3.

0 Strategy formulation According to Reardon, 2011, strategy formulation refers to the process of choosing the most appropriate course of action for the realization of organizational goals and objectives and thereby achieving the organizational vision. Strategy formulation usually takes place at two different levels: business level and corporate level. The business and corporate strategy have four steps which are shown at the below. 3.1 Step 1: Reviewing the current objectives and strategies of the organization Objective is something that ones efforts or actions are intended to attain or accomplish. (Anon, 2011)Reviewing the objective will ensure the organization does the things that is related to its objective and to achieve it. Tescos (Malaysia) objectives are to raising sales, raising share market, to maximize growth and to do better than their competitors. The main aim of Tesco is to maximize profit and provides goods or services that are cheap and affordable to consumers. (Tesco, 2010) Business level strategy is a long term plan of action designed to achieve a particular set of objectives. In this level, it involved the generic competitive strategic which has Cost-Leadership strategy and Differentiation strategy. Cost-leadership strategy usually adopted by an organization when it wants to achieve the lowest costs within an industry and targets its products at a broad market. Differentiation strategy is for an organization that aimed at a broad market and involved in the competition of the basic of products or services that is recognized by consumers as unique. (Henry, 2008) Corporate level strategy is about the overall strategic scope of organization. In this level, it involved the growth strategies and the way to implement it. The growth strategies is a tactic that used by an organization to expand the consumer market for its product or services. The two options of the strategies that involved in the growth strategies are market development and products development. Ansoff (1965) devised a matrix to analyse the different strategies directions organization that can pursue. (Henry, 2008) The two strategies are: Market Development It is concerned about how an organization enters new markets with its existing products. Commonly an organization will target new market segments and geographical areas, and modify the existing products a little bit to ensure its fit the new markets better. (Anon, 2007) Products Development It is about an organization develops new product to sell in its existing markets. The ability of innovation is an important term in this strategy and the purpose is to maintain and grow the organization market share and keep the competitors on the defensive. The examples are Tesco and Jaya Jusco. (Anon, 2007) The way to implement the growth strategies is joint ventures and strategic alliances. The Joint Ventures and Strategic Alliances is talking about when there are two organizations form a separate independent company in which they own shares equally and sharing some of their resources and capabilities. The organizations will use this way to implement the growth strategies when the organization feels it may be beneficial to combine their resources and capabilities to develop new technologies or gain access to new markets. (Henry, 2008) 3.2 Step 2: Identifying the strategic alternatives In cost leadership strategy, an organization strives to have the lower costs in industry and provided its services or products to a broad market at the lowest price. The ability of an

organization to control the operation costs well which it will allow the organization to price its products competitively and able to generate high profit margin. (Anon, 2011) In the differentiation strategy, usually an organization attempts to provide services or products with unique features that customers value. Besides, the organization is able to create brand loyalty for its offerings and therefore, price inelasticity on the part of purchasers. The breadth of products provided, special features and customer service are popular approaches to differentiation. (Henry, 2008) For the market development strategy, an organization is entering the new market through partnership or joint ventures with the local retailers to gain a larger economy of scale and larger market presence. Thus, the organization will extract the comprehensive local knowledge and operating expertise of the partner whilst adding its own supply chain, product development and stores operations skills to deliver better shopping experience to customers. The success of partnership is related to sustainability, acceptability and feasibility. (Henry, 2008) For the product development strategy, an organization will develop a portfolio of distinct store formats and each is designed to provide a distinct shopping experience. The uniqueness is value added for the organization to command a premium price. (Anon, 2011) 3.3 Step 3: evaluation of advantages and disadvantages of the alternatives The advantage of using Cost-leadership strategy is an organization can charge a lower price and still make the same level of profit. The organization will in the competitor price and low-cost as an entry barrier where it can protect itself from rivals. This is enable the organization is less influenced by powerful buyers and suppliers. The disadvantage is the technological advancement makes the low cost advantage outdated. When the organization imitates the ability of competitors will make itself loss sight of changes in customers tastes. (Mitchell, 2011) The advantage of using differentiation strategy is that an organization can charge a premium price and protected itself from rivals in term of brand loyalty, customer loyalty and other. The brand loyalty is an entry barriers for the new retailer and the organization will be less affected by the potential and powerful suppliers and buyers. The disadvantage of using the strategy is the substitutes can be a possible threat for the organization and difficult to maintain a products uniqueness in customer eyes for a long time. When the organization doesnt able to maintain the products uniqueness, customers may shift to another organization to purchase goods or services. (Mitchell, 2011) The advantage of using the Market development strategy is the organization can ensure the products are closer meets the needs of particular geographical market segments. The disadvantages is even the organization have extensive knowledge of its products but the markets experience is less complete and therefore increasing the level of risk. When the level of risk is increase, the organization needs to change the strategy immediately due to the organization may get loss. (Mitchell, 2011) The advantage of using product development strategy is the organization will force the competitors to be more innovative and the new comers to enter the market is discourage. When its products or services are different form other, customer will prefer its products or services, so the new comers are very difficult to handle and therefore give up. The disadvantage is expenses and the risk for innovation is increasing. Sometime when the expenses increase, it may lead the

organization to get higher of cost and to be unable to offered a lower price to customers. (Mitchell, 2011) 3.4 Step 4: Deciding the alternatives that should be implemented Cost-leadership strategy The suitability is the organization charge lower price which is affordable by consumers even the economic is not stable .The organization has met the objectives that are increasing the sales and maximize growth. The feasibility is the organization has sufficient resource and capabilities to develop this strategy because the organization is success to meet the innovation and products development. The acceptability is the stakeholders will not get negative impacts on the profitability and receive the same or higher level of profit. Differentiation strategy The feasibility is the organization has protected itself form rivals where the customers is loyal to the organization. The acceptability is customer accepts the organization that provided the special features of products or services. Market Development strategy The suitability is the organization can solve the problem of distribution location is nearby the competitors location with closer meets the needs of geographical market segments. The feasibility is the organization has sufficient resources and capabilities to joint venture with local retailers to gain large market presence. The acceptability is the stakeholders will not get any changes that lead to negative impact on them because this do not involved high risk. Product Development strategy The suitability is the organization able to develop new products to meet customer needs and become more innovation that reduce the new comers and achieved the objective where it has done better than the competitors. The feasibility is the organization can maintain its market share and increase the sales especially during some festival season. The acceptability is the stakeholders need to spend more expenses for the innovation but it still will earn the profit Eventually, after comparing and evaluating the strategies, the organization should implement the cost-leadership strategy.