier in China designated to transport the President and high-level government officials to visit other countries. (Air China Ltd., 2017) Air China currently provides its air transportation services to 39 countries and regions, with 66 international cities, 3 regional cities, and 115 domestic cities. With the help of Star Alliance, Air China expands to 1,307 destinations in 191 countries. (Air China Ltd., 2017)
The purpose of this study is to conduct a SWOT analysis of Air China Ltd. This will determine the strategic advantages the airline has in the airline industry and provide suggestions to improve the company.
Specific Objectives
This study will go over these specific objectives.
Examine the strengths and
weaknesses of Air ChinaIdentify the
opportunities and threats of Air ChinaContributions Air China
made to improve the Chinese airline market Comparison of Air China
and its competitors in China
SWOT Analysis – (S)trengths
Air China’s massive route expansion
 Air China is an international airline, it must
open routes to get its name out to the outside world. Air China has done a
great job at expanding routes to the United States, Europe, Oceania, and many
parts of the world. As stated on the Air China website, the airline provides
services to 1,330 airports in 193 countries (Air China Ltd., 2017) The mission
of Air China is to connect China to the world. The hub is Air China is Beijing
International Airport. Air China has created routes from bigger Chinese cities
such as Shenzhen, Chengdu, and Shanghai. On December 11th, 2017 Air
China announced its first transpacific route from the Southern city of Shenzhen
to the U.S city of Seattle-Tacoma. (Air China Expands, 2017) Another flight
mentioned Air China will start service from Chengdu International airport to
London in May 2018. These are ways Air China is striving to bring more Chinese
passengers to more international countries, as well as foreigners to visit
China from the comfort of their own airport. 
(Cantle, 2018) According to La Croix and Wolff (1995), the expansion of
air transportation is extremely important and will benefit Asia’s export
economy. In the case of Air China, not only bringing passengers to
international countries, the expansion of routes will also help the transport
of goods for sale to another country. This had really changed the Chinese
airline market as goods are traded through the Chinese market with other
Airline Alliance
China is part of the well-known Star Alliance. The Star Alliance is a
partnership between the 28 airlines. The Star Alliance serves 191 countries,
with 1,300 airports served. (Star Alliance, 2018) The total combined total for
current Star Alliance member airlines is a grand total of 164.04 billion U.S
dollars, with annual passengers of 725.51 million. (Star Alliance, 2018) Air
China uses Phoenix Miles. Being a part of the Star Alliance passengers from Air
China can earn mileage points from flying their partner airlines such as United
Airlines, Air Canada. Passengers can utilize priority boarding, exclusive
lounge access and other amenities offered. (Air China, 2018) The advantage of
having the Star Alliance is to expand routes to more destinations. Some
benefits Air China can get out of this is sharing other airlines check-in and
ticketing counters, and sharing lounges, and baggage facilities. (Star
Alliance, 2018) According to Casanueva, Gallego, Castro, & Sancho (2013),
the mobilization of destinations among partner airlines within an alliance has
positive as well as significant influence on the performance of each airline
company. As stated above, having an airline alliance the airline can use their
partner airline’s resources. According to Zou, and Chen (2016) Code sharing is
another strength of alliances. Airlines can use other partners major
hub-and-spoke. With the benefit of taking advantage of hub-and-spokes airlines
can expand globally without using its own resources. Airlines feed traffic
throughout spoke cities to its hub cities, using hub-and-spoke networks
airlines are profiting through connections. An example would be Beijing to Los
Angeles, the passenger will need to transfer to Las Vegas. As United Airlines
is part of the Star Alliance, they can pick up Air China’s passenger and
transfer their bags over to the next flight and utilize that codeshare
agreement. That way both airlines benefit.           
Higher profitability ratios than the competition
Air China has higher profitability ratios than its competition China Eastern Airlines and China Southern Airlines. According to Mergent Online Air China has been improving in ROA% where it started off at 1.84% in 2014, and later increased to 3.34% in 2015. Although in 2016 it dropped by 0.24% they came a long way from 1.84% in 2014. In general ROE, and ROI has been increasing over the past 3 years. Air China is one of the largest airline companies in Mainland China, from looking at their financial ratios Air China is a profitable airline. 
Higher Asset Management than the competition
According to Mergent Online, Air China is doing well managing its assets than its competition, from examining China Eastern Airlines and China Southern Airlines their asset management is a bit low. Air China is the dominant carrier in Mainland China. An example would be their Cash & Equivalents Turnover, in the year 2014 Air China started off at 8.3, in 2015 at 12.43 then at 2016 it increased to 15.49. It increased a lot. This shows that Air China can quickly turn its cash and equivalents quickly.
SWOT Analysis – (W)eakness
Low rating scores
of the weaknesses of Air China is the low rated consumer scores. According to
SkyTrax (n,d), Air China is given a 3-star rating out of 5. The scores were
weighted from categories such as Airport services, Lounge, Onboard product, and
Cabin Crew service. From reviewing the scores on SkyTrax, the airline seems to
fail on the following categories: Staff assistance on arrival given, transfer
service assistance, washroom amenities, selection of wine and beverages, service
and service hospitality, interaction with customers, lastly language skills. A
lot of the issues were related to customer service, a passenger had posted
reviews describing their unpleasant experience inflight regarding the cabin
crew had little to no service on board, and lack of English speaking skills.
According to Chow (2014), customer expectations of the service provider is a
huge factor that will affect customer satisfaction.  Customers will often state their dissatisfaction
and share it with the public with social media such as Yelp, TripAdvisor. And
SkyTrax. Having negative reviews will affect prospective customers that may not
fly with the airline due to the poor customer service. According to Wang, Fu,
Zhou (2013), North American airlines strongly rely on passenger service as 90%
of their revenue. The Americans value customer service, airlines such as Delta,
American, Southwest are so successful today. Customer service is a must in any
business if customers are dissatisfied with their experience they will not
return. Air China will need to improve their customer service.
Racism Issue
September 2016, on a London bound flight, an in-flight magazine was given out
to passenger’s onboard showcasing information about London and its attractions,
cuisines, culture, and tips while traveling abroad. A CNBC reporter was onboard
that flight, reading a magazine and she stumbled into a very racist tip
regarding areas with large populations of ethnic minorities. (Mullen, Jiang,
2016) The statement was stated that London was a safe place to travel, but
visitors must take extra precautions when visiting areas that are filled with
minorities such as Indians, Pakistanis, and Black people. The airline suggested
visitors not to venture outside alone and suggested females be accompanied by
another person as these ethnic groups are dangerous. According to Diebelius,
Davis, and Newling (2016), the racist statement was interpreted by citizens of
London that their city was a bad place to visit, locations such as London are
very popular destinations among tourists but having a negative statement
towards minorities is unacceptable. This also puts negative tensions against
Air China because this is what they believe in. Citizens of London expressed
thoughts of hate to the Chinese carrier and did not want the carrier to fly to
London. Citizens also vouched to welcome Chinese tourists to areas where there
are a lot of diverse communities with open arms. (Diebelius et Al. 2016) The
article was then posted on the social media platform of Twitter, where a lot of
users expressed hate among the Chinese airline. Air China, apologized to the
public due to an editorial error made by its publishing company and withdrew
all its in-flight magazines. The United Kingdom is a major market area for the
Chinese, as in the year 2015, the increasing number of Chinese visitors rose by
46% to a total number of 270,000 arrivals. (Air China Under Fire, 2016)
Editorial mistakes like this can cause tensions with the United Kingdom and may
want to prevent Chinese tourists from entering their country. This is a major
weakness of Air China, as passengers that rode the airline which was from those
ethnic backgrounds may want to avoid the airline due to the fact they were
identified as “bad people”.
Low-Interest Coverage
of all airlines, Air China has the least in the category interest coverage.
China Eastern Airlines started off in 2014 at 2.41 and then gradually increased
to 956.19 in 2016. That is a substantial increase. China Southern Airlines had
the most among the three from the year 2014 at 2.47 and increasing to 1,216.18
in 2016. That is a huge increase from its competitors, as Air China will need
to work harder on its low-interest coverage.
SWOT Analysis – (O)pportunities
More Chinese travelers
According to Peck (2017), The growing
number of Chinese travelers are increasing every year. Nationals of Mainland
China went on 136.8 trips in 2017. Chinese tourists have spent about $292
billion dollars abroad. They have spent more than the Americans and Europeans
while traveling abroad. (Peck, 2017) As more Chinese travelers are willing to
travel abroad, according to Zhang, Yang, Wang. & Zhang (2013) the Chinese
airline industry experienced tremendous growth. Air Passenger traffic in China
has grown more than 17% during the past 30 years. China is now the second
largest in air transport market since 2005. It is expected within the next 20
years the rate will slowly increase. (Zhang, et al. 2013) China indeed becomes
a major economic powerhouse with large middle-class people that can travel
overseas. (Pan et al. 2016) Since the growing number of Chinese nationals are
increasing Air China will always be in business, as there are customers willing
to travel outside of their country.
China to boost more economic trade with the United States
Chinese trading industry is growing incredibly. According to Geng, Sarkis,
& Ulgiati (2016), China is the largest exporter and known as the second
largest importer in the world. China produces a lot of industrial goods used
for buildings, and mechanical and electrical goods as well as high-tech goods.
The USA is known as the world’s largest economy, which is made up by foreign
trades. The gross value of China’s foreign trade in 2001 had increased from
1.32 trillion USD to 8.23 trillion USD in the year 2012. (Geng et al, 2016)
This is an increasing trend as China exports more items over to the USA than
the import items. From the years 1993 to 2008, there was a 300% increase in
trades as shown in the table below. Today, Beijing and the U.S has made an
agreement for more American imports to China. President Xi Jinping and
President Donald Trump created a $350 billion-dollar trade. The U.S will trade
liquefied natural gas to China, which is highly demanded the improvement of
China’s environment, and U.S beef will also be allowed into China thus creating
an end to the 14-year ban of American beef. The U.S will also allow China to
sell its poultry in the U.S. (Delaney, Lu, 2017) Air China has the opportunity
as the largest and the official carrier of China to do these trades through its
cargo company Air China Cargo.
Table 1: Chinese imports and exports to the U.S
Source: Geng, et al. (2016)
SWOT Analysis – (T)hreats
Flight Delays and Unruly Passengers
airports are known for the worse delays. According to Bergman (2016), there are
numerous factors that airlines cannot control. First, the Chinese airspace is
regulated by the military, which means there is little space for aircraft to
use the runway to take off. About 30% of airspace can be used by airlines. Massimiliano,
Seddik, & Zhu (2016) analyzed the delay of Chinese airports. The percentage
was broken down as The Civil Aviation Administration of China counts estimated
for 40% of the delays were airlines related due to maintenance issues or
passenger problems, air traffic control counts for 20% as there is a lot of air
carriers arriving and leaving Chinese airports daily. Weather is another factor
which counts for another 20% due to heavy rain, snow, and fog, and lastly,
military exercises count for 10%. The 4 categories listed above, count for 90%
of delays in Chinese airports. (Massimiliano, et al, 2016) Flight delays hurt
the airline’s reputation, it will cost them time, and money. This is not
something they can get back so easily. Delays are uncontrollable as there are
different factors that happen in the airline industry.
Figure 1: Comparison chart of delays Rest of the world
Vs China

