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Assignment front sheet

Assessor name

Learner name
Ragy Abdel Alim Ahmed Ahmed

Dr. Khaled El-Sakty

Date issued

Completion date

Submitted on

13th of June 2015

25th of July 2015

23rd of July 2015

Qualification

Unit number and title

Level 7 BTEC Advanced Professional Certificate


Strategic Management and Leadership

Strategic Planning

Assignment title
Strategic Planning for Tesco

Assessor Comment
Feedback

Action Plan

Assessor Signature:

Date:

Internal Verifier Comment

Internal Verifier Signature:

Date:

Learner declaration
I certify that the work submitted for this assignment is my own and research sources are fully acknowledged.
Learner signature:

Date: 23rd of July 2015

MBA ROUTE - ALEXANDRIA

Strategic Planning

Strategic Planning Assignment


Strategic Planning For Tesco

Assignment Date: 25th July 2015

Prepared By :
Student No. :

Ragy Abdel Alim Ahmed Ahmed


EGY0514

Tesco is a British multinational company (MNC), headquartered in Hertfordshire, United


Kingdom (UK). Tesco was founded by Jack Cohen in 1919, a small stall in East End of London
selling surplus groceries. Today, Tesco owns over 7,817 stores worldwide with total number of
employees over 517,802, serving tens of millions of people per week (Tesco, 2015).
It is the worlds 3rd largest retailer with stores in 14 countries all over the world, including China,
India, Malaysia, Korea, America, Ireland and Slovakia (Tesco, 2013). Tesco sells a wide range of
products and services, such as fresh foods and groceries items, electronics, clothing, household
items and financial services.
Tesco aims to expand its business scope and diversify internationally in pursuit of a strong and
sustainable long-term growth. Accordingly, its corporate vision and key strategic objectives are;
to grow the UK market, and to be a successful international retailer in-store and online (Tesco
Plc., 2013).
Tescos growth strategy is international expansion and diversification, lets go through the tasks
to develop Tesco Strategic plan.

Task 1
Section 1.1:
- Explain the importance of external factors affecting an organization.
Section 1.3:
Analyse the major changes taking place in the external environment that will affect
strategy.
The word environment means the surrounding atmosphere and conditions for existence. It is very
important for organisational leaders to know and understand the environment before they start
doing business.
-

The environment & the organisation exists in the context of a complex political, economic, social,
technological, environmental (i.e. green) and legal world. This environment changes and is more
complex for some organisations than for others. How this affects the organisation could include
an understanding of historical and
environmental effects, as well as
expected or potential changes in
environmental variables. Many of
those variables will give rise to
opportunities and others will
exert threats on the organisation
or both. A problem that has to be
faced is that the range of
variables is likely to be so great
that it may not be possible or
realistic
to
identify
and
understand each one. (Johnson,
Scholes & Whittington, 2008)
Figure 1, Source leoisaac.com/planning/strat016.htm

The environmental factors that affect the business plan, and are divided into two main groups:
a. External Factors
b. Internal Factors
Page 1 of 33

Each factor can be divided into several sub factors; I will focus
the external factors affecting Tescos plans and examine each
factor and its importance.

on

The Table below illustrates the important aspects of the


external environment in which the business operates. The
business cannot control these factors and can only
respond to them as needed. The main problem for business
managers is to be able to respond to changes in the external
environment as required and to have the ability to respond
and analyse the available data, and this depends on how soon any
change is identified.

Factor
Economic conditions

Market (competition)

Technology

Legal

Media
Political

Demographic

Figure 2, Source leoisaac.com/planning/strat016.htm

Importance
The current economic condition of nations affect the spending pattern of
the people, high interest rates and unemployment will reduce the
amounts of spending schemes and vice versa.
Also the global economic conditions have great influence on
organizations.
The strength of business competition is a constantly changing factor in
the external business environment. Competitors always change
marketing strategies, product lines and prices. These changes are always
impacting the other competitors and may cause great harm as such
managers need to keep eye on rivals strategies.
Tesco main competitors in UK are Asda, Sainsburys, Morrisons, Aldi
& Lidl.
Technological changes have affected dramatically the designs and
packing of goods, the stores presentation the surveys.
e-stores are now expanding and Tesco has been involved and
developing online services.
Climate change will not have the same impact on all businesses. But
Businesses that depend directly on a good supply of water such as
grocery sector will be adversely effected.
Taxes are one of most clear changes through legislation. Sometimes
taxes on imported goods or reductions have great impact on strategies
and may benefit or harm competitor products.
Advertising is shifting from newspapers to online and Tesco is coping
with the change.
Like law, changes in governmental policies may change with or without
warning. As an example of how government policy has an effect, is that
many organisations depend on government financial assistance, such
assistance can disappear or can increase.
There is constant change in the population. Some of these changes
include an increasing proportion of elderly citizens, increasing number
of two-income families, the age at which people marry is increasing,
increasing ethnic diversity, and suburbs which were once dominated by
young families now have few. These demographic changes can have a
significant effect locally. For example, a sport club which once
prospered can begin to decline as the local area has less and less
children.

Page 2 of 33

In order to analyse Tescos competitive capabilities in the external environment a SWOT


(Strength, Weakness, Opportunities and Threats) analysis is performed:

Strength
Weakness
High brand value in the UK market, Quality Complete dependence on UK market is
products and using new ways to create great one of their major weaknesses for Tesco.
shopping experience for customers helped
them in increasing brand value
Tesco online process- Tesco offers online Serial acquisitions and debt reduction
services to their customers and it is one of
the best ways to generate revenues.
Leader in UK market- Tesco is recognized Low customers switching cost.
as the best grocery items retailer in UK
markets.
Gradually Tesco marketing shares are International expansions depend on UK
finance.
improving all over the world.

