Company Overview

Discuss about the Developing appropriate leadership styles.

A roadmap of an organization is said to be a strategic direction which reflects its objectives and how these objectives will be accomplished (Kokemuller, 2017). This report is being presented in order to identify the future strategic direction of Tesco Company. For this, an analysis of the strategies of the company will be conducted in order to identify how strategic thinking has helped in achieving the organizational goals. Along with this, the analysis of the company and industry will be done. A Business Canvass Model will be portrayed to know what values company is delivering in the market. Further, some strategies will be suggested that the company can use to defend its core business.

Tesco is a multinational retailer of grocery which is situated in England, U.K. As per the profit it is the third largest retailer across the world and by revenue, it is the ninth largest retailer (Tesco PLC, 2018). Across Europe and Asia, it has stores in 12 countries and in U.K, Hungary, Thailand, and Ireland it is the leading grocery market. Today Tesco has approx. 450,000 employees in its stores (CTP, 2018).     

Companies like Tesco who enjoy long-standing success, are said to be a focused business. The company has core vision which is constant whereas the strategies and practices of the business regularly adjust according to the changes in the business world (Mihailoaie, 2013). In a globally competitive environment, a business without a strong vision will miss the track and will not be able to continue. Vision of Tesco is to become the most appreciated business for the target consumers, society, colleagues and its shareholders (Tesco Underwriting Limited, 2018).

Five Elements of Tesco’s Vision

The five basics of Tesco’s vision reflect the kind of the business it aims to be:

• Innovative, modern and full of ideas
• Wants its stores to the present in the whole world
• Earning trust, inspiring and loyalty from colleagues, communities, and customers
• A developing business with full of opportunities
• Winners locally whereas offering services globally

The statement of vision, mission, and goals are interconnected and explain what the company is looking for however the tactics and strategies reflect the way it will be achieved. Tesco’s main mission is simple: They offer products which matters more for the customer.

The core values of the Tesco involve an assurance to using quality goods as being a responsible retailer. The company established the first zero-carbon supermarket in the world in 2010 in Ramsey, Cambridgeshire and for this; it received the Retailer of the year award in 2012 at the Annual Grocer Gold Awards. By 2050, it desires to be the zero-carbon business (Tesco PLC, 2018). The continuous success of the Tesco is because of its re-evaluating and framing clear strategies. The aim of the Tesco is to enhance customer loyalty and its business so that it can help in developing the experience of customers. To achieve this target company committed to invest £ 1 billion in a programme. Policies to improve effectiveness were then established. The driving forces which are the reason behind these policies are innovation, quality, price, and range as well as providing multichannel customer service, for instance, by its service of ‘Click & Collect’ (Human Resource, 2015).

Tesco Vision and Core Values

Tesco is counted in the list of giant retailers who have a large number of retail stores. Its principal business strategy is to generate value for the shareholders by the invention and focus on the customer satisfaction. The principles are as follows:

• To have a strong position in the market
• To assist the community
• To develop its business essentially in the UK
• To expand the business globally
• To trade effectively all over the world
• To be the inventor of brands (Tesco, 2015)
• To make value by teamwork

A PESTLE Analysis is used as a tool or a framework by the marketers in order to evaluate and observe the factors of macro-environment that influence the performance of an organization (Sadgrove, 2015). It involves six aspects i.e. Political, Economic, Social, Technological, Legal, and Environmental.  

Tesco operates its business in 14 countries across the world which might be able to affect the performance of the company due to the political conditions and local legislative. The Employment laws which are implemented by the local government that should be followed to evade legal obstacles. Most of the government influence organizations to offer employment opportunities for local people such that local public can be benefited.

The demand for the product in the market, product price, and organization’s profit is based on the economic factor such as local employment levels, inflation rates, and interest. Business cannot control these factors and the effect of these factors can be adverse on the performance of the organization (Dudovskiy, 2016).

As Tesco is in the business of food it is important for them to monitor the consistency of the customers, because nowadays every consumer has become concerned about their health and taste (CWH, 2018). Due to these changes, Tesco has involved non-food items in its list which attracted many customers in the market.

Implementing new and advanced technologies in the business might be advantageous for the business as well as for customers. The satisfaction of the customer has been increasing by implementing advanced technologies in the Tesco. Technologies used in the stores of the Tesco are to improve the process of distribution and stocking and the technologies are:

• Electronic Fund Transfer System
• Electronic shelf labeling
• Self-check-out machines
• Radio frequency identification
• Electronic Point of Scale

The operations of the Tesco are influenced by the laws which are stated by the governments. For example, Food Retailing Commission forced to make use of standards of pricing for the products which mean retailers should not alter the prices without the notice from the government. Tesco decreased the prices on endorsed products however the prices of the other products increased so that it executed politically correct laws of pricing. 