uncontrollable factor by the airline is unruly passengers. As the flight takes
off, there can be a bunch of factors that case diversions. Passengers may throw
fits on the aircraft, threatening other passengers on board and flight crew.
According to IATA, in 2016 there was one incident for every 1,425 flights.
Alcohol and drugs can also be the cause of these problems. According to the article
“Stronger Laws for Unruly Passengers” (2014), Unruly passengers are known as a
very small minority, and they can cause serious consequences that can put other
passengers and the flight crew in danger. When a problem occurs in flight, if
the crew feels the passenger is endangering everyone on board, a decision must
be made and divert the plane back to its origin, or to the closest airport.
China is known for its boisterous tourists, a common problem for Chinese and
international airlines. Air China has experienced these problems with unruly
passengers in the past. Flight diversions will cost the airline a lot of money.
Issuing customers vouchers or coupons to use at airport restaurants, hotel
housing, changing flight schedules, and refueling.  Table 2 refers to the amount of unruly
passenger on board that affected the flights. As the title shows, according to
IATA (2016), 9,837 incidents were reported. The year that had the most was in
2015, while 2016 it dropped by one.
Figure 2: Reports of unruly passengers
Source: IATA (2016)
Terrorist Attacks
is one of the most concerning threats to all airlines in the industry. It is
very difficult for airlines to prevent these threats. Terrorist has ways to by
pass-through TSA screenings as well using fake identity’s. The enhancement of
security at airports has been improving since the well-known terrorist attack
on September 11th, 2001. This has shocked the entire world as a
group of terrorists planned to hijack aircraft and suicide bombers for one
purpose to destroy America. Air China had not experienced any terrorist attacks
on board, but an airline in China named Tianjin Airlines experienced a
hijacking in 2012. (Qiu, Liu, 2012) According to Hall (2002), the aftermath of
terrorist attacks affects the public, this affects their decision if they would
like to board a plane to travel or not. The psychologic effect is caused by streaming
of media, as fewer people would travel out of their country with the fear of
terrorist hijacking aircrafts and wreaking havoc. According to Oxly (2017),
airline revenue can take a loss of 2.5 billion due to terrorist attacks. The
airline industry cannot control these factors, they are not able to control the
decision made by people. An important issue airline can work on is gathering
intelligence through no-fly lists where passengers are blacklisted due to prior
or past events that occurred in flight or at airports, as well as working
together with TSA and customs officers to prevent shady passengers from
entering the aircraft.  
Contributions to the Chinese airline market
of the major contributions Air China made to the Chinese airline market was
creating smaller subsidiary airlines to connect throughout the rest of China to
counter its competition. Subsidiary airlines such Air China Cargo, Air Macau,
Shenzhen Airlines, Dalian Airlines, and Beijing Airlines as well as owning
shares with Cathay Pacific Airways and Shandong Airlines. (Air China, 2018) The
goal of Air China is to cover more ground, which most of its business is from
its domestic flights. Air China not only covered more ground in domestically,
it has expanded to 193 countries with affordable tickets than their
competitors. According to Fong (2005) Airfares have fallen since 2003,
state-owned airlines such as Air China are able to discount fares as up to 40%
without consent through the Chinese government. Air China tries to be competitive
in their airline industry, as said earlier with the expansion of its subsidiary
routes they can cover more ground in China, as well as relying on the Star
Alliance to get more recognition through its code-share flights. Beijing
Capital International airport is well-known as the second world’s busiest
airport, Air China has that advantage in its favor due to the fact Beijing is
its major hub where most of its flights take place. Strategic planning and
pricing is a must for Air China.
Air China vs Other Chinese Carriers
China is the largest carrier in the People’s Republic of China. There are a lot
of airlines in Mainland China but will only focus on two of its major
competitors in China. China Eastern Airlines, in Shanghai and China Southern
Airlines in Guangzhou. These are the top 3 carriers in Mainland China. Beijing,
Shanghai, and Guangzhou are huge cities with a large population of people, and
the cities have experienced economic growth. The chart below shows the market
percentage each airline has in their hub city. Air China has the advantage in
their hub at Beijing Capital. Other airlines are reaching 34.2%, Air China may
need to step up to prevent other airlines from catching up to them. On the
competition, China Eastern Airlines hub is in Shanghai which covers Shanghai
Hongqiao and Shanghai Pudong, Air China is weak at 5.6%, and in the territory
of China Southern in Guangzhou Baiyun international airport, Air China is weak
at 6.8%. Other airlines have higher percentages in Shanghai vs Beijing and Guangzhou.
Air China will need to step up and work on their customer service skills
mentioned in the weakness section.
Figure 4: Market Share of
each airline within their hubs
Source: Bloomberg, (2017)
the next table below compares Air China, China Southern, China Eastern and
other airlines in international markets outside of China. Air China prevails in
the U.S, European market compared to its counterparts. China Eastern does
better in the Japanese market and China Southern does extremely well in the
Australian market. As shown below, the category “other airlines” in every
market except Australia have higher market shares than the 3 leading Chinese
airlines. According Airlines in China (2017) domestic flight accounted 91.2%,
while international flights accounted for only 8.8% for Chinese airlines in the
year 2016. A forecast was made for 2021 a forecast of 858.9 million passengers
with an increase of 76.8%. China will continue to increase because of the
growing number of passengers. Air China needs to work on perfecting its
customer service, and market to more foreign destinations. The future for
Chinese airlines will be strong.
Figure 5: Chinese airline market shares on
international routes

Key Findings
to the intense competition in the airline industry, it is extremely important
to analyze the strategic advantages of airlines when competing against
competitors. From performing the SWOT analysis on Air China, we are able to
access the strengths, weaknesses, opportunities, and threats for the airline.
According to the strengths of Air China, the massive route expansion has
benefited the Chinese citizens connecting to more cities, as well as connection
to other countries. The Chinese economy is growing, and more Chinese nationals
can afford to travel, as more routes are opened there are more doors to Chinese
travelers. The Star Alliance is also the largest airline alliance in the world
with 28 airlines.
Air China is part of this massive airline alliance, passengers of Air China are
able to fly on partner airlines and accumulate mileage and take advantage of
priority check-in, boarding, lounge services, etc. Being an international
airline, in certain countries where the airline has routes too, Air China can
take advantage of partner airline’s check-in counters, lounges, and baggage
facilities. The main benefit is to cut costs and utilize the hub-and-spoke
system to gain more feedthrough airport transits from other airlines.
are some weaknesses Air China will need to improve on such as customer service,
by improving employee relations to customers, Air China will do much better
than its competition. The airline industry is highly competitive, Air China
needs to take advantage of its opportunities to minimize its threats to
succeed. In order to become an even better airline, Air China needs to create
and utilize its strategic advantages, to become the most profitable, successful
airline in the world.
The contributions of this study were to analyze and discuss the strengths, weaknesses of Air China, and to identify the opportunities and threats for the firm. By performing the SWOT analysis the airline can understand its strength and weaknesses, and opportunities and threats outside of the company. By understanding these factors, the airline can improve its company effectively and financially by maximizing its profits and provide the best service. The key findings of this study will be beneficial to Air China, which will help improve its strategic advantage, to help minimize its weakness and threats to become the best airline in the world.
Air China may not have the best reviews and customer satisfaction on SkyTrax and Tripadvisor, they will need to work on their customer service. Passengers are complaining about the lack of hospitality they are receiving from the cabin crew and their lack of English speaking skills. As this is a problem when traveling, some suggestions would be creating mandatory training classes for everybody, ground staff, cabin crew, and the employees that deal with the passengers. Occasionally, a training course should be implemented to refresh customer service skills. Being a flight attendant, it is important to know the English language, as it is a universal language of the world when traveling to international countries. English courses should be implemented for ground staff and cabin crew about airport operations and inflight.
When referring to the competition of the Chinese airlines, Air China faces two major competitors. China Eastern Airlines and China Southern Airlines. As shown in table 4, Air China is prevailing in its major hub at Beijing Capital International airport, China Eastern, and China Southern remains victorious at their own hubs, as well as other airlines are catching up. In table 6, shows the market share of Air China, China Eastern, and China Southern in areas outside of China. Air China must come back with a strong strategic plan to counter its rivals. Air China has intense competition between the 2 main carriers of China as well as other carriers in the market. A competitive profile matrix should be done to analyze the major strengths and weaknesses of the competition, and what Air China can do to take over the cities in China where the competition is victorious. Lowering airfares can help, as well as improving their customer service inflight for passengers, and improving technology on board such as Wi-Fi, movies, and aircraft design are one of the factors to success. Customer service is extremely important in the airline industry. If nothing is done about improving the customer experience of their passengers, everything will go downhill. Air China has the potential to do well in the airline industry as it is the largest carrier of the People’s Republic of China, the airline will continue to open new routes as well as ways to satisfy its passengers. 
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Analyse The Factors Affecting The Strategic Plans

Tesco plc is a well-established and consistently growing food retailer global company operating in UK and many other countries like USA, Europe, Thailand, China, Japan and so on. It was established in 1919 by Jack Cohen, when he sold some groceries in the stall in East London and then it later lead to the opening of the first Tesco store in 1929 in North London. Using the well-researched and consistent strategy for growth, Tesco has been able to strengthen their core UK business and lead them to expand into new markets. Tesco has already been declared as the no.1 superstore in UK against its rivals Asda, Sainsbury and Morrison. Tesco is still aiming to broaden the scope of their business to enable it to deliver strong sustainable long-term growth by following the customers into the basic and the large expanding markets at cheaper price. Currently, Tesco has over 2200 stores in UK and has been able to reach every possible customer through its different types of outlets as superstore, metro, extra, express and by various means as online shopping through Tesco direct, Reserve and collect plus loyalty/club cards, insurance, clothing, banking and financial services, telecoms, insurance.