Opportunities
Concentrating more on non-food retailing

Threats
Strong competitors in market such as
Asda
Growing as skincare retailer (Health and Expanding
its business to
the
beauty)
international level could be very
expensive.
Focusing on international growth.
Overseas profits may fall
Price war between UK retailers may
impact profits used to finance
expansions in international markets.

After reviewing the SWOT analysis is clear that Tesco runs an Open system that interact with
other systems in the external environment, unlike closed systems which have relatively little
interaction with other systems or the external environment.

Page 3 of 33

Accordingly we can examine how Tesco responds to major changes in the external environmental
factors:

Factor
Economic conditions

Market
(competition)
Technology

Climate change

Legal

Response
Stable economic conditions in UK, a slight increase in sales value,
Asian markets sees great opportunities as life style and economic
conditions improving Tesco is investing and expanding rapidly in
Asian markets.
Competition in UK is very strong and other players are gaining
more market shares and Tesco trying to improve shopping
experience and implementing loyalty programs to hold or increase
market shares.
Developing and enhancing online services to fulfil customer needs
and expectations is an essential concern as this sector is seen as a
huge area of development.
Reducing carbon emissions and wastes is a key target to serve the
plant and comply with strict regulations by governments in forth
coming years.
New tax regulations in Hungary affected Europe net profits are one
of most clear changes through legislation. Sometimes taxes on
imported goods or reductions have great impact on strategies and
may benefit or harm competitor products.
As well as opening hours in South Korea, Tesco to develop online
services there to make up for constrained opening hours.

So we can see how Tesco as an open system organization is affected and responded to changes in
the external environment changes.
In my opinion I think that Tesco are trying to catch up with all changes and are modifying
strategies according to external factors ahead or inline with changes.

Page 4 of 33

Section 1.2:
-

Analyse the needs and expectations of stakeholders of an organization.

First we need to define the term stakeholder in order to identify their expectations and needs from
the organization.
A stakeholder is a person, group or organisation that has an interest in the organisation.
Stakeholders have needs and expectations and can be internal or external to the organisation.

Figure 3, Source figures.boundless.com/13782/large/stakeholder-28en-29.png

I.

Internal Stakeholders

1. Employees &
Managers

2. Owners

Influence on Strategic Decision


- Significant investment in training,
development
and
incentives,
including Executive Committee
Talent Cycle, Talent Planning,
Leadership
Development
and
succession planning for future
needs of the business.
- Pay, pension and share plan
arrangements help attract and retain
good people.
- To keep a successful - Expansion plans in new markets.
business
and
achieve - Tactics to increase brand values are
sustainable growth.
developed.
- Create
highly
valued - Pricing strategies to increase market
brands.
share.
-

Needs & Expectations


Secure job.
Career Development
Annual bonus.
Pension plan.

Page 5 of 33

II.

External Stakeholders

1. Suppliers

2. Shareholders

3. Customers

4. Society

Needs & Expectations


Long Term relationship
Increase Business
Good trade
Rewards
Return on investment

- Meet Customer
expectations
- Introduce new services
- Retain loyalty
- Provide new Jobs
- Charity

5. Government

- Follow regulations

6. Creditors

- Collecting loan payments

Influence on Strategic Decision


Cost of supplied products and taxes
incurred to suppliers affect the
pricing strategy.
Good rewards means good strategy,
if not a strategy modification is
required.
They are the key part in any plan
and all strategies are based on
satisfying customers and gaining
benefits from satisfying there needs.
Expansion plans provide job
opportunities
Participation in local community
activities and giving back to
community is a part of any plan.
Taxation rules impacts the pricing
strategies.
Opening hours regulations will
affect profits and accordingly affect
pricing and profits.
Reduce carbon emissions
Amount of debt and ability to pay
instalments, gives opportunities for
expansion plans through more
loans.

Page 6 of 33

Task 2
Section 2.1:
-

Use appropriate tools to analyse the effects of current business plans.

Section 2.3:
-

Evaluate the competitive strengths and weaknesses of an organisations current business


strategies.

There are many tools to be used to in strategic planning process:


1. SWOT analysis
2. Porters Five Forces.
3. Boston growth-share (BCG) matrix.
The SWOT analysis was conducted at Section 1.1 & Section 1.3, and in order to identify the
current competition, so we will conduct five Porters analysis

Tesco Strategic plan was to achieve the following:


1. To grow the UK core: during 2012 & 2013 UK stores continues to increase from 3,146
stores to 3,378 stores and in 2014 a difficult decision to close 43 unprofitable stores and
not to proceed with plans for 49 new stores as a result of declining market shares and
pressure on profits due to price war between retailers.
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2. To create high value brands: Continue to introduce new fine product brands.
3. To be outstanding International Retailer: to expand in international markets, stores in
Europe and Asia continue to increase.
4. Grow retail services in all markets: Sales values continue to increase despite of decreasing
market shares and sliding profits, USA business was totally dropped in light of continuing
loss.
5. Build Teams to create more value: Number of employees continues to increase and
personal development plans remains in force.
Reviewing annual performance indicates sliding market share in UK and drop of net profits on
annual basis, accordingly the expansion plans was affected and new expansion halted,
unprofitable stores to be closed.
Price war continues and losing market share to rivals like Aldi and Lidl which are the largest
market share improvers.