The organization should fulfil its social responsibilities at the time of product development. Reducing wastage at the time of manufacturing the product, reducing resource usage, and decreasing the environmental damage are the significant conditions to be considered by Tesco (Pestle Analysis, 2014).

Strategies for Enhancing Customer Loyalty

The operations of Tesco in the British retailing, united with its sound foreign growth, have unlocked various threats and competitive challenges. Tesco is facing strong competition from its competitors such as Morrison, Sainsbury, and ASDA-Wal-Mart. All the companies are trying to enhance their market share by several customer-focused strategies. Whereas Tesco regularly lead in the sales, profitability and market share, it remains under the pressure of competition and any marketplace and strategic error might be able to have negative results.

Tesco Company is slowly increasing its global operations and is the leader in a grocery in two abroad markets i.e. Thailand and Malaysia. However its presence in the global market is less as compared to Wal-Mart, Metro, and Carrefour and its place in the retail market do not reflect its leading position in the UK. Same as other major firms Tesco is also expanding its business in the international market regularly, deals with different and hard competitive and environmental circumstances in its numerous operating areas (Wood and McCarthy, 2018).

Major of the competition in the overseas market arrive from various local competitors, who are not only operating with far lesser expenses but also know the preference and local tastes much better. Tesco has to struggle with the competition in its abroad markets and trying to create its existence with the support of local firms which are well-established and have different store formats.

An analysis of the industry structure must be accepted to identify operational sources of competitive advantage (Rothaermel, 2015). Hence, to examine the competitive environment of Tesco, Porter’s five forces framework has been considered as follows:

In the market of grocery, the threat of substitutes is significantly medium to high for non-food items and low for food items.

In the market of food retailing, the substitutes of big retailers are convenience stores, organic shops and of licenses which are not taken as a threat for the big supermarkets such as Tesco that provide products which are of high quality at reasonable prices. Additionally, Tesco is starting Express stores at the city centers and local towns which will create barriers for these substitutes.

On the other side, the threat of substitutes is fairly high for instance clothing and non-food items (Bush, 2016). It must be considered that as long as the economic recession conquers, consumers will be attracted towards the products which are offered at discounted prices therefore for specialty shops Tesco is a major threat.

PESTLE Analysis of Tesco

In the industry of food retailing the entry of new competitor’s threat is low.

In the context of creating a brand name and to be competitive, it is important to have a capital investment. Big brands that already have covered the market of food retail are Sainsbury’s, Tesco, Morrisons, and Asda. Approximately 80% of the shopping in the UK is done from these food retail markets. Hence, the new entrants need to manufacture something which can be offered at a low price and offer high quality to establish their market value.

Getting planning consent from the local government takes a significant amount of resource and time to create new supermarkets and therefore it is a significant barrier to new entrants.

In the grocery and food retail industry, the intensity of competitive rivalry is extremely high.

Direct competitors of the Tesco give it a high competition which includes Sainsbury’s, Waitrose, Asda, and Morrisons, who are challenging each other by promotions, products, and price (Bhasin, 2018). Therefore it must be noted that Asda is the major competitor of this segment and have successfully enlarged its market share from 16.6% to 16.8% in 2010, whereas Sainsbury’s has reflected an growth from 15.8% to 16.1% and Morrisons from 11.3% to 11.6% in same time duration. The slow growth in the market basically means that these growing market shares from competitors have strengthened the rivalry in the market, which is intimidating the market leadership position of Tesco.

The buyer’s bargaining power is high.

The switching cost is very low in those circumstances where products have little variation and are more consistent. The customers can effortlessly shift from one product brand to another.

It has been analysed that consumers are majorly attracted towards those products which are of low prices, and with the availability of online shopping, the products prices can be simply checked, associated and selected (Solomon, Russell-Bennett and Previte, 2012).

The supplier’s bargaining power is low

It must be considered that suppliers are persuaded towards grocery and main food retailers and have panic of losing their agreements of business with big supermarkets. Therefore, the retailer’s position such as Sainsbury’s, Asda, and Tesco is strengthened and discussions become positive to get the lowest price of the products from the suppliers.

Strategic drip is said to be a concept of strategic management that talk about the reaction of the organization while dealing with the changing environment (Kew and Stredwick, 2017).  Various circumstances and unpredicted challenges are common features that may come any time when determining and emerging strategic change in the organization. Strategic drift is those circumstances for which companies fail to produce the strategic outcomes which were expected (Zafirova, 2014).