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So this report will be identifying Tesco’s vision, Mission, its current strategic objectives, evaluates them and analyses the factors that will be affecting strategic plan. The purpose of this case study is to review and determine the organizational strategic aims and objectives identify and analyse the progress towards organizational strategic aims and objectives and to determine and evaluate strategic options to support a revised strategic position.
1.1 Identify the current strategic aims and objectives
Our well-established and consistent strategy for growth has given the business momentum to grow through the downturn. (1)
Long term Strategy
According to Tesco’s official website it is clearly evident that Tesco has a well-established and consistent strategy for growth. The rationale for the strategy is to broaden the scope of the business to enable it to deliver strong, sustainable long-term growth by following customers into large expanding markets at home – such as financial services, non-food and telecoms – and new markets abroad, initially in Central Europe and Asia and more recently in the United States.
The objectives of the strategy are:
Successful global retailer
Tesco aims to be one of the most successful global retailer organisation in the world. With this idea in mind they have opened stores in many other countries like Canada, USA, Europe, Thailand, China and Middle East.
Growth in core UK business
Tesco also aims on growing its business as the core UK business as it is originated here. It had 1500 stores in UK in 2007 whereas the number has reached to over 2000 by now. And it has diversified its market from only being a food retailer to selling fuel, clothes, housing, finance, banking, insurance, mobile broad band and electronics.
Strong non food retailer
As Tesco has been known for its food items and is the leader in food retailing, Tesco also aims to develop the rest of the retailing it has been doing. They are working hard to be as strong in non-food as they are in food.
Developing banking and finance
Tesco is also working for developing retailing services – such as Tesco Personal Finance, Banking, Telecoms and This is showing that Tesco is determined to help its customers even with the financial and banking services. As the name specifies, Tesco is all set to deliver ‘Every little helps’.
Community friendly Approach
Tesco is determined to put community at the heart of what they do and help maintain the natural balance.
Values and aims
According to the official website, Tesco feels that: ‘No-one tries harder for customers than Tesco’ They have mentioned that they understand their customer’s needs and they want to be the first to meet their needs and at the same time they want to act responsibly to their community in order to avoid any kind of degradation in the environment and ethnicity.
Tesco promises to treat people as we like to be treated:
”Work as a team…Trust and respect each other…Listen, support and say thank you…Share knowledge and experience….so we can enjoy our work.”
Tesco has been taking regular feedbacks from customers by asking them and the staff what can be done to make shopping with them and working with them better.(2)
1.2 Undertake an evaluation of the component parts of a strategic plan
Tesco’s strategy to diversify the business in 1997 has been a very important landmark and the base to the success of the company. Product Diversification from being only food retailer to non-food retail was the best decision that has made Tesco to be the market leaders in many of their markets in and outside UK.
According to Tesco’s official website (, its vision and mission are:
Vision- Every little helps.
Tesco’s vision is very simple as it is stated. It simply focuses on providing every little helps to the customers. Tesco is willing to follow the customer’s and their basic needs and be the only retailer to help them out with every kind of help they need -small or big
Tesco aims to broaden the scope of their business to enable it to deliver strong long-term sustainable growth by following their customer into large expanding markets at home – such as financial services, non-food and telecoms – and new markets abroad, initially in Central Europe and Asia, and more recently in the United States
Chairman s statement
Over the past decade Tesco has transformed itself into a diverse international business- we are well-positioned for long-term growth.
Tesco is scanning the external environment as much as possible in order to develop its mission and vision. All these efforts from Tesco is making them able to meet their strategic plan to be everywhere, to sell everything and sell to everyone . Managers are taking further actions to full fill their promise. They are satisfying and identifying customer needs through affordable prices, quality products, home delivery, 24 hrs service, recycling, business expansion and technological developments such as online shopping and home deliveries. These evidences shows that; there is a clear alignment between their mission. Vision and strategies. This helps tesco in being market leader in UK retail super markets.
1.3 Analyse the factors affecting the strategic plan
For any business to run and meet its long-term strategic aims and objectives, there is a great involvement of the environment. The environment is divided into Macro/external and Micro/internal environment and there factors which are affecting the long-term organisational strategic planning. Some factors both external and internal for Tesco are discussed below:
Internal factors are those factors which come from the business and affect it without any regards to the external factors like suppliers, customers, distributors and so on. Some examples are Research and Development, Employee Turnover/employee satisfaction, Physical assets, mission and objectives and so on. The internal environment consists of variables (Strength, Weakness, Threat and Opportunities) that are within the organization itself and are not usually within the short-run control of the Top management. This variables form the context in which work is done. They include the cooperation’s structure, culture and resources, Key strength form a set of core competencies which the organization can use to gain competitive advantage.
(Thomas L. Wheelen, J. David Hunger (2000). Strategic Management Business Policy. p10)
By analyzing PEST Analysis, it is observed that Tesco’s strategic plan is affected by various external factors. They are:
Government interferes in the economy of every company. Factors such as tax policy, labour law, environmental law, trade restrictions, tariffs and political stability makes the major impact on the business and the society as well as the global market. This year the government has increased the tax from 17.5% to 20%. This has affected the profit of Tesco and is affecting the long-term aims, mission and vision of Tesco.
Economic factors include economic growth, interest rates, exchange rates and the inflation HYPERLINK “ / Inflation rate”rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a Tesco’s revenue and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy.
Example: increased fuel tax, impact of credit crunch on sales.
Social factor includes the cultural aspects and include growth rate of population, age distribution, health consciousness, career attitudes and health and safety. Changes in the social factors affect the demand for a company’s products and how that company operates. For example, the new trend of health consciousness has resulted in Tesco to produce more organic and low fat foods such as skim milk, organic milk, organic vegetables, Lighter choices with nutritional value mentioned in the product and local charities and getting Thailand over fit- 3 million people involved in aerobics Tesco has changed various management strategies to adapt to the social trends such as recruiting older workers and long term unemployed people as a part of social responsibility; Regeneration: where people who are unemployed for more than 6 months had been trained for several weeks and were guaranteed jobs; Community Champions and many volunteers helping the community and local charities. (UK supporting cancer research with race for life to fight against cancer) (4)
Technological factors include technological aspects such a Research and development activity, technology incentives and the rate of technological change. Technological changes in Tesco can affect costs, quality, and lead to innovation. Example: Use of self check out service, online shopping and reserve and collect service(new) has saved huge amount of labour cost, has avoided customers from being charged for same product more than one time plus has saved time of the customers. Or use of security system and CCTV cameras has prevented Tesco from having huge amount of stock variances and made the staff more work efficient with the fear of being caught while doing irresponsible activity during their duty hours.
Environmental factors are growing awareness of the potential impacts of climate change is affecting how tesco operates and the products they offer, both creating new markets and diminishing or destroying existing ones. Zero carbon foot prints, Recycling, sustainability are the areas of focus for tesco, so that the products have been labeled with the message of recycling. Using local resourced products is attracting customers towards the specific food products.Example: climate change affecting Tesco’s supply and transport.
Legal factors include discrimination law, consumer law, data protection law, antitrust law, employment law, and health and safety law. Assuring Health and safety in all the regions wherever it is expanded is one more challenging Legal responsibility of Tesco. These factors can affect how Tesco operates, its costs, and the demand for its products.
Example: Tesco to avoid the legal opposition to expand on the high streets
LO2: Evaluate alternative strategies to meet the desired future strategic position.
2.1 Apply a range of strategic analysis tools to audit progress towards strategic aims and objectives
Strength Weakness
· Giant Leader in superstores
· Financial stability
· Huge Brand name
· Bulk goods importers and sellers
· Product Diversification from being food retailer to non food plus electronics, telecom, insurance, banking and finance
· Competitive pricing-providing goods and services in low price
· Ensuring Health and Safety in different parts of the world
· Maintaining Quality issues as the goods are supplied from different suppliers abroad, out of which some are not very experienced with maintaining high quality.
· Stabilizing itself as a good non food retailer.
· Maintaining their presence and growing customer loyalty in the recently expanded countries
· Expansion in more developing c countries
· The competitors: Asda being competitively cheaper Sainsbury, Morrison being food retailers with comparative pricing
· Environmental issues and corporate Governance responsibility
Opportunities Threats
Giant leader in superstore and financial stability
Tesco has over 2200 stores and Tesco holds more than 71% share in the UK retail market
Its strategic capability explains that it will continue to grow share in food, while increasing space contribution from supermarket will allow it to drive a higher share in non-food.
Tesco’s business growth shows no sign of failing. In the UK, Tesco’s late 2006
investment into West-midlands based convenience store group T&S was billed as the
most aggressive move into the neighbourhood market by a big-name retailer so far. They are aggressively expanding and going with acquisitions with the local food stores.
The deal has turned Tesco into the country’s biggest convenience store chain, and the company also plans to open up 95 new stores PLC in the UK this year which includes 6 stores purely based on Regeneration Scheme. Tesco’s general growth shows no sign of failing.
Health & safety issues and maintaining quality
Maintaining health and safety is a major challenge for Tesco. From the suppliers to warehouses and to the store, there is always a risk associated. Plus making sure that the stock is properly handled in the store by stacking them properly and the use of trolleys and their proper management is also the major responsibility of Tesco. They must make sure that every single person who is linked to Tesco should be safe while they operate their operations.
Maintaining the quality and standard of goods they supply is also a major challenge to a bulk good retailer like Tesco as they have to get goods from their suppliers all around the world. They have been very fair to their suppliers and they want them to be decent to them by maintaining the standard of the goods they produce and supply.
Business growth and expansion in Europe is successful but it still has to work in some other parts of world. They have just started exploring Asia but being all over Asia and the rest part of the world is a strong opportunity. Being established as a non-food retailer is another very good opportunity for Tesco. Since the start of diversification, they are working to prove Tesco not only as a grocery store but a superstore providing customers with every little helps.
2.2 Review and assess the expectations of major stakeholders and their influence upon the organisational strategy
Engagement with stakeholders is helping Tesco identify new risks and opportunities and to ensure that their long-term goal and strategy is sustainable. In some cases, they have found that working with stakeholders in partnership can help deliver shared goals. Tesco feels that they might not be able to satisfy all stakeholder concerns all the time but through proper engagement they can do their best to balance competing demands. Tesco is very committed to having a productive dialogue with its stakeholders inorder ensure that they understand what is important to them. This is allowing themselves the opportunity to maintain their position. Engaging with stakeholders includes customers, employees, suppliers, investors, government, regulators and non-governmental organisations.() (