Based on these outcomes Tesco


changed most of the board members
and committee heads during 2014 in
order to review strategies and
implement new plans to regain
market share and boost profits.
It is obvious that discounters like
Aldi & Lidl are gaining the fastest
market share gain while Asda &
Sainsbury posted their market shares
but at little margins.

Figure 4, Source i.dailymail.co.uk/i/pix/2014/09/22


/1411373060890_wps_18_Scale_of_challenge_facing.jpg

In my opinion Tesco must slow down expansion plans all over the world, expand only in markets
with promising profits, concentrate their efforts to match discounters prices and reduce salaries
and benefits given to executives.
In the following task a detailed review of Tesco market position will be conducted

Page 8 of 33

Section 2.2:
-

Review the position of an organisation in its current market

Tesco position in different markets is reflected from profits at different markets, Tesco has been
losing profits in UK, Asia and Europe while USA business was dropped due to several years
losses, by comparing Tesco revenues and profits we can spot deficiency in both as follows:

Figure 5, Source Tesco Annual Report 2013

Figure 6, Source Tesco Annual Report 2014

Figure 7, Source Tesco Annual Report 2015

Page 9 of 33

Figure 8, Source www.cityam.com/sites/default/files/1-custom/content/141022-tesco-empire-3.jpg

Also Tesco shares value dropped as a direct impact of profits and revenues decline, as extracted
from Tesco 2015 report Tesco suffered from decline in all markets in terms of shares review
Figure 4 for UK market accordingly strategic development for Tesco plans is going by new
management.
But in terms of leaders Tesco is still leading the market in most markets refer to Figure 5 & 6,
so in order to review the strengths & weaknesses in current markets.

Strength
Weakness
High brand value in the UK market, Quality Complete dependence on UK market is
products and using new ways to create great one of their major weaknesses for Tesco.
shopping experience for customers helped
them in increasing brand value
Tesco online process- Tesco offers online Serial acquisitions and debt reduction
services to their customers and it is one of
the best ways to generate revenues.
Leader in UK market- Tesco is recognized Low customers switching cost.
as the best grocery items retailer in UK
markets.
Gradually Tesco marketing shares are International expansions depend on UK
finance.
improving all over the world.
In my opinion Tesco in order to regain the profits they have to reduce total costs, reduce
investments in all markets, reduce costs incurred by top management salaries & benefits

Page 10 of 33

Task 3
Section 3.1:
-

Use modelling tools to develop strategic options for an organisation.

In order to develop strategic options different modelling tools or frameworks can be used, all
frameworks have the following characteristics:
a. There is no right and wrong framework
b. There are many frameworks that may fit any industry
c. All frameworks are based on 4 principles (Analysis, formulation, Execution, Evaluation)
Applicable Frameworks such as:
1. Porters five forces analysis
This tool is more likely used to identify strategic position of an organization against other
market rivals, as it accounts for the following:
(a) New Entrants: which are considered a new threat that can decrease your market share.
(b) Supplier Power: which can impact the organization during her buying of materials and
directly impact final product cost which to be supplied to the target customer.
(c) Buyer Power: This can impact the firms targets if customers decide not to use such
product.
(d) Competitive Rivalry: this is focused on the competition between big firms, and this
also posses how each organization markets her products and how it modifies products
to reach customer satisfaction.
(e) Substitutes: This accounts for the switching cost between similar products.
After describing what this method stands for it is evident that it can be more used
when making a qualitative evaluation of a firm's strategic position and is better used at
same business levels, and will not be so helpful when generating a marketing plan to
ascertain growth based on market development plan.
Refer to section 2.1 & 2.3 for the porter analysis carried out for Tesco.
2. SWOT analysis
This tool is used to define Strength(S), Weakness, Opportunities and Threats that can face
any organization:
Strengths and Weaknesses: These are the internal factors within an organization, so it can
show strength like good reputation of the organization and wide range of products to sell,
weakness can be low switching cost.

Page 11 of 33

Opportunities and Threats: These are external like the opportunity to be present in new
markets or benefiting from a new regime that gives advantage to my products, threats
would be the rivals or changing patterns of clients.
After describing what this method stands for seems that it evaluates the internal and
external parameters affecting the organizational current objectives and current goals,
which means it is more useful to be used as a control tool rather as a development tool.
Refer to section 1.1 & 1.3 for the SWOT analysis carried out for Tesco.
3. Ansoff Matrix
This is a tool for studying growth opportunities, and as Tesco target is to impose growth it is the
most suitable tool in order to study the areas of growth, this tool offers four growth areas:
(a) Product Diversification: this is achieved by introducing new products in the existing
market; this will impose direct costs to introduce this new product to new markets
which is the most risky option.
(b) Product Development: this is achieved by introducing new products in the same
market.
(c) Market Penetration: this is achieved by trying to obtain a bigger share for an existing
product by increasing the awareness of such product or improving the design or the
packing of this product and can be all.
(d) Market Development: this is achieved by creating new markets for an existing product
and expanding the market.
This is a very helpful tool which focuses only on markets and products this is why it is preferred
and was a good selection, if a perfect mix between products and markets achieved be certain the
growth is achievable.
Market Driven
SAFEST

Existing
Markets

Product Driven

Existing Products

New Products

Market Penetration

Product Development
Use the base of existing products to grow.
For example once a range of products has
been established , new types of products
can be developed within that range such as
introducing new discounted products to
compete with other discounters or new
Fine products to competitor with other
similar products.
Market Development
Seeking to create or develop new products,
or product ranges for new markets.