Porter’s Five Forces Analysis of Tesco

Tesco Company has faced strategic drift which resulted in declining its sales of UK in 2011. This situation raised because of its major concentration was on its growth in Asian and UK markets which diverted it from its operations in the UK. This affected Tesco to declare the investment of £1bn into “refurbishing” its stores of UK to enhance the “customer experience”.

Tesco has its stores across the world and it has become their major advantage in the context of making extra revenue and sales. But this factor is also a challenge or issue with the view of strategic planning. It is important to acknowledge that with the support of strategic planning it becomes easy to implement the objectives and strategies in appropriate manner (Tesco, 2015). But because of operations of international business, it is difficult to make on the master plan. The influence of globalization and enthusiasm could be easily redirected to the strategic planning of the organization. It averts them to track their business in a smooth way. Hurdles are also common situation in the operations of the business. Due to huge corporate level, it turns out to be harder to keep an eye on each area and activity so the management and distribution of the resources can be another challenge and problem for Tesco.

The cited companies can face problems in neglecting the resources wastage. It can affect the efficiency and some type of modifications could be recognized on the organization’s earnings ratio. Tesco has to face the issues of strategic planning but besides this everything is under their control or favorable for them. An additional change in the demand and perception of the customer is another factor that might be able to influence the strategic planning. Tesco is properly evaluating the external environment to develop its vision and mission. All the efforts of the Tesco helping them in meeting their strategic plan of being everywhere, sell to everyone and to sell everything. Managers of the company are making best decisions so that their promises can be fulfilled. They are identifying and satisfying the needs of the customer by offering products with good quality, at affordable price, home delivery option, recycling, 24 hours service, business expansion and development of the technology like home deliveries and online shopping. This evidence indicates that there is a proper alignment between their strategies, vision, and mission. This supports Tesco to be the leader in the UK’s retail supermarket.

Conclusion

Strategic capability means the ability of the business to effectively employ competitive strategies that permit it to persist and increase its value (Scott, 2013). It includes those strategies which are used by the business; it concentrates on the resources and assets of the organization and market position reflecting how company will employ strategies in the future (Hartman, 2018).

Mostly it is considered leadership as a group of people at the organization’s top level but it is a skill that must be present at every level of the organization. It is said to be a capability to motivate and inspire people to accomplish a mission (Antonakis and Day, 2017). There are various leadership styles which are followed in various companies’ such as transactional leadership, Bureaucratic leadership, Servant leadership, Charismatic leadership, Laissez-faire leadership, Transformational leadership, Democratic leadership, and Autocratic leadership (Management Study, 2018). The managementof Tesco follows Democratic style of leadership which is also termed as participant leadership. 

In this type of leadership, the voices and opinions of the employees are considered on the highest priority at the time of decision making. The Tesco’s leadership motivates its employees and because of this, the company regularly offer best services to its customers. It must be highlighted that the management of the company give more importance to hiring leaders in every department so that the process of the company can be handled properly. Management gives charge of the leadership roles to the employees in the company such that each people can have clear view about their roles and responsibilities. This helps in implementing the strategic decision by conducting meetings, by effective communication, and by performing staff’s follow. These follow-ups confirm that they have to provide excellent quality of work and effectiveness of the company’s operation (Business Case, 2018).

The style of leadership which is adopted by Tesco is imitated by every department’s leaders which have resulted in changing the structure of the company. For example, Duty manager of every store leads the team of the store makes decisions daily which supports the store’s operation. These managers are expert in the management of their duty and they confirm that every team leader is completely trained, participative, and validated.

Creativity reflects the ability of the organization to think in a different way and permit different thinking to impact the strategic decisions (Runco, M2014). Tesco is very famous for its creative presentation of items in its stores. It takes care of every department and ensures that the representation of the stores is excellent, for which it has appointed various employees who can maintain the store. Besides this, the promotional campaigns of the Tesco are very effective and creative which grab the attention of the customer and convince them to do the final purchase (Bhasin, 2018).

Tesco is a legend company in its own right. The strategic capacity of the company has always been ahead of its industry competitors. Apart from observing the “consumer behavior, management styles, local market conditions, legal regulations, competitive environment,” the company’s ability to consider the needs of the customer adds to the company’s success.

Moreover, the club card system of the company has not only provided great deals to the customers but confirmed that the business of the company will continue in the future (Love Money, 2016). Furthermore, this offered customers to maintain their loyalty to the store’s chain of the Tesco.