The major stakeholders of Tesco plc.are:
Customers need to be able to trust tesco’s business and they will only trust only if they believe that there is appropriate engagement in regular basis with the stakeholders. Tesco has been using various strategies to able to win the trust of its stake holders by following various strategies such as Cost leadership, diversification,
Tesco believes that if they can offer what the customer needs than surely they will come back and purchase again. This is helping to establish and gain lifetime loyalty of the customers. The launch of Club cards is helping customers satisfy their needs and quality services are the functional business strategy of Tecso. They have been innovating more than 2000 new products (food/non-food) every year depending upon the demand of the customers. Example: Launching organic, dietary and healthier food options, Nutritional values in the packaging and making sure that the quality of the food is maintained by doing mystery audits in the supplier’s factories. And the new self check out system where customers can grab whatever they want and go has helped the customer to manage their time and made it simple to operate.
According to the Tesco website, Tesco says ‘No-one tries harder for customers:
Understand customers.
Be first to meet their needs.
Act responsibly for our communities.
Treat people as we like to be treated: Work as a team. Trust and respect each other. Listen, support and say thank you. Share knowledge and experience….so we can enjoy our work.
We regularly ask our customers and our staff what we can do to make shopping with us and working with us that little bit better.”
This proves Tesco has been treating their customers as the core of their business and are providing every simple and small helps by being fair to them.
Tesco employees 285,000 employees. Philip Clarke, Chief Executive from 2011 says ‘If we don’t look after our staff the chances are they will not look after our customer.’
Tesco has been using the term ‘A great place to work’ in which they include;
”Our staff have told us what is important to them – to be treated with respect, having a manager who helps them, having an interesting job and an opportunity to get on. Helping achieve what is important to our staff will help us to deliver an Every Little Helps Shopping Trip for our customers.”
The statement clearly states that they treat everyone with respect and dignity. At the same time they have great managers who are always ready to help the team and make their job interesting everyday and giving them good opportunities by job rotation, job enrichment and job enlargement. These activities take the employees off from the regular job pattern, motivates them to learn and do new things everyday. And staff are the basic point of contact to customers and it is very important to get them right to gain satisfaction and loyalty of all our customer.
Employees are the most important and basic level of contact with customers. Every customer remembers his first experience when he visits the store and the way he had been assisted. A good and motivated employee always treats them very well. So Tesco has been very focused to make sure the employees do their duties in the right way and makes sure that every customer and even the employee is being treated in the right way.
Rewards wise also Tesco is the only organization which has been giving bonuses to their staff on doing their regular jobs. For maintaining the accuracy of stock level they get 15% bonus, till accuracy 5% bonus and Mystery shoppers result 5% bonus. Apart from this there are more benefits and rewards the employees are getting like holiday pay, outstanding service award, discount in shopping, career breaks, free company shares.
Tesco has recently given a huge amount of share profit to its employees (02/06/10). More than 216,000 Tesco staff, from checkout operators to drivers and managers found out that they will share a £105 million bonus pot as the company announced details of its biggest ever ‘Shares In Success’ scheme(
Tesco has been supplying goods from different parts of the world as the bulk retailer has to meet the demands of huge retail market segment like Kenya, South Africa, Spain, Scotland, Wales, and has high expectations of its suppliers. They have built a strong relationship with their suppliers, have given them the best value for their customers and given their customers the confidence of maintaining good standard through out their chain. They are very focused in treating the people in the right way so that they perform better and which will automatically helps in improving sustainability in their supply chain by encouraging suppliers to make proper investment in products and stable work. Due to their decent pricing, Tesco is confidient to keep the trading for longer period of time and is willing to get enough support from its supplier by being with them and helping them maintain their ethical and food standards. Tesco has been sourcing products from the countries which has cheaper good employment practices, cheap labour and less regulations to maintain the level of margin. ( Tesco has been paying more for the diary suppliers. Kenayen suppliers had been supplying goods since long time. Tesco launched an awarding agenda where they had been launching surprise visits and evaluating the hard work done by the suppliers and rewarding them afterwards. Tesco has also been providing necessary training to the supplier’s staff in Kenya, South Africa.
The following diagram shows the competitive rivalry and shows the effect of stake holders in the business.
2.3 Analyse, interpret and produce a structured evaluation of the organisational strategic position
Note: The challenges faced by the organisation may be identified, for example, competitive environment, external climate and globalisation (if applicable) may be examined. The knowledge gained by studying Porter’s three generic strategies and PESTAL analysis may be applied.
Political view reflects that the economic downturn- credit crunch has lead to high number of unemployment. But Tesco has been able to help a number of people by providing them jobs.
and therefore helping the unemployment.
Regeneration: People who are unemployed for more than 6 months had been trained for several weeks and were guaranteed job. Three new stores were opened and 320 people were employed. 6 more stores will be opening this year.
Community Champions: Tesco has Community Champions and many volunteers helping the community and local charities,
Healthy living for customers: is one of key promise by Tesco and is celebrated by producing healthy products like lighter choices, nutritional value mentioned in the product, getting fit-Thailand over 3 million people involved in aerobics, UK supporting cancer research with race for life to fight against cancer. Tesco is also instrumental as a retailer in supporting carbon reductions and have also encouraged their customers to make low carbon choices .They created a £100 million Sustainable Technology Fund for this purpose.
At the same time they are maintaining the eco-friendly approach by helping reducing the pollution-they are passing the message to their customers to reuse and recycle the wastages.
LO3: Decide upon a strategy and identify how, if required, you would justify your selection to meet the required future strategic position.
3.1 Identify and develop a range of alternative strategic options to meet strategic aims and objectives
Note: This section requires the candidate to apply his/her own judgement so that a few alternate options are visualised and discussed,. For example the candidate may propose emphasis on alternate products, or increased after sale service, or following aggressive marketing strategy etc.
During the 1980s Professor Michael Porter from Harvard Business School developed the model of generic competitive strategies. He called the strategies generics as they can be undertaken by businesses of any size or type, even if they are non-profit organisations (Hunger and Wheelen [2001]p82).
He argued that companies only have three strategies to choose from:
Cost leadership
Porter also believed that before a company decides which strategy to adopt, it must know its competitive scope: the breadth of its target market, the range of products it wishes to produce, the distribution channels, the type of buyers and geographic areas it wants to serve and the related industries it will be competing in (Hunger and Wheelen [2001]p82).The cost leadership strategy is aimed at the broad mass market and requires actions like cost minimisation in research and development, services, sale forces, advertising and so on. By doing this the company will sell its product for smaller price than its competitors but still achieve reasonable profit. This also creates entry barrier for the new market entrants, as it would be difficult for them to match the low cost of the existing producer. (Hunger and Wheelen [2001] p83).
The differentiation strategy is aimed at the broad mass market as well, but this time creating a product which must be perceived as unique by its customers, for example through design,
The strategy aims to gain customer loyalty and therefore making the buyer insensitive image, technology, customer service, dealer network and so on to a higher price. This again will also make entry more difficult for new entrants (Hunger and Wheelen [2001] p83).
(Hunger and Wheelen [2001] p83) argue, ‘differentiation strategy generates high profits as it creates a better entry barrier. Low cost strategy however creates increase in market share.
Focus strategy concentrates on serving only a certain niche market as either a cost leader or with a differentiation strategy. In cost focus a firm seeks a cost advantage in its target market only, in differentiation focus a firm seeks differentiation in its segment (Lynch [2000]p.568)
The following diagram may illustrate Porter’s model in more detail:
Fig: Porter’s Generic Model
Tesco has been implementing the cost leadership strategy since its establishment. And after going to non-food retail in 2004, it also applied the diversification strategy in their business to meet the customers every needs. Tesco launched its own broad band in 2004 followed by Home plus in 2005. Globalisation has been another important step taken by Tesco. Though Tesco’s Fresh n easy did not do very well in USA in the first 2 years of its establishment, now it is maintaining its grip among the customers, according to Sir Terry Leahy Chief Executive. Tesco has been very successful in Europe and in Asia. To flourish more of its business in South Asia, Tesco has an exclusive franchise agreement with Trent, the retail arm of Tata Group to support the development of their Star Bazaar format by the end of 2010 in India.
Since Tesco has already used the first two strategies, it still has the Focus strategy in hand. Tesco can still aim on the niche markets and work on that segment of the market in order to gain more market share. Tesco has recently opened their first baby store in Manchester which provides all the necessary materials to the toddlers including clothes, push chairs, strollers, car seats, high chairs etc. Similarly, the start of DRIVE-THRU store has covered another segment of people who drive and have very strict time schedule.
Apart from that Tesco should also work on its weaknesses. Maintaining Health and safety in all parts of the world with its globalisation and maintaining quality of goods upto the Tesco standard at all times is the major challenge. Tesco should make sure that their ware house, supplier’s factories and even the shop floor should be Health and Safety approved and should have all kinds of equipments that helps in maintaining it such as use of helmets, gloves, safety goggles and also training the people with right procedures of lifting weight, handling chemicals and so on.
Tesco must make sure that every product they sell is 100% hygienic to the customers and has the same quality and standard at all times. Because of having different suppliers all over the world and buying goods on bulk, Tesco might not be have been able to keep proper maintained standard at all times(as some issues were raised last year regarding the bread supplier) So focusing strategy is not only a good idea to get a grip over the niche market segments but also to maintain its brand value among the existing customers.
3.2 Determine and justify the strategic option that meets the revised strategic position
Note: Out of the alternate options in 3.1 above, the one which is considered to be most suitable to meet the new strategic position, may be identified. Justification may be given as to how this selected option is likely to fit in the present position.
Out of the various strategies suggested above in 3.1,Focus on maintaining quality and brand value at all times all over the world without a single compromise is the most important option which is most suitable to meet new strategic position and is likely to fit in the present position.
Tesco has already been market leader in Cost leadership and has used Differentiation strategy to its limit by understanding the needs of people to the basic extent and providing them the services and satisfying them. They have already started working in the niche marketing strategy by starting DRIVE-THRU store and Kids store. Tesco is aiming to launch mortgages in the first half of 2011, followed by current accounts in the second half of 2011/2012 financial year.