Trying to take a greater share of an existing


market with an existing product.

This could involve product re-launch or increasing


brand awareness.
Product Diversification
Finding or creating new markets by targeting new
New
Markets parts of the market or by expansion into different
markets.

MOST RISKY

In my opinion Tesco has to develop products within the current markets as well as products
diversification and to expand in online sales and to reduce direct costs.
Page 12 of 33

Section 3.2:
- Develop a comparative understanding of activity from organisations in the market.
In order to develop the comparison between organizations in the market we have to bencmark
Tesco to other competitor such as Aldi which can be used as a way of understanding how an
organisations strategic capability, in terms of internal processes, compare with those of other
organisations.
There are different approaches to benchmarking:
Historical benchmarking: Organisations may consider their performance in relation to previous
years in order to identify any significant changes.
Industry benchmarking. Insights about performance standards can be gleaned by looking at the
comparative performance of other organisations in the same industry sector or between similar
service providers against a set of performance indicators.
Best-in-class benchmarking: Best-in-class benchmarking compares an organisations
performance against best-in-class performance wherever that is found and therefore seeks to
overcome the limitations of other approaches.
So in order to benchmark Tesco against a rival that is grapping market shares from bigger UK
retailers which is Aldi, we will consider the following in our comparison:

1. Organization
Structure &
Management
2. Outlets Location

3. Selection of goods

4. Pricing Strategy
5. Service

6. Supply & Stock

7. Quality
8. Packing

Tesco
Shareholders accounts for
business direction and drive
the company towards profits in
focused on short term gains.
Open stores at expensive costs
to be near and in the heart of
cities and towns.
Offers in excess of 40
thousand products with 8000
considered as core products
Slash prices to compete

Aldi
A family-owned business, meaning
that it doesnt have to report to
shareholders, allowing them to take
a more long-term strategic view.
Found it tough to afford suitable
sites inside the major cities, limited
area shops
Offers only about 2500 product

Maintain price differences with


major four.
Offers shopping experience Limited number of products, No
with diversity of products , loyalty programs, Cash only is
online
shopping
,loyalty accepted
programs,
Credit
cards
accepted
- Keeps stocks of every thing( - Stock to be minimum (make to
make to stock)
order)
- Fair prices to suppliers
- Lowest prices are paid to
suppliers
Offers quality products
Offers low prices
Big and Bulky and comes in Minimum packing, standard sizing
different sizes depending on for maximum utilization of shelves
supplier.
and pallets.
Page 13 of 33

So it is clear that Tesco offers much more good things in the shopping experience but they are
losing on the other hand the prices war, high management costs and expensive expansion plans
has impacted the pricing strategy leading to the repetitive loss in market share and profits in UK.
Lots of people drops the quality and the shopping experience as long they save money, shopping
at Aldi can save up to 35% of the total costs rather than shopping at Tesco.
Tesco needs to increase the performance in order to regain market share and to compete in terms
of prices, Performance parameters are:
1. Productivity
2. Quality
3. Utilization
4. Efficiency and effectiveness

Page 14 of 33

Section 3.3:
- Create options to form the basis of future organisational strategy
In order to identify the options for future organizational strategic options Ansoff analysis for
Tescos options was performed in Task 3.1 also is presented here:
Market Driven
SAFEST

Existing Products

Product Driven
New Products

Market Penetration

Product Development
Use the base of existing products to grow.
Trying to take a greater share of an
For example once a range of products has
existing market with an existing
been established , new types of products
Existing product.
can be developed within that range such as
Markets
introducing new discounted products to
This could involve product re-launch or compete with other discounters or new
Fine products to competitor with other
increasing brand awareness.
similar products.
Product Diversification
Market Development
Finding or creating new markets by
Seeking to create or develop new products,
New
targeting
new
parts
of
the
market
or
or product ranges for new markets.
Markets
by expansion into different markets.
MOST RISKY

From the options we can see that the most risky is to start market development, accordingly the
feasible options are to start penetrating the market and developing the current products.
These options require competing in prices and gaining customers from all other competitors.
Accordingly Tesco strategy in 2015 is to regain that total focus on serving customers. We have
refocused our business under three operational headlines:
1. Listening to, understanding and reaching out to customers to create the best possible offer.
2. Working with growers and suppliers to make great products, and helping to deliver the best value
to customers.
3. And working across different channels to get those products to customers in the most convenient
way possible.
Their aim is to make sure everything in the business is set up in the most efficient way to create
value for customers.
By refocusing on these three areas and with the capabilities, reach, insight and skills we have
within our business we are uniquely placed to deliver the best offer we can and in doing so earn
our customers loyalty. By creating value for our customers, we will create sustainable value for
our shareholders too.
If we look back to compare to 2013 strategy, the strategy was:
1.
2.
3.
4.
5.

