Choosing Tesco PLC as a Fortune 500 Organisation: Brief Description and Overview

Introduction

Choose a Fortune 500 organisation operating in the UK which you will use as a basis for all your answers for this assignment. It may be a company which you work for or one you would like to work for or an organisation you are familiar with.Name your chosen organisation.Briefly describe the organisation.

You should choose an organisation for which you can easily find out information either on the internet or by some other means. It must be a different organisation from the one you choose for Business Environment.

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Name of corporation – Tesco PLC

Description of corporation – Tesco is a UK based supermarket engaged in retailing of food and non-food products. Tesco is a global company operating in 12 markets. Jack Cohen founded the company in 1919 and since then it has expanded to a supermarket from a market stall in London’s East End (Tesco.com, 2014). In the UK, Tesco operates via 3300 stores, having a team of 31,000 employees (Tesco.com, Tesco UK, 2014). The store formats include express, extra, metro and hypermarkets. The company is also famous for its online grocery shopping, serving millions of customers every week. Tesco recorded revenue of ?43.6 bn and trading profit of ?2,191m in the UK in 2013 (Tesco annual report, 2014).

LO1: PROCESS OF STRATEGIC PLANNING

Q 1.1

Define the terms and state the mission, vision, objectives, goals and core competencies of your chosen organisation.

Guidelines: (Approx. 200 words) Recommended Interim Deadline: 3rd February 2014

In your answer, you should :

• Define each of the terms , mission, vision, objectives, goals and core competences;
• Provide evidence of your chosen corporation’s mission, vision, objectives, goals and core competencies.

Mission

The mission statement defines the main purpose of the company or what it aims to do.“We make what matters, better together”.

Tesco believes in earning trust from stakeholders and not just focuses on profit. They treat different stakeholders the way they like to be treated, and encourage teamwork (Tesco.com).

Vision

Vision is defined as the expression of what a firm wishes to achieve or accomplish.‘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 Times 100, 2014).

Tesco provides training to its staff to serve customers better; investing in opening small store formats due to customer preference; believes in ethical sourcing of raw materials
(Tesco Annual report, 2014).

Objectives

Objectives state what an organisation wishes to achieve.A growing business full of opportunities; modern, innovative business; inspiring, earning trust from different stakeholders (Tesco.com, 2014).

Goals

Goals are specific and measurable end results a company attempts to fulfill.Tesco strategic plan 2020 to reduce carbon emissions (Tesco Annual report, 2014). The company is investing to reduce carbon emission by 2020 throughout its supply chain.

Core competencies

Core competencies are the tangible or intangible assets, unique to a firm that provides competitive advantage.Core competency of Tesco is in technology and innovation such as designing efficient supply systems that enables it to become a leader in online grocery shopping and provide benefits to customers..

Q.1.2

For your chosen organisation, describe the key issues encountered in strategic planning.

Guidelines: (Approx 250 words) Recommended Interim Deadline:10th February 2014

In your answer, you should :

• Define strategic planning
• Describe at least three strategic planning problems
• Provide examples of problems within internal analysis, external analysis or business level strategy.

In answering this question, you will have covered the following assessment criterion:

u1.2 Review the issues involved in strategic planning

Strategic planning is based on setting a firm’s objectives, including developing and implementing plans designed to fulfill the objectives (Campbell et al., 2000).

The strategic planning problems faced by Tesco are as follows:

• Social Factors: Customers are switching to shop at smaller store formats near to their homes rather than big supermarket (Barford, 2014). The availability of small stores at city centre locations or near to homes is attractive for customers. Many retailers are now focusing on small store formats, however they are costly to operate (Barford, 2014). Due to changing customer trends, Tesco is facing problem as the company mainly operates via big supermarket stores in the UK. Moreover, the stores are located far from the city centre location.
• Government regulation: Tesco is facing problems in the Asian market such as restrictions faced in the opening hours in South Korea (Tesco annual report, 2014). This regulation is affecting company’s trading hours and hence profitability.
• Neglecting the UK business:Due to rise of opportunities in the emerging markets, Tesco has been focusing on markets such as China and India, however, the company is losing its market in the UK, on which Tesco depends for major portion of its revenue. Tesco invested in acquisition and diversification, but at the same time underinvested in its UK stores (Gray cited in Barford, 2012)

Q.1.3

Compare and contrast two different planning techniques which you could apply to your chosen organisation.