Strategic Management Accounting and applying it

With the rapid development of the global economy, traditional management accounting has been difficult to meet the business strategic management and requirements. Strategic Management Accounting(SMA) for the modern enterprise is of great significance. However, it is a new techniques and approaches. Although strategic management accounting has been developed over 20 years, the SMA is still debatable. In addition, a number of scholars have experienced to define what SMA is, however, the opinions of the scholars is still not yet able to be generalized. Yet, strategic management accounting is still at the exploratory stage.

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Management accounting plays a crucial role in the business world. It provides important advice in order to make decision for the firms in the western society. The costs of offering excellent products strategically need to be fully integrated into the enterprise cost system and being reported by these systems. Management accounting helps monitoring the performance of the management. Therefore, the customers can then be securely kept in the same market. This could also be helpful on understanding the market in a better way. Strategic management market aims to obtain the information of the rivals in the same market; this provides support to their business when making decision since the owner could adjust their budget plan according the reports of the strategic management market.
Strategic management accounting is recently developed in management accounting. It involved in planning, control and requires financial information. In the strategic management planning and control systems, R.N.Anthony believes that there are two different oriented processes which are externally and internally. Externally oriented process is a financial accounting. Moreover, an internally oriented process is including strategic planning, management control and operational control. During the strategic planning process, it is the role of formulating strategy and it emphasis on planning. Planning defines aims, objectives and targets of organizations and also does formulation, evaluation and selection of policies, strategies, tactics and actions to achieve them. The orientation is planning outside the organization which is relating to the organization’s environment. Secondly, after strategic planning, management control would be followed. The main function of this process is implementing strategy which can be a part of the planning. In the final stage, operational control is mainly responsible for controlling however also performing the tasks as well as planning. In this process it ensure that resources and obtained and used effectively and efficiently to achieve organizational goals and procedures adhered to or appropriate remedial action taken. It normally occurs within the organization.
Strategy orientated accounting complements the traditional concerns of the West accounting. It focuses on the additional costs in order to maintain competitive advantages of enterprises of actual and potential rivals. It focuses on the cost impact enterprise products and marketing strategies and it can be seen as an essence for success in today’s meeting the challenges of an increasingly global market. Generally speaking, such re-orientation is another license management accounting focused on the value of consumer generated relative to its competitors. It also helps monitoring the company’s performance in the market variables using a series of strategic decisions over the horizon which would be long enough to achieve the strategic plan. These concepts form the core of the new concept of SMA. In addition, there are 12 strategic management accounting practices. They are competitive position monitoring, strategic pricing, competitor performance appraisal, competitor cost assessment, strategic costing, value-chain costing, brand value monitoring brand value budgeting, attribute costing, quality costing, life-cycle costing and target costing. However, the main methods in SMA which are strategic costing, target costing and product life-cycle. Although there are a lot of practices, there is still of a lower usage and recognized by a couple of organizations.
In 1981, Ken Simmonds has firstly proposed the “strategic management accounting”, he developed the SMA definition. After his speech, SMA has been concerned day by day. In the speech, he mentioned to collect management accounting information about a business and the competitors for the uses in developing and monitoring the business strategy. He argues that management accounting should be more outward looking and should help the emphasis to place upon relative levels and trends in real costs and prices, cash flow, market share and stewardship of the resources available to the business. It can be developed and controlled the enterprise strategic.
Ken Simmonds suggested that profits are not from internal efficiencies but from the company’s competitive position in its market. He raised several ideas for the application of SMA in the business. He stressed the importance of the learning curve with respect to achieve strategic advantage by forecasting cost reductions and thus selling price reductions of competitors. He also drew attention to the importance of early experience to the new product as a meaning to give a unique advantage over competitors. Major competitor should be able to reduce the sales price of the products which should further increase its production and enhance its market share; which eventually force some competitors to leave the industry. Secondly, Simmonds shows that the cost-volume-profit relationship of competitors could predict the price response and management accounting functions to help assessing the cost structure of each major competitor and relating this to their prices. In addition to handling costs and prices, Simmonds concentrated on volume and market share by monitoring the movement of the market share as the main products, companies can see if it is acquired or lost status and competitors will show different strength in the market share. Including detailed information on the market, management accounting report will help to enable more strategic management accounting-related. Simmonds suggested that the market share of the statements may be included in managed accounts. He believes that SMA will develop in management accounting in the future.
One of the main advocates of Strategic Management Accounting is M.E. Porter(1985). His argument on strategic management is considered as the important information. Porter mentions a two pronged approach.
First, he assessed various aspects of the industry’s long-term profitability. He believes the five competitive forces will contribute to strategic balance. This is a threat to new entrants, substitute products or services enter the market, competition among existing institutions within the industry, bargaining power of suppliers and consumers. These five forces fully reflect the competitiveness of many enterprises in an increasingly competitive. However, Porter has also raised the question of the relative position of the enterprise in the industry. This issue is important because it affects the ability of enterprises to create profits above or below the industry average. Returns may be higher than average to achieve a sustainable competitive advantage. This is achieved by three basic generic strategies which are cost leadership, differentiation and focus.
Cost leadership means that companies intended to serve as the lowest cost of production in the industries. This is achieved by economies of scale; capital of the experience curve effect, tight cost control and cost minimization. Also, the company aims to provide a number of different levels of product and service value to customers. It can generate a premium price. This is the differentiation part. Focus is another part of the bargaining power which concerns about the cost and differentiation focus.
Porter mentioned that the value chain is needed to determine the future of the practice of strategic management accounting. Value is the customer willing to pay which is a function of the image products. In the value chain, there are nine elements. Some of these cost drivers may be controllable. The nine elements of the value chain can also be separated as either support activities or main activities. For the support activities, they are firm infrastructure, human resources, technology development and procurement. And the main activities are inbound logistics, operations, outbound logistics, marketing and sales and services.
For example, Internal value chain analysis is the objectives of promoting enterprises to eliminate useless operations and reduce waste. The factory analyses the operating level step by step. The main reason is to focus on the market and customer. The operations and the activities of the business-internal price chain analysis enable the cost management of enterprises to maintain the basic operating level, and explore each layer of worth operations, eliminating useless operations.
The value of Competitors chain analysis can identify the merits and shortcomings in the company. The conclusion of the market and competitors analysis that compared to the competitors on the market, production quality and diversification may not have too much effect. If the strategic can improve the quality or diversification in product to enhance competitiveness, it would be hard to achieve. On the other hand, if firm blindly relying on low prices to gain market share, it will lead to greater losses.
In the analysis, the impact of the cost drivers on each of the elements must be assessed by efforts. Also, there must be a satisfactory margin which produced by the cost of the nine elements.
Once this is completed, manager must try to make analysis of their own competitors in the same way. Strategic advantage will be able to establish if the elements of the total cost is less than competitors. It is necessary to adopt a more positive attitude to assess if the profit margins higher than those of competition. If not, it is needed to develop strategies to achieve the low cost advantage by controlling the cost drivers. The cost savings would lead to a reduction on costs or improve productivity. Marketing, sales and service costs may be reduced more efficiently, if the reduction in external fault. An obvious example provides a good customer support services to the public. If a Volkswagen breaks down occurs, while the car is in a warranty period, the rescue vehicles comes out and fix it. If it cannot be fixed, and then provide replacement. This is would be good way handle but the cost would be expensive (C.DRURY, 2008).
Shank based on Porter (1985) proposed three generic strategies in order to achieve sustainable competitive advantage. Shank also mentions the needs for management accounting to support the enterprise’s competitive strategy and clarify two different types of competitive strategy the first one is cost leadership and product differentiation. The second one is demand different cost analysis perspective. For example, standard product cost is likely to be a very important tool for management control in the company that pursuing a cost leadership strategy in a mature commodity business.
On the contrary, standard product cost is probably not important after the differentiation strategy of enterprises. With the market-driven, there is rapidly changing and fast-growing business. A company’s pursuit of product differentiation strategy may require more information than on the cost of the leading about new product innovation, design cycles, research and development expenditures and marketing cost analysis. The difference between the cost leadership and product differentiation which depend on the primary strategic thrust of the firm.
Recently, Professor Bromwich(1994) further discusses strategic management accounting and definition of strategic management accounting such as the provision analysis of financial information on the firm’s product markets, competitors’ costs, cost structures, the monitoring of the enterprise’s strategies and those of its competitors in these markets over a number of periods. Bromwich found that SMA is a development of management accounting. This new techniques needed to be further discussed by the accountants in the future. Moreover, Bromwich mentioned that the role of accounting is going to extend in two directions when adding the strategic perspective to traditional management accounting. First, in strategic cost analysis, costs need to integrated into it and thus align costs with strategy. Secondly, in a fairly general way, the cost structure in competitors businesses and to record the changes over time. To achieve this, Bromwich also highlights this distinction identifying two dominant approaches to SMA. One seeks to cost the product attributes offered by a company’s goods. It is to attract customers. The other approach is to cost the functions in the value chain which provide value to the customer. (Bromwich and Bhimani ,1994)
In the cost leadership strategy development trends, as well as obsolete the traditional cost accounting. SMA focus is based on the benefits and it is doubtful for the standard costing performance measurement; suspected the use of flexible manufacturing costs, budget control, a worship of the budget; strict adherence to the traditional product cost pricing decisions; one to consider the cost of competitors; the absence of formal consideration of the marketing costs.
Roslender (1995) determine the target cost as a domain within strategic management accounting. This is the reason why focus on the external part and this is a market-oriented approach for product pricing and cost management. In addition, it involves the proliferation of management accounting throughout the organization and active participation of staff in a broad range of management functions. Their goal is to achieve the target cost, including the identification, evaluation and use of cost functional analysis of the product attributes and research opportunities to reduce costs throughout the value chain. Moreover, a recent contribution to the role of SMA, emphasizing the management accounting in the development and support the overall competitive strategy of an organization is the Balanced Scorecard. The purpose of the Balanced Scorecard is to encourage behavior consistent with organizational strategy. It includes a comprehensive framework for performance measurement to clarify, communication and management strategy. (Kaplan and Norton, 1992). He sees SMA as an approach that to account for strategic positioning by the trials to integrate the views from the previous marketing texts into management accounting.
Robin Roslender and Susan J.Hart mentions that SMA is intimately associated with both management accounting and marketing management because SMA is on a strategic level who attends to change in the environment outside the enterprise but not limited to this one part of the enterprise, SMA explore the whole industry value chain in the business information and improve the enterprise’s economic environment. It emphasis that enterprise development and environmental change are consistent, in order to achieve the optimal effectiveness of industry, SMA requires marketing management to collect the information of competitors. The management accountants collect, compare, and analyze the information. The analysis of SMA is depending on the information from marketing management. It is controversial that if it is necessary for the management accountants to handle to the marketing information or the marketing management can obtain the information with their own tool.
Innes (1998) believes that strategic management accounting for the provision of information to support strategic decision-making in enterprise. Strategic decision-making usually involves in a long-term period, there is a significant impact on the organization, even though they may have an internal element, and they also have external factors. This definition was introduced that provide information in order to support an organization’s principal long-term decisions, such as the use of activity-based costing information, provide the relevant information product structure, the introduction and abandonment decisions are the domain of SMA. This view is support by Cooper and Kaplan (1988) who state that strategic accounting techniques are designed to support the entire organization’s competitive strategy. Generally speaking, the power of using information technology is to develop more sophisticated product and service costs.
Despite strategic management accounting has received, there is still no comprehensive conceptual framework of what strategic management accounting (Tomkins and Carr, 1996). For example, Coad(1996) states that SMA is an emerging field whose boundaries are loose and there is still no unified view of what it is or how it might develop. The existing literature in the field is both disparate and disjointed (Coad, 1996:332).
There is an exception such the survey which conducted by Guilding et al. (2000). The survey sample included 312 large companies. Guilding et al. found that recognition of what is difficult to determine the composition of the strategic management of generally accepted accounting practice. According to the review of the literature, they identified 12 strategic management accounting practices including value-chain costing, strategic costing, target cost, life-cycle costing, attribute costing etc. These are being used to determine the practice, it is a must demonstrate one or more of the following characteristics: the environment and market position focus on competitors; and long-term, forward-looking direction. At the end of the experiment, Guilding et al concluded that 12 strategic management accounting practices are of relatively low usage, there are two factors that should not dismiss their potential. First of all, all the evaluation of SMA practices may be significantly higher than expected utilization of the advantages of scoring points. Secondly, there are still many companies have abandoned the usages of the SMA. These findings showed that there is a difference between the neediness and the actual reports conducted. It finds that there the practicing accountants do not familiar with the usage of the SMA. This gives supports to the findings of Tomkins and Carr’s (1996) while they believed that the SMA is ill-defined.
In addition, it is still lacking of the strategic management accounting consensus. (Lord, 1996) stated that a number of strands have been used to describe the strategic management accounting. It magnifies the internal focus of traditional management accounting and the external information to competitors. The linkage between the strategic position which decided by the companies and the anticipated emphasis on management accounting and lastly obtaining competitive advantage by interpreting methods to reduce costs or to boost the varieties of the companies’ goods by exploiting the relationship between the value chains and generalizing the cost drivers.
In conclusion
Strategic management accounting is recently developed in management accounting. It involved in planning, control and requires financial information. Nevertheless, SMA have not formed a unified knowledge. While some firms may have heard SMA. They may lack for a clear understanding in SMA.
Although SMA has lots of different views from various authors. For example, Simmonds is the earliest to introduce the strategic management accounting. He mentions to collect information on business competitors. Than Bormwich has further information SMA is not only to collect information . It still need to Research and competitors on their own competitive advantage and value creation process and research a long-term decision-making cycle in the enterprise perspective, for the marketing of these products and services give enterprises the total revenue. In addition, Porter identified 3 generic strategies in SMA to achieve sustainable competitive advantage. .However ,Innes (1998) believe that strategic management accounting for the provision of information to support strategic decision-making and Cooper and Kaplan (1988) views that Strategic Accounting technology is designed to support the entire organization’s competitive strategy to develop more sophisticated products and services costs. On the other hand,lord (1996) identified SMA not only analysis external competitor information but also extend the main point of traditional management accounting. They are all authors who hold different evidence to support their own mind in SMA, so SMA is totally confide, it is remains a mystery .,In my opinion, the main reason of SMA occurs because Economic is developing very fast and SMA is reclamation and atone for traditional management accounting in a new environment. However,SMA has many of obstacles in developing process such as enterprise keep continue to apply the SMA in the practical application and do adjustment and innovation , thereby it can promote the development of SMA application to make it update. So I believe that Although SMA lack of consistent theory at this moment , it will be a big management accounting develop in the future.
Bromwich, M. “Accounting information for strategic excellence”
Bromwich, M.,1990 “The case for strategic management accounting : the role of accounting information for strategy in competitive markets”.Accounting Organization and Society, Vol 15, No ½ , pp.27-46
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Drury,C. 2008, Management & Costing Accounting, 7th ed. , London: South-Western.
Horngren,C. T. ,1999,Management and cost accounting London: Prentice Hall, 1999
Lucey,T.,1988 Management accounting 2nd ed. London: DP Publications
Roslender,R. and Hart,S.,2003 “In search of strategic management accounting : theoretical and field study perspectives” .Management Accounting Research 14 , pp.255-279
Ryan, B.,1998, Strategic Accounting for Management 5th ed ,Australia: Thomson Learning
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Wright, D.,1996 Management accounting London: Longman

Supply Chain Management, Relational Dynamics and Strategic Intelligence for Sustainable Business

Supply Chain Management, Relational Dynamics and Strategic Intelligence for Sustainable Business



Executive Summary


Actors in supply network management and role they play in sustainable business practices…..3





Relation  between Firms and Support Structures for Innovative Sustainable Practices……..6

Value creation……………………………………………..6

Network fundamentals…………………………………………6

Financial strategy……………………………………………8

Strategic intelligence……………………………………………9

Business intelligence………………………………………….9

Competitive intelligence………………………………………..9

Knowledge management………………………………………..9



The report is aimed at studying, analyzing and understanding the present industry standards of execution of supply chain management using Samsung electronics Ltd. (a multinational technology company)’s supply chain as an example.