To grow the UK core


To be an outstanding international retailer in stores and online
To be as strong in everything we sell as we are in food
To grow retail services in all our markets
To put our responsibilities to the communities we serve at the heart of what we do.
Page 15 of 33

6. To be a creator of highly valued brands


7. To build our team so that we create more value
The vision was To be the most highly valued business by: the customers we serve, the
communities in which we operate, our loyal and committed colleagues and of course, our
shareholders
The mission was We make what matters better, together. the 2015 mission To be the champion
for customers to help everyone who shops with us enjoy a better quality of life and an easier
way of living.
When we look at 2013 vision and link it to 2013 strategy it focused on expansions through
introducing new products and brands as well as increasing number of branches, also the mission
focused on achieving goals together with the customers.
2015 Mission and values focus on work to be done b Tesco to keep loyal customers and to offer
them the best experience and service which a major shift of Re-Engineering the mission statement
to reflect the correct image.
The values also focused on customer feed back and satisfaction by offering the best service and
products by communicating with customers and suppliers, Tesco introduced the Tesco Supplier
Network to achieve the most smooth relation with suppliers fulfil the customers satisfaction.
As a result of these changes Tesco 1Q results are promising and reveal that Tesco is back on
track.

Page 16 of 33

Task 4
Section 4.1:
-

Propose a suitable structure for a strategy plan that ensures appropriate participation from
all stakeholders of an organisation.
Any strategic plans has to undergo several steps, the following steps are the normal procedure to
develop a strategic plan:
1.
2.
3.
4.
5.
6.
7.

Introduction
Mission , Vision & objectives
Strategy
Analysis
Implementation
Control
Conclusion

These steps are formulated through the 3 main stages covering the whole Strategic Plan Process:
1. Strategic Analysis.
2. Strategic choices.
3. Implementation
In order to ensure appropriate participation from all stakeholders during the strategic choices that
may impact stakeholders, a Stakeholder analysis to identify the level of interest, participation
First identify the stakeholders:
a.
b.
c.
d.
e.

Government
Suppliers
Customer
Investor
Employees

Second identify the stakeholders Interest Level:


a. Government: Government has low level of interest by the change Tesco brought into
service.
b. Suppliers: Supplier as internal stakeholder has high level of interest of what change has
brought into Tesco.
c. Customer: Customer has low level of interest of what Tesco has changed within the
organization, and has high level of interest by changes in service and prices.
d. Investors: Investor who put the money in Tesco has high level of interest by the change
has happened.
e. Employees: Employees as internal stakeholder has high level of interest of what change
has brought into Tesco.

Page 17 of 33

Figure 9, Source https://mpconsulting.files.wordpress.com/2011/02/picture-22.png

Page 18 of 33

Section 4.2:
-

Develop criteria for reviewing potential options for a strategy plan.

During the construction of any Strategic plan, there are multi options to choose; from the options
for any plan could be expansion, retention, change pricing strategy and differentiation, etc.
From Tesco 2015 report we found that Tesco strategic direction is based on three major
directions:
1. Regaining competitiveness in core UK business
2. Protecting and strengthening the balance sheet
3. Rebuilding trust and transparency
In order to assess the options for every direction the following 18 points have to be used each in
the relevant area to review the potential options:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Reviewing options
Attractiveness to stakeholders;
Stakeholder participation;
Criteria for judging options;
Feasibility studies;
Risk assessment;
Reviewing additional recent material;
Cost-benefit analysis;
Consistency with organisational values;

10. Effects on market position and share;


11. Costs and investments;
12. Opportunity costs;
13. Scenario planning;
14. Simulation modelling;
15. Sensitivity analysis;
16. Balanced scorecard approach;
17. Globalisation and internet advantages;
18. Resources issues eg (financial, workforce)

So lets see how each direction can be reviewed


1. Regaining competitiveness in core UK business
This can be achieved by 4 tactics (Service, Range, Availability and Price), accordingly the
following measures can be used to identify the improvement in each tactic.
a. Service: 4,652 new colleagues in customer-facing roles. These colleagues should be
gaining feed back from customers regarding their shopping experience and needs.
Measure: Customer feed back, Footfall, earnings.
b. Range: Customers get confused due to so many products, the products to be reduced and
enhance the packing, this to be performed in conjunction with suppliers.
Measure: Customer feed back, inventories tracking, lower prices offered by suppliers.
c. Availability: Tesco gave more space to the top 1,000 lines in each store.
Measure: marked improvements in product availability at peak times during the day.
d. Price: Tesco want to make the most important products to the customers as affordable as
they can. Tesco has dropped prices on hundreds of branded products and essential ownPage 19 of 33

brand products. Tesco is also committed to simpler, lower and more stable prices
wherever we can.
Measure: Customer feed back, Footfall, earnings.
2. Protecting and strengthening the balance sheet
In order to improve the balance sheets the following actions to be performed:
a. Cost Savings: Tesco have identified cost savings across the Group of 400m. Tesco have
also taken a difficult decision to close 43 unprofitable stores in the UK, and not to proceed
with plans for 49 new stores. These decisions have been difficult but have been made to
put the needs of the business and customers first.
Measure: Saving 400 million.
b. Spending: Savings in rewards and salaries as well as other spending shall account for
1bn.
Measure: Saving 1 billion.
c. Pension fund: Tesco have started a consultation to replace our defined benefit pension
scheme for all colleagues. Tesco is committed to protecting the pensions that colleagues
have earned, and also to continuing to provide a competitive pension scheme for all
colleagues.
Measure: Protecting and providing competitive pension schemes.
d. Property: Tesco have undertaken a detailed review of our property portfolio, including the
leases which drive our 1.5bn annual rent bill. As an example of this, Tesco have
completed an asset swap with British Land to regain sole ownership of 21 superstores,
increasing the proportion of owned stores within our estate.
Measure: Savings in leases and increasing properties value.
3. Rebuilding trust and transparency
a. New management: who are transforming our commercial model to create long-term,
mutually beneficial partnerships, with a greater focus on cost prices than on the
commercial income we receive back from suppliers for promoting their products.
Measure: Reduction of costs incurred to suppliers.
b. New Code of Business Conduct: supported by a company-wide training programme to
help colleagues follow key policies.
Measure: Number of trained staff.
c. A speak-up culture: with a stronger focus on ethics and compliance. Code compliance and
ethical leadership are now key factors in performance management and reward. In
addition, we now have protector lines for both colleagues and suppliers, so any concerns
with business conduct can be raised confidentially.
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Measure: Raised issues count and feed back from all concerned parties.
d. Restoring trust: is not just about process and structure. Its about culture and individual
actions. In the same way that every colleague holds the key to better customer service, so
every colleague can help us to be a better active corporate citizen.
Measure: Footfall, Loyalty card usage.

