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Tesco is an international grocery chain based in the United Kingdom that operates one of the globe's leading retail networks. It was established in 1919 and runs in various nations, especially in the United Kingdom (Tescoplc.com, 2023). Tesco sells everything from food to gadgets and expanded into cyberspace and other industries, including monetary services (GlobalData Plc, 2021). Tesco's long-term goal is to "take on the destination of being the world's preferred retailer, where shoppers like to purchase." Their goal statement is to "provide customers a little better every time." One of their basic principles is "no one tries harder for customers" and “treat people how we like to be treated” (Tescoplc.com, 2023). Superior market position via creativity, conservation, and efficient operations are among Tesco's strategic objectives. They provide a diverse range of goods and services, including food, apparel, electronic devices, financial assistance (banking and insurance), internet shopping, and environmental projects.
Tesco strives to deliver a variety of handy products while focusing on customer happiness and the environment. The company has more than four thousand and eight hundred outlets in the world that are currently functional (Bedford, 2023). For seamless operations, Tesco has a wide range of employees that are 336,926 employees in total, majorly spread across the UK, Ireland and other stations in the world (Bedford, E. (2023). The annual revenue of the company has ranged up to more than 79 billion in 2023; however, according to the statistical analysis, it is a sharp decline of more than five percent since 2022 (Macrotrends.net. (2023). Tesco's competitive edge may be evaluated using Porter's Five Forces approach. Tesco's dominance in the UK grocery industry indicates its great competitive advantage, while new competitors pose a low danger due to substantial barriers to entry. Supplier power is evenly distributed, however, the corporation confronts fierce competition from well-known rivals such as Sainsbury's and Asda (Race, 2023). Tesco's key strategy drivers are cost competitiveness through seamless logistics and economies of scale, expanding its range into non-food goods, and a growing emphasis on e-commerce to respond to changing consumer tastes.
Tesco, a huge global retailer, has an organizational structure that is centralized or specifically hierarchical (Meng, 2014). The organization of the corporation is functional, with several divisions focused on specialized activities such as advertising, banking, and operations. This structure enables effective oversight and integration of the company's wide activities, allowing for efficiencies of scale and seamless handling of brands across numerous regions (Tescoplc.com, 2023). The organizational lifespan includes several stages, such as birth, growth, maturity, and decay. Tesco is believed to be at the maturity stage of its organisational lifecycle. After experiencing tremendous growth in the past, it is currently focusing on optimizing its current processes and maintaining market share. The organization has seen both growth and setbacks, necessitating a more solid and risk-averse strategy. Tesco, being one of the UK's top grocery companies, retains an advantageous competitive edge in the market (Quinn, 2020). It has a large market share, a large retail base, and a varied product line. Tesco responds to a wide range of client demands with advances in internet shopping services, shipping services, and an extensive retail network. While it competes with rivals like Sainsbury's and Asda, Tesco's emphasis on price maintenance, efficient operations, and shopper-centric programmes such as the Clubcard programme helps it keep consumer loyalty and maintain its competitive advantage (Pepper, 2023).
Furthermore, Tesco's global footprint strengthens its competitiveness in the retail market. Thus, due to this, Tesco has a significant influence on its external company adversaries. Because of its scale and reach, it may put a hardship on smaller merchants, frequently through competitive price techniques and creative service offers. This might compel rivals to adapt and change to remain competitive. In terms of performance effectiveness, Tesco's centralized structure, while efficient in many ways, can occasionally result in delayed decision-making and difficulty responding to local market variances. Tesco has to continually reinvent itself and adjust to changing demands from customers, competitors, and marketplace dynamics during the mature stage of the organisational lifecycle. Maintaining or boosting effectiveness at work requires striking this equilibrium has made Tesco one of the leading brands in the industry.
A PESTLE evaluation looks at the external elements that impact a company "political, economic, social, technological, environmental, and legal" (Buye, 2021). It aids in assessing the possibilities and challenges presented by these elements, directing choices regarding strategy and adapting to the company landscape.
As the company of concern, Tesco works on an international scale, political issues have a tremendous impact on its business. Regulation changes, such as those impacting product labeling or food safety, might influence Tesco's operations. Given Tesco's extensive activities, tax changes can have an impact on company profits (pestleanalysis.com, 2014). In its founder nation, the United Kingdom, several issues include the rate of taxation, acts of regulations, and economic stability. Recently, the political turmoil that the UK faced was Brexit which had a disastrous impact on Tesco's development in the world and within the UK (News, 2020). Tesco's global position exposes the company to trade conflicts and penalties. Due to the globe's continued monetary turmoil and uncertainty, several countries urge shops to generate employment for local people. Tesco's role in offering job opportunities improves demand for goods and extends its labour force.