Any supply chain has a number of actors who play a crucial role at every step in the supply network. Well distinct role and possibility of every performer goes far  in smooth application of the supply network for any business.

Different strategies  investors and value creation association etc. at the point when assembled lays a solid substance of the vital thought of any business. The strategic insights assume an essential job for line among policy and business which additionally advises how to go for competition in the focused marketplace by applying business knowledge intelligences.

The level of working and the productive development of any business relies on inner and outer support erections. Additionally, the division of  association examines the current market importance, innovative developing challengers and creation or services appraisals.

The principle objective of the report is to understand the key ideas in inventory network, the jobs different performers play in the store network, and genuine task of production network administration in any random business. Likewise it intends to clarify the key help structure for any sustainable business insight to be in front of competition.

The structure of the report is as follows:

The management of supply chain is the mixture of different procedure which incorporates producer, dealer, client, transporter and so forthn.  Figure 1, demonstrates that store network can be distinctive according to the organisation prerequisites. The combination differs in size and extension, client needs, topographical nearness and item. It is innocuous to express that no two supply chains are really comparable, there may be different role for same participant in each.

Figure 1  Supply chain management model of Samsung Electronics Ltd (, 2018)

In Figure 1 above the total supply network of Samsung electronics comprise of suppliers of various parts, the manufacturers or assemblers of final product, the logistics, the venders and the end consumers. The system is complex and it sees how individual key performer assumes an imperative job in finishing the coordination and entire store network circle


Almost all the supply chains focus on end user demand for planning activities. End user may be a retailer, consumer, or other business entity depending upon if it is a consumer product supply chain or industrial supply chain. For example, a lot of Samsung’s sales come from sale of consumer products (home appliances) and mobile phone handsets in various parts of the world. (Venkateshwar, 2017)

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Retailers are middlemen which work as a link between manufacturers and end consumers. Samsung have a huge number of retail outlets and individual retailers selling its products worldwide. Also a good amount of sales come from sales of products on online platforms (own or third party). Retailers provide shelf space, assistance in financial transactions, customer support and also act as a first point in after sales services.

Distributors and wholesalers are also an important link in the supply chain. These are the businesses involved in buying and stocking large quantities of merchandise from manufacturers and then distributing it in small batches throughout the retailer network. They help in building a local network of retailers and distribution/introduction of product at a local scale.


Manufacturers are the entities which transform raw materials in to usable products. It may be done through production from basic raw materials (making of LCD screens from scratch) or assembling of different components sourced from various suppliers (assembling of a smartphone using a number of components supplied by a number of other manufacturers)

Producers are in charge of development stock, arrange and build the requests which impact the plan and activity of the inventory network.


Suppliers produce raw materials or manufacturer individual components for a device. (CSCMP CSCMP, 2014) a number of Samsung subsidiaries, other manufacturing units, small business enterprises are involved in manufacturing components for Samsung products. Samsung works only with Eco Partner-certified suppliers so that the environmental impact can be easily assessed and managed. (, 2018)

Value creation, Network sustainability, and financial strategy are the important features for sustainability.

Value creation

Creating value for consumers in the form of better (design/efficiency or NPD) products, and for investors in the form of increase in the stock price is main aim of any business entity. It ensures smooth incoming of orders/sales and at the same time ensures the availability of investment capital for future operations. (Hillstrom, 2018)

Samsung started as a small trading business in year 1938 and expanded into food processing, insurance cloths, security and trade within 30 years. It started its electronics business in late 1960s; it also has shipbuilding and construction business. Mobile phones, home appliances and semiconductors are the main source of company’s income. It has brought a number of new technologies and products into customer hands and the stocks have been roaring continuously. (Wikipedia, 2018)

Network fundamentals

System basics are helps in the stream of business inside an association or among various associations. It is vital to obviously characterize the scope and obligations of a person in the business or different provision structures in order to have long term sustainable business practices.

Following table shows scope and responsibilities of different departments in an organization:



Human Resources

Hiring and retiring

Employee Data

Employee relations and disputes




Workplace facilities



Research and development

New product design and development

New technology



Market analysis

Advertisements and promotions


Stakeholders relations

Dispute management

Supply chain management


Building and personnel security

Data and intellectual property security


Abiding by law

Legal aspects of business policies

Legal disputes

Securing licenses and intellectual property rights



record keeping


income and expenses


market analysis

advertisements/ promotions



managing order fulfillment

inventory control

stock keeping

after sales services

Table 1. Different departments and their roles in a business

Apart from the support structures within the organization, a business entity also need support from external sources, for example a logistic partner will be needed to transport merchandise from one place to other and to deliver direct sales to end consumers. For online help of their merchandise they require a different IT accomplice. Calculated accomplice and IT accomplice go about as an outer system structure for running end to end business. (Reckitt Benckiser Group plc, 2006)

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Financial strategy

Key Financial administration refers to exact positioning, usage and organization of an association’s monetary resources for achieve its motivations as a business concern and return most outrageous incentive to speculators over the time goes on. Strategic Financial management includes accurately describing an association’s business targets or objectives, individual and evaluating its accessible or potential resources, and devising a plan for using funds and other capital assets to accomplish its objectives. (Investopedia, 2018)

Samsung takes a one of a kind financial strategy to increase sales and improve organization’s image.

Financial strategy of Samsung includes series of strategies that incorporates comprehensive range of organization’s expenses.

This covers defining out financial objectives and goals, recognizing assets, engaging into financial decision making, examining information and following fluctuation among planned and real outcomes and deciding the explanations for the difference. The financial strategy of Samsung rotates around the correct ways to deal with a perfect financial management with long term prospect. (Marketing Slides.2018)

Strategic intelligence comprises of combination of various types of academics which makes collaboration between organisation intelligence, competitive intelligence, and knowledge management to give value‐added data and information toward settling on organizational strategic decisions.    (Pellissier, & Kruger, 2011)

Business intelligence

Business intelligence (BI) includes the procedures and innovations utilized by undertakings for examination of business data. BI innovations give chronicled, current and predictive perspectives of business operations. (Techtarget, 2017)

Competitive intelligence

Competitive intelligence is the gathering and investigating noteworthy data about competitors and the market to shape a business strategy. Its point is to pick up everything there is to know about the competitive environment outside your business to settle on the best decisions about how to run it. (Investopedia, 2018)

Knowledge management

Learning administration is the route toward making, sharing, using and managing the data and information of an association. It refers to a multidisciplinary way to deal with accomplishing organizational targets by making the best operation of information. (Investopedia, 2018)

Actors play an important role in management of supply chain. Operations and profitability of any .business relies on inside and outside help structures. Various business strategies help businesses understand the current ongoing market trends and formulate plans and policies to counter competition run business efficiently.

Strategic intelligence helps gather information about market, competition and manage intellectual property efficiently. It also helps to recognizes changes to be made in the existing policies of an  business in order to recover itself in the modest market, increasing profitability sustainably. (2018). Supply Chain | Sustainability | Samsung India. Retrieved from

Venkateshwar, k. (2017). Samsung case study. Retrieved from

CSCMP CSCMP, H. C. (2014, 01 10). informit. Retrieved from informit: (2018). Supply Chain | Sustainability | Samsung India. Retrieved from

Hillstrom, L. (2018). Value Creation – strategy, organization, definition, school, company, business, and competitiveness. Retrieved from

Wikipedia. (2018). Samsung. Retrieved from

RB. (n.d.). Retrieved from RB:

Investopedia (2018). Strategic Financial Management. Retrieved from

René Pellissier, J.‐P. Kruger, (2011) “A study of strategic intelligence as a strategic management tool in the long‐term insurance industry in South Africa”, European Business Review, Vol. 23 Issue: 6, pp.609-631,

Strategic Procurement & Supply Management Threats to the UK


Solution 1 –(SPM, 2018)

There are several blue-chip companies with major U.K operations conducting preventative activities. These depend on the dread of import duties and the loss of access to the single market. Companies have even moved their production facilities and staffs to continental Europe.

E.g.-Goldman Sachs -They have shifted their vodka production out of Scotland to Italy and the U.S and Airline to Vienna.

The reasons behind their shiftiest are:

1) To position their manufacturing assets in a secure supply chain environment.

2) To find base camp inside the administrative condition,which will expand their entrance to key European markets.

Besides the high –visibility announcements, our view is that few attainment and store network capacities have a genuine all encompassing arrangement to address Brexit dangers Few companies are delaying investments as a standard method in times of uncertainty. Many companies had cut their cape budgets but this seems to be short term solution .U.K companies taking this initiative may miss future productivity gains while their competitors in continental Europe to invest in their production tool and boosted by higher growth.

        The level of willingness of European organizations with significant sales in the U.K but without any operational base is lower but careful consideration is required as they will still have supply chains and cost impacts in the U.K involving tariffs, taxes, currency and interest rates, regulatory decisions and labour flows.

Solution 2 –

Supply Chains under Threat from Four Key Risks

Following are the four key risks areas of supply chain which Corporations with heavy U.K. exposure are facing: Export of goods and services from one country to another tends to affect the cost base, changes to the regulatory environment and also affects the workforce. And hence, these impacts will lead to increase costs which will either decrease edge or increment costs to clients; clients may likewise feel trouble because of these complexities. Momentum inquire about proposes that particular enterprises are at higher generally hazard than others, with money related administrations standing out in hazard terms.

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THREAT #1 –  Challenges in exchanging products and enterprises crosswise over outskirts. The point of view toward the kind of exchange bargains the U.K. might anchor in the wake of Brexit is still exceptionally hazy. This can be in numerous structures, going from full single-advertise access with proceeded with tax organized commerce on merchandise and ventures to the more protectionist end of the range, where taxes are connected on all products and enterprises exchanged between the U.K. what’s more, EU, likely dependent on costlier

WTO rules. While the U.K. government has been very clear that the U.K. will leave the single market and EU Customs Union, their specific deal target means a lot of uncertainty as it is uncharted territory. Non-tariff barriers such as new physical customs borders and labour rules will undoubtedly be more flexible on a company’s ability to move goods across EU borders, and the costs to do so.