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Section 4.3:
-

Construct an agreed strategy plan that includes resource implications

Task 5
Section 5.1:
-

Compare core organisational values (ethical, cultural, environmental, social and


business) with the current business objectives of an organisation

Section 5.2:
-

Develop appropriate vision and mission statements for an organisation

Section 5.3:
-

Produce agreed future management objectives for an organisation

1. Introduction
Tesco was founded in 1919 by Jack Cohen from a market stall in Londons East End. Today it is
one of the largest retailers in the world. Tescos core business was retailing in the UK, which
provides 60% of all sales and profits in 2012/2013 and dropped to 33.60% in2013/2014. Tesco
has the widest range of food of any retailer in the UK.

Clearly, for a number of years, the global retail market has been highly competitive. We were
losing market share in our critical home market and the growth momentum we had enjoyed
internationally had faltered. The channel shift to online and convenience presented both challenge
and opportunity, but the bottom line was that we had stopped growing.
Alongside these issues is a deeper challenge of trust. For customers to choose to shop with us,
they have to place their trust in us on price, quality, service and brand. But over a number of
years, weve seen a gradual erosion of that trust for a number of reasons. Earning that trust back is
fundamentally important to Tesco. We will do this not by any quick fix or short term initiative,
but rather by continuous and lasting changes in what we do and how we behave.

2. Mission , Vision , Goals & Objectives


Tesco has set a new Mission statement To be the champion for customers, this statement
shows strive of the organization to regain customers satisfaction and loyalty.
a. What we do?
b. For whom do we do it?
c. What is the benefit?
Tesco has a fixed Vision statement To be the most highly valued business by: the customers we
serve, the communities in which we operate, our loyal and committed colleagues and of course,
our shareholders
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Tesco Vision has five elements each of them describes the sort of company Tesco aspires to be:
a.
b.
c.
d.
e.

Wanted and needed around the world


A growing business, full of opportunities
Modern, innovative and full of ideas
Winners locally whilst applying our skills globally
Inspiring, earning trust and loyalty from customers, our colleagues and communities

Tescos values are:


a. No one tries harder for customers.
b. We treat everyone how we like to be treated.
c. We use our scale for good.
Tesco Corporate Social Responsibility (CSR) is at the heart of operations, its commitment to
using its scale for good is demonstrated by Tescos Three Big Ambitions:
a. To create new opportunities for millions of young people around the world.
b. To improve health and through this help tackle the global obesity crisis.
c. To lead in reducing food waste globally.
These values drive everything Tesco does at every level and help make it different from its
competitors.
Tesco Objectives are:
a. To maximize sales and with doing so increase their profits.
b. Decrease their prices. Tesco aim to make shopping cheaper for the average household.
They aim to do this by cutting prices and offering more in store deals.
c. Introduce more healthy eating products into the wide range of groceries they supply.
The advantage of introducing more healthy living products is that Tesco will; attract
many more customers that are interested in healthy eating products.
d. Tesco aim to develop a large Internet shopping site. Tesco aim to provide groceries,
electronics and clothing goods as well as a number of their services online. Tesco are
aiming to develop the online shopping experience, if they are successful in doing so
they may attract many more customers which will help them achieve objective a
e. To provide jobs to their local community. Tesco aim to reduce the unemployment in
local areas where Tesco Stores are built.
3. Strategy
A fresh start with our reach, our footprint, our skills and capabilities, we are perfectly placed to
lead and offer this kind of service. When I look at our business, I see a sea of opportunity. What
we need to do now is unlock the potential which exists within Tesco and to do that, we need to
do some key things differently. Dave Lewis, Group Chief Executive, Tesco report 2015
Tesco has always been a champion for customers. Its in our DNA. The last few years have been
challenging, but we are confident that if we get back to doing an unbeatable job for customers,
our best days lay ahead, Tesco set out our three strategic priorities:
1. Regaining competitiveness in core UK business
2. Protecting and strengthening the balance sheet
3. Rebuilding trust and transparency
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Other strategies are still ongoing


4.
5.
6.
7.
8.
9.

To be an outstanding international retailer in stores and online


To be as strong in everything we sell as we are in food
To grow retail services in all our markets
To put our responsibilities to the communities we serve at the heart of what we do
To be a creator of highly valued brands
To build our team so that we create more value.