Key Partners ü  Local Joint Ventures ü  Associations ü  Business and suppliers at a local, regional, and international level	Key Activities ü  Evaluating the demand of consumers ü  Logistics and warehouses ü  Buying and selling consumer goods ü  Collect suggestion, information, and feedback ü  Effective distributive system	Value Proposition ü  Personalized shopping ü  Convenient shopping ü  A wide variety of choices ü  Visiting preferred stores ü  Home delivery ü  Safe online buying	Customer Relationship ü  Attract more customers ü  Long-term relationship ü  Considering the opinions and suggestions of consumers in various ways ü  Categorize and retain loyal customers	Customer Segments Mass Market Segmentation: ü  Housewife ü  Middle income ü  Student ü  Traditional lifestyle and easy going customers ü  Older people
Key Resources   ü  Store infrastructure Logistics and warehouses ü  Website on digital platform ü  Club card	Channels ü  Stores ü  Social Media such as Facebook, Twitter ü  Website of Tesco ü  Mobile application
Cost Structure ü  Logistics and Warehouses ü  Capital expenditure ü  Staff		Revenue Streams ü  Home delivery of the product at affordable prices ü  Sales of goods

In the context of international expansion plan, there are many assumptions being made that Tesco will start its business operations in Europe, Switzerland. Tesco’s present position in the market is very strong as it has been reflected in its huge profits and regular investments in establishing new stores at local and global level. Therefore, the company has potential to enter the market of Swiss. All age group customers will be targeted by Tesco and will try to meet their expectations and wants. Besides this, Tesco will guarantee to make strong supply chain network in Switzerland such that the strategies of the company can bring good results. It will try to become the member of CSR (Corporate social responsibility) campaigns as serving the society is essential to influence the people of Swiss. Additionally, the factor that can have impact on the decision of penetration in the market of Swiss is that it is highly developed market, few competitors are present there and are said to be a multilingual country. Moreover, the investment policy of the country is also good which will support in retaining its local customers along with the tourist visiting Switzerland. Thus, the country possesses great potential to invite foreign investments due to its financial, political, and economic stability. Moreover, the people of Swiss are very particular about the product quality and the economy of the country is dynamic with low taxes. If company got success in its Swiss market processes, future plans for expansion of new stores in Switzerland will help the company to enter the market. On the other hand, the growth process could take five to six years.

Ansoff Model Strategies

Tesco can implement two strategic options:

New Product Development

Switzerland people are very interested in creating their brands of food. Therefore, by concentrating on this area Tesco can make its primary market of new product development.

By approving this strategy Tesco can commence its operations of the business in Switzerland for food retail and non-food retail business. Moreover, the company can have strategic alliances and joint developments with  Switzerland’s existing retailers. Thus, in Switzerland market development will help Tesco to maximize its revenue by which strategies of expansion could be formed.

When the entry in the Switzerland market became successful for Tesco then it will become important for them to differentiate it from the other competitors. Thus, the services and products provided must be innovative and match the expectations of the people so that products can be accepted widely in just a few months of its operations (Estep, 2011). Moreover, the products should have innovative packing and attractive brand style. This will support in increasing the satisfaction of the customer and successful operation (Lorette, 2018).

Operations of the Tesco will be initiated by small store that will help in future expansion. The market which is segmented will include both food items and non-food items. The major agenda is to provide goods at low price.

The target market of Tesco comprises people of every age groups i.e. children, adults, infants, old age, and teens. Tesco will provide inclusive range of goods to the targeted market with unique and scheduled strategies.

Unpreserved and fresh goods i.e. food products must be focused by the company as people in Switzerland spend more amount on food products. Along with this, product’s fair price will support company in attracting customers as in Switzerland people are quality and price sensitive.

In terms of implementing the proposed plan, huge amount of investments would be needed in order to commence its processes in Switzerland. Skilled labor cost, suppliers of goods, infrastructure cost, marketing expenses, cost of inventory, and maintenance cost, etc. are needed in-depth analysis. Furthermore, various expenditures such as salary of employees, middlemen services cost like transporters, promotional activities cost, warehouse, and sales service workers. Regular monitoring and strict control of the strategy will be needed. Along with this, Tesco must make a emergency plan so that instant decision and execution of changed plan can avoid losses. The plan which is proposed must be wisely measured and can be executed in the next three years or before. However, its execution can be influenced by any of the factors of external environment, i.e. change in policies, political influence, etc.

Conclusion

The strategy of marketing that is discussed in the above report is prepared after proper examination of the external environment, such that program can be implemented successfully. The strength of the Tesco is that is a functioning effectively all over the world which guarantees that the company can multiply its operations in more geographic areas, particularly in Europe. This report suggests Tesco commence its operations in Switzerland, on the other side more detailed analysis would be required. Tesco should implement the strategy of product implementation as per its segmented and targeted market such that customers can be invited and fruitful procedures must be ensured. Though, the implementation of the prosed strategic plan is based on Switzerland’s prevailing conditions.

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