THREAT #2 – Higher costs

Trading from UK to EU will invariably have an impact on the cost base of businesses with U.K. operations or sales regardless of the type of deal that is secured. This could be in the form of new tariffs, which will be passed directly onto customers, or other costly measures. Brexit has already had a significant impact on costs in the U.K. through exchange rate changes which themselves have resulted in higher import costs.

THREAT #3 – Rapidly changing regulations (GEP, 2018)

The regulatory environment for both U.K. and European companies has the potential to change significantly, due to which there will be some degree of additional friction between U.K. furthermore, EU exchanging accomplices, including cost, time and hazard to most cross-outskirt supply chains. Regardless of whether the final product is a ‘delicate’ or ‘hard’ Brexit will to a great extent decide if controls of every industry are set to remain firmly lined up with the EU or whether they will move far from existing conditions. Current signs are that the feasible result will be toward the ‘hard’ end of the scale.

This will result in an expanded administrative weight for organizations because of the need to consent to various administrative frameworks. U.K. organizations that need to work in Europe will be required to follow the General Data Protection Regulation (GDPR) or any comparable direction later on, and European organizations with U.K. tasks should follow new U.K. controls as legitimate structures veer. We will likewise observe jumps in everyday business activities – for instance, an extra authoritative weight of enrolling EU nationals in the U.K.

THREAT #4 – Availability of workforce

The British economy could face a labour supply shock due to Brexit, if foreign workers stop coming to the U.K. In recent years, foreign and particularly EU workers have made up a growing proportion of the U.K. workforce, which will ultimately help the economy and companies grow and fill key skill requirements. Some U.K. industries and regions are more heavily impacted by restrictions on immigration than others.

All Sectors Will Not Be Equally Impacted (US News, 2018)

These four key supply chain risks shows how would have an impact on the U.K.’s top sectors under four different high-level Brexit scenarios. These scenario scan provide an indication of business challenges by sector.

Whereas, we found that single-market access would be the least detrimental to all sectors, we also found that some sectors were more exposed than others in the alternative scenarios.

Money related Services is most affected in many situations since ‘pass porting rights ‘are basic to banks’ capacity to work crosswise over EU fringes. The main situation in which pass porting rights would be ensured is under an EEA-type bargain. Some other situation would not naturally give these rights to U.K. money related establishments post-Brexit. Which is as of now driving extra expense, for instance, with office development and anchoring of office space. This is probably going to grow further and will result in increment in going through examples with associations keeping up numerous areas with costs crosswise over offices, land and bolster administrations. We expect the Financial Services area to spend fundamentally on expert administrations charges for legal advisors, bookkeepers and specialists to enable it to explore the Brexit change difficulties.

Makers should be worried about store network, add up to cost of merchandise, and access to both high-and low-talented work. Upgraded traditions checks will demonstrate impeding to organizations with items that have short expiry dates or life expectancies. The nourishment business is likewise intensely dependent upon an exceedingly European workforce with more than 30 percent originating from the EU.

The U.K. Life Sciences segment is maybe best situated to alleviate the effect of Brexit as it faces zero levies for items, for example, medications and therapeutic gadgets, even in case of ‘finish separate’ from the EU coalition. Be that as it may, its capacity to research and market new items might be influenced by the loss of access to EU R&D subsidizing and access to ability of EU inception. We are as of now observing administrative associations and subsidizing moving out of the U.K, for example, the European Medicines Agency moving to Amsterdam from London. Also, we could see administrative difference causing issues, for example, in item marking.

Additionally spotlight can be put on inventory network and acquirement regions to recognize contracts, providers, estimating and effects to business progression in another U.K. /EU traditions condition.

Solution 3(Floyd, 2015)


Procurement and supply chain leaders should act now and implement five simple steps:

These steps can be as follows:

Measure exposure to Brexit risks

Develop alternative supply strategies with trigger points

Reductions in cost

Be equipped for the heavy lifting

Become an enabler for Brexit opportunities


Solution 4

MEASURE 1 – Measure exposure to Brexit risks

The Organizations can identify business areas affected by Brexit. Key parts of this cross-functional initiative can be facilitated and act as a perfect opportunity by the procurement and supply team chains particularly keeping strong supplier relationship (SRM) framework and tools in place.

With this action we can ensure a joined-up approach when developing and implementing eventuality plans. After following this, we can further focus to put on supply chain and procurement areas to identify contracts, suppliers, pricing and impacts to business continuity in a new U.K. /EU customs environment.

Information can be collected across direct and indirect categories.

It should include:

*Spend not realized’ in GBP,

* Suppliers/categories impacted directly and indirectly by exchange rates,

* Supply categories highly dependent on an EU workforce,

* As well as evaluations of incumbent suppliers’ readiness for Brexit in their own supply chains.

* Conduct an impact assessment on supply planning and distribution within the U.K. and EU.

A starting point is to triage your supply base by evaluating two factors:

A. criticality to your business and

B. exposure to negative Brexit risks and costs.


We need to identify what routes to market, network planning and delivery locations. Also establishing target commodity groups by conducting a critical prioritization based on goods/services, availability of supply and time required to qualify supply sources.

As the U.K. concludes trade deals with non-EU partners these alternative sources should be identified locally or in a tariff-free geography or locations. Larger firms can leverage their relative strength to boost up and motivate the key suppliers to shift more of their operations to the U.K.

Example: Auto producers Nissan and Jaguar Land Rover

 The two firms as of late welcomed an extensive gathering of worldwide makers to their U.K. base to help in advancing moving their tasks to the U.K.

Manufactures from the continent which are currently sourcing from the U.K. should be able to identify alternative sources based in the EU and also introduce higher levels of risk monitoring across their U.K. suppliers.

Buyers in continental Europe reduce their volume commitments or contract to shorter period of time it’s expected that U.K. manufacturers could be hit over the next 12 months.

Preparing the procurement function for Brexit will require significant investments to ensure sufficient capability across vendor negotiations, contracting and SRM.


A pressure has been created on the costs of goods imported for U.K companies due to a weaker pound (since Brexit vote) creating inflation throughout the economy and also impacting growth.

Depending on the agreement and details of political discussion on the transition this deterioration could highly accelerate as we approach the effective Brexit date.

Identification of what total cost of ownership models by the organization will be impacted and start ’Request for Information’ processes using ‘should Cost’ modelling.

 Execution programs and opportunities of reduction in targeted cost will provide competitive advantage as whole sectors are hit by Brexit.

Other potential approaches include:

*securing extensions to contracts during at-risk supplying base areas can protect against cost increase and risks


We require a significant investment from businesses for the preparation of procurement function of Brexit to ensure sufficient capability across vendor to negotiate, contracting and SRM.

Contract amendments and notations are required on a large scale for some organizations and anticipate sourcing are to be exercised as well.

Most associations will be constrained by limit and ability, needing outside support.

It’s often seen that contract amendments require a level of flexibility from essential and imperative providers, who will think about their own position and might possibly be available to these changes.

There are organizations that keep up elevated amounts of coordinated effort with their supply base.

It helps in being all around put to run a smooth procedure, while others should concentrate currently on molding basic providers ahead of time.

Any new understanding finished up from now until the point when the Brexit date ought to be refreshed to incorporate the correct level of adaptability against the different Brexit situations.

Other down to earth ventures for readiness incorporate recognizing firms who can help and planning for this in like manner.

Associations that expect to be one stage ahead are as of now archiving the inward procedures which are probably going to be affected and are building cross-practical groups that will be entrusted with conveying execution exercises because of Brexit.


Its becomes clear that the U.K./EU trade negotiation outcomes and the U.K includes trade dealing with non-EU countries, now the purchasers should expect to counterbalance cost increments.

Be that as it may, may likewise access wellsprings of supply at lower cost and even advantage from more development from their merchants.

An opportunity to create competitive advantage for the organizations can be provided by proactive firms and also identifying the geographies and vendor upfront.

A compelling method to locate the correct answer for how to moderate new costs together for instance, by implanting co sourcing as a feature of a SRM program.

Thus, acquisition has a chance to help its association’s development in new markets.

To do this, it needs to furnish itself right on time with neighbourhood showcase information of the focused on topographies.

A concrete and straightforward methodology is to create hearty class procedures which incorporate short-and long haul guides covering the abovementioned.


Brexit is an extraordinary case of how district particular occasions produce worldwide repercussions affecting acquisition and store network. It will have noteworthy ramifications for any worldwide or European organization with major U.K. tasks or deals, and additionally U.K. organizations with noteworthy activities or deals in whatever is left of the EU. Numerous elements will prompt expanded store network costs, which will decrease edges or increment valuing to clients, making this a vital board-level hazard. Acquirement and production network pioneers and their capacities should be at the core of all inclusive Brexit arranging and usage and they have to act currently to look for upper hand and to maintain a strategic distance from the expanded expenses and dangers if this is left past the point of no return. With the principal phase of political transactions finishing and certain parts of the approaching Brexit structure getting to be clearer, an opportunity to act has plainly arrived.


GEP (2018) Bracing for Brexit: An Action Plan for Procurement and Supply Chain | GEP. Available at: (Accessed: 12 November 2018).

Floyd, D. (2015) Brexit, Investopedia. Available at: (Accessed: 12 November 2018).

SPM (2018) Course: Strategic Procurement and Supply Management [MSIPS-SPM/Dub/PT]. Available at: (Accessed: 12 November 2018).

US News (2018) Brexit. Available at: (Accessed: 12 November 2018).

The advantages and disadvantages of Strategic Management Accounting

In recent years, the strategic management process has become more complex and costly. Growing competitiveness in many markets and along many combinations of dimension is increasing of analysis facing managers.
The term strategic management is used to refer to the entire scope of strategic-decision making activity in an organization. We can define Strategic Management Techniques in many ways.
Strategic management is the process of managing the pursuit of organizational mission while managing the relationship of the organization to its environment.
Strategic management is defined as the set of decisions and actions resulting in the formulation and implementation of strategies designed to achieve the objectives of the organization.
Now Strategic Management Accounting has been defined as “a form of management accounting in which emphasis is placed on information which relates to factors external to the firm, as well as non-financial information and internally generated information.”
In 1981, Ken Smmonds defined it as the collection of management accounting information about a business and its competitors for use in developing and monitoring the business strategy. The emphasis was placed upon relative levels and trends in real costs and prices, volume, market share, cash flow and stewardship of the resources available to the business. (Inman, 1999)
We have different Strategic Management Accounting Techniques such as Key Performance Indicators, balanced score cards, value chain analysis etc. (Carrefour, Key indicators, 2010)
Over the last 40 years, the company has grown to turn into one of the globe’s leading distribution company. The globe’s second-largest retailing company and is also largest in Europe. Carregour group at present operates four main types of store formats: Supermarkets, hard discount, hypermarkets and convenience stores. The Company currently has more than 15,500 stores which are either franchises or company operated. In UAE, Carrefour has large presence and has the business similar to its international business domain described above.