Figure 10, Source https:// manishabraham.com/documents/controlling/tescoplc-balancescorecardfortheyear-2013

4. Analysis
Various analysis tools were used in the previous sections to demonstrate the advantages
and disadvantages that leads to the strategic decisions.
And then updates the strategy according to analysis findings.
5. Implementation
Once strategy is set and finalized, Tactics to be put in action:
a.
b.
c.
d.

Pricing Tactics: to offer completive prices.


Closure of non profitable stores: in order to strengthen balance sheet.
Postpone Expansion plans: in order to strengthen balance sheet.
Training of staff: to rebuild trust and enhance the shopping experience.

Resources are assigned in budgets estimation sheets to achieve the previous goals.
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6. Control
KPIs and Balance Score Cards are used in order to evaluate the outcomes after
implementation, and continous intervention to update tactics and strategies which can be
changed according to changes in the external environment.
7. Conclusion
Tesco is committed to delivering an effective business strategy that involves:

Costs reduction.
Strengthen the balance sheets.
Regain market share.
Reduce debt.

Tesco as a most successful high profile supermarket retailer in the UK and one of the
world's leading international retailers has generated its core organisational value with its
current business objectives.
Ethical value with objectives: Tesco as the one of the giant supermarket has very strong
Ethical value with its stakeholder. It has 58% of suppliers around the world say they are
satisfied. Tesco works with suppliers as part of the goal of restoring trust and
transparency.

Cultural value with objectives: Tesco as most successful supermarket has the objectives of
creating a beautiful place to work for everyone, 70% of staff would recommend Tesco as a
place to work. Tesco has 23% of board directors are women. Developing more local
leaders in each country remains a key priority.
Environmental value with objectives: Tesco has more accountability of practising
environmental issue. It is very responsible on environmental impact. It has got the plan of
reducing carbon dioxide emission decreased by 4.3% compared to last year, and 40.9%
since 2006/07, surpassing our 2014/15 annual reduction target. It has set up a target of
become zero - carbon business by 2050.

In order to develop Mission and vision statements, I propose a modified mission statement
to reflect the care to customers, suppliers, staff, environment & shareholders To be the
best for our customers, partners and environment.
Regarding the vision To be number 1 in all activities we do and give all stakeholders the
most out of the business.

In reference to future objectives, Tesco future management objectives are:


1. Tesco to be no 1 as a international retailer within 10 years
2. To have 50% of the UK core business by next 5 years
3. To be successful in non-food as successful in food. (Mobile, Insurance,
electronics) by 2020.
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4. To be recognised by community of what we do by regular contribution within next


5 years.
Objectives must be SMART: Tesco should implement the objectives with SMART. The
SMART stands for
Specific: Tesco management future objectives should be based on Specification of what
Tesco need to do.
Measurable: Appropriate measure must be taken in order to implement the objectives.
Achievable: The objectives must be based on the potentiality of being achieved.
Realistic: To avoid the unprecedented acts Tesco must place its objective on realistic.
Time based: To be competitive in the market locally and internationally Tesco must utilise
the objectives on time and should have proper time frame.

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Section 5.4:
-

Develop measures for evaluating a strategy plan


Tesco as one of the multinational high profile supermarket need to develop some measures
for evaluating strategic plan. The evaluation of strategic plan is to be placed on specific
elements.
The strategic plan for Tesco: The
area of strategic plan is consist of
Environment, Communities, The
responsibility of buying and selling
products, Healthy choice for
consumer,
employees
and
managers.

Environment

Tesco sets Carbon dioxide emission


to reduce by 2020 30% and 100%
by 2050; currently Tesco is ahead
of their plan.
Figure 11, Source Tesco PLC

This is a specific measure & target.


Tesco targets to reduce food wastes, and the measures shows that wastes at each category
is as follows:

Figure 12, Source Tesco & Society

review 2014

Community

Tesco need to work for the local community to involve them with Tesco, Tesco provided
18m raised for Diabetes UK, also 685,000 children have learned about food through
Tesco Eat Happy Project In the relative time consume. Tesco's community programme
needs to carry out in locally in deferent culture in deferent country in order to benefit by
the local people while experiencing the international. Tesco need to have a strategy Fair
Trade Model when buying and selling the products.

Job

Tesco need to employ more women at the high level position for not being discriminated
In the comparative market time by next five years

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Health

Healthy Choice for customer: To carry out the policy of providing healthy choice Tesco
need to impose a strict rule of selling Alcohol. It should focus on encouraging customer to
eat more healthy food in order to avoid the risk of bad and embarrassing health.
KPIs & Balance score cards can be used to assess other levels achievements regarding the
balance sheets, profits, market share, footfall, loyalty cards usage and suppliers feed back.
Samples of KPIs used by Tesco are extracted from Tesco Plc 2013 Annual report

Figure 13, Source Tesco PLC Annual Report 2013

Figure 14, Source Tesco PLC Annual Report 2013

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Task 6
Section 6.1:
-

Develop a schedule for implementing a strategy plan in an organisation


During setting the strategy plan targets time frame must be set and followed to review the
progress of each target whether on, ahead or behind schedule.
Tesco plans sets some timeframes for different targets, these targets are divided into short,
medium and long term targets.
Here we will demonstrate some scheduled strategies by Tesco:

Short Term (1 year)


-

Lower operating expenses by 20%- 2016


Increase gross profit by 10% -2016
Increase revenue by 15% -2016
Increase profits to 700 million-2016
Increase turnover by 10%-2016
92% capacity utilisation rate 2016
50% increase in the customer satisfaction index 2016
Increase average employee training hours to 8 hours annually. - 2016
20% increase in employee satisfaction index- 2016

Medium Term (1 year to 5 years)


-

40% increase in the employee engagement level- 2020


15% increase in Return on Investment by 2016/2017
15% in Return on capital employed 2016/2017
300 million increase in Economic value added by 2018
50% decrease in process waste levels 2020

Long Term (5 years and more)


-

Tesco sets Carbon dioxide emission to reduce by 2020 30% and 100% by 2050

It is obvious from reviewing various reports issued by Tesco that they are responding to
external environmental changes and updating their goals, objectives and strategies
accordingly to keep their competitive advantages and always showing their attention to the
environment, customers and other stakeholders.