Guidelines:(Approx. 200 words) Recommended Interim Deadline: 14th February 2014

In your answer, you should :

• Define and describe two different planning techniques, for example, the BCG matrix, SPACE, PIMS or stakeholder mapping.

In answering this question, you will have covered the following assessment criterion:

u 1.3 Explain different planning techniques

BCG (Boston consulting group) and Stakeholder mapping

The BCG is a tool used by firms to allocate resources. The business is organised on the basis of two dimensions such as business growth rate and market share (Figure 1). Business growth rate indicates how rapidly the industry is increasing while market share signifies whether a firm has a larger or smaller market share as compared to its competitors. In terms of Tesco, the Stars, which have greater growth potential, is the company’s online grocery business. More investment should be done in this sector. The Cash Cows are the Tesco stores, having a big market share. The Question mark would be Tesco Blinkbox, a digital download service that streams movies and TV series to computers, tablets, playstation 3 (Shayon, 2013). There are big competitors present such as Netflix and Amazon. Dogs which is a poor performer would be Tesco’s operation in the US with ‘Fresh and easy’ business which was pulled out due to low profit (Butler, 2013).

Another tool used by companies in planning is the stakeholder mapping to understand the important stakeholders and their needs. There are four steps in mapping: (identifying) stakeholders such as organisations, people and other groups; (analysing) understanding stakeholder perspectives and interests; (Mapping) determining the stakeholders that are most useful to engage with; (Prioritising) ranking stakeholder relevance and identifying issues (BSR, 2011).

Lo2: Be Able To Formulate A New Strategy

Q 2.1

Conduct an organisational audit on your chosen organisation by carrying out a SWOT analysis.

Guidelines: (Approx. 250 words) Recommended Interim Deadline: 21st February 2014

In your answer, you should :

• Identify the strengths, weaknesses, opportunities and threats for your chosen organisation
• Complete the table below.
  In answering this question, you will have covered the following assessment criterion:

u2.1 Produce an organisational audit for a given organisation
Write your answers here

Name Of Company –

Strengths

• Strong brand name
• Strong market position in the UK
• Expansion in international markets
• Clubcard, Dunhumby (world leader in customer insight)
• Diversification into other sectors

Opportunities

• Increase in online shopping
• Emerging economies – India and China

Weaknesses

• Hypermarket store format
• Management change

Threats

• Competitive UK market
• Government regulations

Tesco is perceived as a strong brand in retailing. It is the leading online grocery supermarket. Tesco has number of stores in the UK. In addition, Tesco operates in other regions such as China, Europe and South Korea and this shows its strong financial resources. The company benefits from loyalty scheme, Clubcard and owns Dunhumby, a world leader in customer insight. The company also has diversified operations in banking and insurance sector.

Customers like to shop at smaller convenience stores, however, Tesco operates mainly through big stores (Tesco Annual report, 2014). Thus, Tesco has stopped its plan of opening new superstores and is investing on convenience stores (Tesco annual report, 2014). Tesco is facing uncertainty in its management structure that could have an impact on its profitability. The CEO of Tesco fired 50 experienced managers from its head office location, with reasons unknown (Butler, 2013).

The UK retail market is highly competitive due to presence of number of well-established competitors such as ASDA, Morrison and Sainsbury, and discount stores like Aldi and Lidl. ASDA and Sainsbury are also competing with Tesco in banking and insurance sector. Tesco also faces government restrictions where it operates like store opening times restrictions in South Korea. Customers are switching to online shopping, which can be done at the comfort of their homes or while commuting (Rigby, 2014).