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Business Strategy:
Carrefour is a retail endeavor, having its own manufacturing and distribution chain in Middle East which is innovated by EMKE Group. The business strategy of the company is to provide things of daily necessity to common people at reasonable price and earn profit for increased market share. The profit is supposed to be magnifies and retailing units as a result of low buying price in bulk purchase of material. The company has its own manufacturing unit for number of products to reduce the purchasing cost. (Author, Our group, 2010)
Mission & Objectives:
The ultimate goal of the company is to have highest profit in hypermarket and other business segment. The company wants to manage its supply chain efficiently by implementing ERP. Other objectives include increased sales, ERP implementation, cost reduction and TQM implementation. (Author, Key indicators, 2010)
Type of Manufacturing:
The company has its own manufacturing stream and distribution stream, providing a good choice to carry out this research. The company did not manufactures all of the products it sells but around 70% of the products Carrefour sells comes from its own manufacturing plants. The company has hi-tech plants which are able to produce more than one variety of products at a time.
Carrefour’s measurement of Strategic objectives:
The company to achieve its strategic objectives uses the balanced scorecard (BSC) method to check its current level of performance and to bridge between present and desired level of performance. Balanced scorecard is a tactical performance management instrument – a semi-level structured account supported by confirmed plan methods and computerization apparatus that can be utilized by managers to maintain track of the implementation of activities by personnel within their monitor and control the cost arising from these actions.
It is possibly the best known of numerous such frameworks (for instance, it is mainly accepted performance management agenda reported).
The company implemented the balance scorecard model given in the figure below. Plan of a Balanced Scorecard eventually is about the recognition of a little number of non-financial & financial measures and adding targets to these items, so that at time when they are evaluate it is probable to establish whether present performance ‘meets prospect. The idea in the rear of this is that by alerting executives to regions where performance diverges from prospect, they can be buoyant to focus their concentration on these areas.
Areas where Strategic Management accounting is useful:
Increasing the performance of the employees and the company:
Performance measures are primarily used to evaluate organizational, as well as employee performance. A PMS develops key performance indicators (KPIs), or metrics, depending on the nature and activities of the organization. KPIs are used as strategy and incentives to assist the coordination of business unit and manager’s objectives, with those of the general corporation objectives, that is, they support goal congruency.
By these metrics, the firm communicates how it desires the workers to act, and how these activities will be evaluated and judged.
Carrefour uses the framework below:
The key performance indicators of the company include:
Number of registered own brands.
Number of quality line product
% of product supplied by the suppliers.
Energy consumption
Water consumption
Customer base
The company uses these indicators for the overall performance improvement and for performance of the employees, the indicators are:
Feedback from colleagues
Work hours
Quality of service (Gregory, 1995)
Supply chain:
The supply chain in the company is evaluated on the basis of Value chain. The value chain is a methodical way to examining the growth of competitive benefit. It was invented by M. E. Porter in his book named Competitive Advantage (published in 1980). The chain comprises of a series of actions that build and create value.
Value Chain Analysis generally describes the actions that take place in commerce and narrates them to a study of the competitive potency of the company.
Value Chain Analysis is single way of recognizing which activities are finest undertaken by a company and which are finest provided by another business. According to that, the finest category of Carrefour’s supply chain is Information Networks. Here as the task is distributed to individual units (like transportation, distribution etc) and innovation can be diffused at any stage. Talking about supply chain, the Carrefour is currently using “allocating gaming policy” to hand out the products. Under this strategy, when the supply is low, the suppliers place fewer products on allocation. This signify that that supplier will not provide the order of the downstream fully but will decrease the volume to be supplied downstream in order to make certain that all the downstream nodes get at least some part of demand. In this way, Value chain analysis helps Carrefour to make a best in industry supply chain. (Gregory, 1995)
Areas where Strategic Management accounting is not successful
The company tried in past to use SMA for inventory management but the results were not fruitful. The key failure was because of short term nature of inventory management which is not been provided by strategic management accounting. Thus to ensure emergency and constant supply of stocks, the company also maintains warehouses at its allocation centers. The company currently utilizes “build to stack” approach in its inventory management policy.
Replacement of SMA in inventory
To ensure a centralized approach in inventory, Carrefour hypermarket has EPR implemented but is not federal yet. The ERP needs to be implemented in complete set of outlets and warehouses of the company.
The responsibility to ensure inventory lies in hands of warehouse manager who has to ensure a particular fixed quantity of stock at anytime of the year. The information needed in ERP is to be supplied by various managers at distribution centers, manufacturing units etc.
Master plan scheduling:
Again because of short term nature of scheduling, Carrefour is not able to schedule its activities with the help of Strategic Management Accounting. Scheduling is thus done by correct coordination between varieties of departments. As mentioned previously, the company maintains around 7 days inventory in its warehouses to provide flexibility next to the always changing demand of people. If the material in the warehouses is lesser than that of 6 days, a buying order form manufacturing plant is placed. In the same way, if the inventory in the outlets is lesser than that of 3 business days capacity, again inventory is enthused for warehouse to the outlets. (Gregory, 1995)
Strategic Managemetn Accounting in Various Departments
The company did not have a probable forecasting model for maintaining the inventory. It needs a better method for this purpose. The present method for supply planning goes with the need of the customers. Production is governed by the customer needs and Bullwhip effect (covered later in the report). In order to support the production in accordance with customer needs, the company utilizes Kano model as a strategic management accounting tool. A short explanation is given below.
Kano model shown at this point is the most fundamental conceptualization of client requirement. “The red line shows innovation” while the blue shows expected and spoken requirement and green line signifies expected and unspoken requirements.
Kano model relies on a supposition that a clients buys when he or she Need something, however is it not totally right, an organization must flood the client needs. This can be implicit as a “Voice of the customer” concept.
Value chain analysis:
At every step, proper documentation is done and coordination is maintained which is a part of value chain analysis to ensure that overall supply chain works properly.
A balance score card method is used here. The key ingredients of the balance score card method are as follows:
Cost Control
Senior leadership manages operating expenses and costs through cyclic budgets/ plan. A budget/ plan is a essential management accounting instrument because it assists top management and subdivision heads set spending thresholds and limits.
correct financial reporting
SCA or Strategic cost accounting assists top management report complete and accurate accounting data summaries. Sufficient cost accounting schemes ease monetary reporting work as corporate controllers can rapidly relocate cost accounting figures into financial accounting instruments like ledgers.
Variance analysis
Variance study is a necessary profit management instrument. Variances, often called contingency, are differences among actual costs and budget amounts. A positive discrepancy indicates that budget total exceed real costs. Higher management pays concentration to negative discrepancy because these indicate insufficient cost control operations in operating activities.
In marketing department, SMA is generally used to forecast the demand. In marketing department, Carrefour is currently employing allocating gaming policy (as mentioned previously too) to distribute its products. In this strategy, in case when the supply goes down, the suppliers place fewer products on allocation. This signify that the supplier will not provide the order of the downstream fully but will decrease the volume to be supplied downstream in order to make certain that all the downstream nodes get at least some part of demand. For example if 1,00,000 Carrefour products are meant for distributed to 4 equally vital downstream nodes band there is difficulty in reliable supply, then the company will supply only 12,500 products to the downstream nodes, irrespective of its capacity and even when it can provide more to assure that each node get a little and stock is not unfilled.
It is also find that is the irregularity in demand is too often, some costumers (downstream nodes of supply chain) order more than the actual need to compensate future disorder in supplies. In this way, the company manages its product strategically.
The company preserves an effectual transportation system from manufacturing unit to distribution centers and then additional from distribution centers to retail outlets. Currently hired motor vehicles are used to diminish the cost of purchasing of vehicles.
Demerits of Strategic Management Accounting
There are some of the disadvantages of Strategic Management Accounting Techniques also. Some of them are:
Lack of Standardization
Monetary accountants follow accounting measures and principles sketched by generally established accounting principles like US GAAP. Management accountants, counting strategic executives, do not have a mix of procedures & policies to follow.
Focus on Quantitative Information
Data based or Quantitative information is information calculated in hard statistics, such as dollars and ponds. A strategic accountant centers a lot of concentration on quantitative data. Information studies by these accountants are very cogent. The difficulty with this is that concentrating only at lucid information, other relevant information is unnoticed.
Strategic accountants generate methods for calculating performance and are prearranged a lot of space for subjectivity and unfairness. This causes a disadvantage to companies because strategic accountants attach their own individual feelings and beliefs into making decisions.
Strategic management process involves the entire range of decisions. Typically, strategic issues have six identifiable dimensions:
Strategic issues engage the allocation of large quantity of company resources
Strategic matter require highest level-management decisions
Strategic issues are probable to have noteworthy impact on the strategic-term success of the company
Strategic issues typically have chief multi business or multifunctional penalty
Strategic issues are often future oriented
Strategic issues require considering aspects in the firm’s outside environment.
Usefulness of Strategic management in the company
Meeting the downstream demand by the organization is extremely necessary and most of the organizations (and thus Carrefour) thus lay great weight over their production unit and taking it to best level to attain marked productivity standards. It is involved in strategic guidelines of the company to attain or exceed the requirement in the market. In order to absolute this requirement, business should be spotless in its production and its inventory management. This also need suitable administration of its volume, productivity and cost resources, so as to achieve suitable quality standards. (Inman, 1999)
Relation between demand and Supply side
The demand of the products to be sold is directly dependent on the supply side (for fulfillment). There is a linear relation existing between demand and supply side with negative slope. When the demand increases, the manufacturing side capacity or say the supply decreases and opposite in vice versa case.
One area in which Carrefour is missing is the supply of consumer demand to its customer with appropriate timing. It is the dimension in which system is meeting its prevalent failure. This is highly exaggerated from elasticity that the system possess, and to have correctly timed outcome, Carrefour should have highly appropriate structuring that would be clever to be adequate to all the needs of the customers associated form the company. As a conclusive reason for the failure, we can say that there is lack of co-ordination and management within all the sections operating in the system.
Production in governed by the Kano model in order to meet the requirement of the customers. The company manages a number of plants for producing the variety offered by the company.
Capacity management:
As mentioned earlier too, to guarantee emergency and constant supply of stacks, the company preserves warehouses at all its distribution centers. The stock maintained in the warehouses depends on the forecasting model of the retailing company. The company depends on two sets of customer (temporary and permanent), the stock necessary for permanent clients is still conventional but that for the temporary set of clientele is not. Thus Carrefour invests blissfully on warehousing extra stocks as it is required to maintain extra quantity to answer the surprises expected form temporary customers.
Why it is crucial?
In a retailing industry like Lulu, a major cost is warehousing or organizing the inventory as mentioned above. If the company fails to understand the actual need of the marketplace in advance, it can counter two kinds of problems: one is the likely unavailability of supply at the stores which affects the quality of the offered service by the company and secondly if Lulu tries to preserves larger amount of stocks, it has to disburse in terms of charge of warehousing. Both the situations are undesirable by the company. (Gregory, 1995)
Comments on Role of SMA in achieving Mission and objectives of the company:
As we saw that the company wants to become the number one retail market company in the world, the activates like Key performance indicators to maintain the performance of employees and the company, Balance scorecard for financial management and related models like Kano model etc helped company to perform its operations in better and cost effective manner. Thus we can say that SMA is helping the company in achieving Mission and objectives