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Section 6.2:
-

Create appropriate dissemination processes to gain commitment from stakeholders in


an organisation
We know that we cant achieve our ambitions alone. We need to work with our
stakeholders to make sure we use our scale and expertise to contribute to society, as well
as to find out what we are already doing well and where we can improve. (Tesco and
society 2013)
During 2013 Tesco have stepped up our engagement programme by engaging with over
50 leading stakeholders, both at a national and an international level, to assess our existing
work and, using their insight, to shape and steer our strategy to use our scale for good.
Many of them had worked with us before, but some we were meeting for the first time.
Weve heard that many stakeholders feel that corporate responsibility has not been
sufficiently core to our business in the past. Many others feel that our engagement with
them has been inconsistent and that we werent always as open and transparent as we
could have been. We know our stakeholders want us to be more collaborative, to share
more of our expertise and data and look to work more in partnerships with other
organisations. (Tesco and society 2013)
Accordingly Tesco have taken the following actions to gain commitment from different
stakeholders and assure good communication in both directions for the sake of good order.
Customers
Tesco success is based on serving the customers in the best way they deserve; there are
different channels through which Tesco engages with the customers through:
1. Twitter
2. Calling centre
3. Customer question times
Colleagues
Tesco have a scale for good website where colleagues to stay connected with colleagues
where they can submit ideas on how the business be better.
Investors
There is dedicated investor relation team meets with the investors regularly. Annually
Tesco ran an investor and analyst day to share business vision with the investment
community.
Industry
Tesco always get in touch with experts and obtains feedback from campaigns regarding
the way to reduce food waste.
Tesco collaborates with industry experts to improve the defrosting and CO2 emissions

Page 30 of 33

Suppliers
Tesco have a professional team that deals with the suppliers as well as the new supplier
web based network. Suppliers can give feedback through partner viewpoint questionnaire.

Other groups
We regularly respond to Government consultations on a wide range of topics and we have
given expert evidence to public working groups and inquiries. We also seek the expertise
of academics from many of the worlds leading universities.

Page 31 of 33

Section 6.3:
-

Design monitoring and evaluation systems for the implementation of a strategy plan
in an organisation
Strategic plan must Have SMART objectives. Tesco has set specific objectives that can be
accurately measured during the progress. Reviewing various Tesco reports over the past
years shows that they had an excellent track of the progress along through the preset
monitoring systems.
There are many types of monitoring system. Which are:
Goal based Evaluation
In order to implement the strategic plan set up a goal based on evaluation in Tesco. Goal
base evaluation is a way to monitor the progress during implementation.
Outcome based evaluation
After completing the implementations the outcome of the outcomes are evaluated to assess
how the objective was fulfilled.
Regular reports
Set up a monitoring team those will submit the report on regular based to identify whether
the Strategic plan are taking place or not.
Meetings
Regularly based meetings with different stakeholders to show outcomes of the strategic
plan as well as gaining feed back from other parties to update the plans accordingly.
In order to remain in the market place implementing and analysing of the strategic plan is
very important for Tesco to adapt. The strategic plan is the continuous and gradual
approaches of applying in to the company. Tesco as one of the most successful
international retailer it should follow the strategic plan to be more competitive among the
rivals.

Page 32 of 33

References
1. Strategic Planning Handouts.
2. Gerry Johnson, Kevan Scholes & Richard Whittington (2008) Exploring Corporate
Strategy. 8th edition
3. Tesco Annual Report 2012
4. Tesco Corporate Responsibility Review 2012
5. Tesco Annual Report 2013
6. Tesco and society 2013
7. Tesco Annual Report 2014
8. Tesco and society 2014
9. Tesco Annual Report 2015
10. Tesco Our corporate responsibility update 2015
11. https://www.aldi.co.uk/
12. http://www.mikeanthony.me/retail/aldi-winning-the-retail-battle/#.VauL4_nzrIU
13. https://www.scribd.com/doc/48002603/Strategic-Planning
14. http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11362881/Tescotries-to-rebuild-relationship-with-suppliers.html
15. http://www.ibqh.org/unit-2-strategic-planning
16. http://www.ukessays.com/essays/business/external-factors-of-environment-affectingorganisations-business-essay.php
17. http://www.ukessays.co.uk/essays/business-stakeholders-shareholders
tesco.php#ixzz3fkr4qlkp
18. http://www.ukessays.com/essays/management/strategic-management-and-leadership-attesco-management-essay.php
19. http://www.thegrocer.co.uk/companies/tescos-2020-vision/121683.article
20. http://www.africakibs.com/tesco-balanced-scorecard/
21. http://www.en.wikipedia.org
22. http://www.leoisaac.com/planning
23. http://www.quickmba.com
24. http://businesscasestudies.co.uk
25. http://smallbusiness.chron.com

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