Q 2.2

Evaluate the business environment for your chosen organisation by doing a PESTEL analysis.

Guidelines: (Approx. 300 words) Recommended Interim Deadline: 24th February 2014

In your answer, you should :

• Describe the factors of PESTEL – Political, Economic, Social, Technological, Environmental and Legal
• Provide an example of each for your chosen organisation
• Present the answers in a table as below

In answering this question, you will have covered the following assessment criterion:

u2.2 Carry out an environmental audit for a given organisation
Write your answers here

Pestel Analysis For Tesco Plc

Factors

Description Company example i.e. how your organisation is affected by this factor

Political

Political factors include government regulations, political instability and corruption, crime, etc.Tesco faces restricted operations in South Korea due to government regulations in South Korea on opening times and hence affecting company’s profitability (Tesco Annual report, 2014).

Economic

It includes unemployment rate, GDP, and income spending.Due to economic recession and low income spending, people like to opt for low discount stores such as Aldi and Lidl. Tesco is facing tough competition from these discounters.

Social

Social factors include demographics, social attitude, cultural factors and behaviour of people that can affect a business.Shoppers are becoming more health conscious and they are more concerned about the quality of food (Doward, 2014). Thus, Tesco is investing in sourcing of organic foods to serve customers better.

Technological

Technological factors include transport development, infrastructure and new technologyMany customers use smartphones for online shopping, comparing prices with competitors and reading reviews (Tesco Annual report, 2014). Tesco is increasing its investment in digital technologies to provide better customer service.

Environmental

Environmental factors include climate change, weather and regulations that can affect and industry’s performance.Many environmental organisations encourage companies to reduce carbon emission in different stages of their supply chain. Tesco is working to achieve its 2020 target to reduce carbon emission throughout its supply chain. For example: Using sea transport instead of road transport which causes pollution.

Legal

It includes taxation, employment laws, consumer laws and health and safety laws.Due to the diverse nature of UK retail sector, there are wide range of regulations including consumer protection, employment laws, health & safety, age restricted sales, tobacco display and alcohol licensing (Department for Business, Innovation and Skills, 2013). Tesco adheres to all these legal laws.

Q2.3

Define and explain the significance of stakeholder analysis.
Guidelines:(Approx. 250 words) Recommended Interim Deadline: 28th February 2014

In your answer, you should :

• Define the term stakeholder
• Explain stakeholder analysis
• Describe the importance of stakeholder analysis

In answering this question, you will have covered the following assessment criterion:

u2.3 Explain the significance of stakeholder analysis
Write your answers here

“Stakeholders are the groups or individuals with which business interacts who have a ‘stake’ or vested interest, in the firm” (Carroll and Buchholtz, 2012, p22). It includes different individuals or organisations with whom a company interacts such as customers, employees, investors, governmental organisations and environmental institutions.

Stakeholder analysis helps in understanding the relationships between an organisation and the individuals with which it must interact (Weiss, 2014). It is important for a business as by engaging right people, one can make a big difference to a project. There are various stages involved in stakeholder analysis (Smith, 2014). Firstly, stakeholders are identified; finding the people who could get affected by a firm’s operation. Secondly, it involves prioritising stakeholders and mapping them on the basis of high power (interested people with whom a business should fully cooperate), high power (less interested people), low power interested people and low power less interested people (Smith, 2014). Third step involves understanding stakeholders like what motivates them and their opinion, and their financial interest.

Stakeholder analysis provides an ethical way of doing a business by fulfilling the needs of different individuals. This is important for a firm’s reputation. As a company becomes more successful, the actions and the business project a company runs affects more individuals who could greatly support or fail a business project (Smith, 2014). Stakeholder analysis is important in many ways. A company can get support from a strong stakeholder such as an environmental organisation in the early stages of a project. A company can identify what would be the reaction of a community towards a future project and thus can plan well in advance.

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