Tesco, being a customer-friendly company, is concerned with item pricing and policies connected to the economies of nations. As a result, the firm should be informed of any alterations to policy, including adjustments to taxes or any other variables that may influence the availability of funding. In the UK, economic conditions are waning due to the rise of inflation and cost of living (House of Commons Library, 2023). Inflation has been one of the most striking economic factors that has impacted Tesco and its business within and outside the UK (Kollewe, 2023). The business and the pricing strategy of Tesco were impacted as well, as inflation raised the price of daily grocery items, commodities of essential needs and other items. Additionally, as levels of disposable income and household incomes have declined, Tesco has switched its promotional focus to cheaper labels instead of more expensive ones.
Customers in the United Kingdom have shifted towards bulk purchasing and single-stop shopping. As a result, Tesco has boosted the quantity of non-food goods available for purchase. Veganism is on the rise in the United Kingdom because of increased health and concern for the environment (Long, 2022). Plant-based diets are becoming more popular, and companies are giving more vegan options. Concerns about animal cruelty, worldwide warming, and a drive for better living all contribute to this movement. Consumers' preferences for goods and services are largely determined by their ideas and attitudes, which in turn are impacted by social conditioning (Long, 2022). Customers' attitudes concerning food are changing as they become increasingly mindful of health problems, and Tesco must recognise the necessity for improvement.
Tesco has been operating in the UK, one of the most technologically leading nations in the world. The invention and implementation of e-commerce with delivery-at-home possibilities is one of the most notable. Self-service checkout stations within the functionalities of Tesco have increased consumer activities in the store by giving them premium services, lowering labour expenses (Fisher, 2021). Furthermore, Tesco has spent a large amount of money on energy efficiency initiatives to meet its long-term goal of reducing its ecological impact.
Governmental legislation and regulations also have a direct influence on Tesco's performance. As an illustration, the Food Retailing Commission (FRC) proposed in 2004 the implementation of a Code of Practice that would prohibit numerous present practices, such as raising tariffs without announcement or requesting payment from wholesalers (Parliament.uk, 2014).
Sustainability measures, junk removal, and energy utilization are all environmental considerations for Tesco. Tesco is dedicated to decreasing its carbon impact, sustainably sourcing products, and minimising food waste. Tesco has pledged that it will be carbon neutral by the end of the year 2035 and has also committed to omitting all types of CO2 production from its supply chain and logistics by the end of the year 2050 (Tescoplc.com, 2023). Concerns about the environment, such as global warming and preservation of resources, have an impact on Tesco’s operations and affect what customers want for goods that are sustainable.
Tesco's dedication to ecological responsibility, particularly its aim of becoming carbon neutral by 2035, has resulted in greater investments in eco-friendly practices, which may initially boost operating expenses (Tescoplc.com, 2023). This, however, is consistent with rising customer demand for ecologically friendly products and practices. Tesco's reaction has been to offer environmentally friendly and ethical product lines, as well as to minimise the negative environmental impact of its supplier network. While these programs may require initial investments, they have the potential to improve the company's image and client retention, eventually increasing revenue as more ecologically concerned purchasers select Tesco (Wallace, 2023).
Tesco's emphasis on waste reduction benefits both the surroundings and its commercial bottom line. Tesco decreases expenses connected with unsold or spoilt items by minimizing food waste and optimizing the management of inventory. Furthermore, the implementation of circular economy ideas, such as the reuse and recycling of resources, coincides with a decrease in waste objectives. Tesco's initiatives result in cost reductions and higher revenue.
Tesco has taken a proactive approach towards responding to these ecological issues by participating in environmentally friendly practices and waste elimination programmes. For instance, Tesco has organised “Community Food Connection” as a response towards their pledges of environmental sustainability and waste reduction issues (Tescoplc.com, 2023). While there may be some early costs, the eventual rewards include cost savings, improved corporate image, and a progressively enthusiastic response from customers who care about the environment. Overall, Tesco's dedication to sustainability and reducing waste not only corresponds with environmental aims but also benefits the company's revenue.
Strategy decision-making and execution are critical for businesses because they give a clear roadmap for achieving their objectives (In Professional Development, 2022). Having a well-defined strategy allows a firm to efficiently concentrate on its assets and efforts, making it better equipped to grab possibilities and handle problems. The formulation guarantees that the strategy is put into behavior, bringing the entire organization together to achieve similar goals. It improves productivity, decision-making processes, and the distribution of resources (In Professional Development, 2022). A well-executed plan may also increase competitiveness, stimulate innovation, and improve the overall satisfaction of customers. Overall, strategy creation and implementation are critical for long-term success, allowing businesses to adapt to changing circumstances in the market while sustaining sustainable development.
Using the Blue Ocean Strategy for product innovation entails discovering unmet consumer demands and developing new goods or services to meet those needs. This approach pushes firms to think beyond established market limits in order to differentiate their services and open up unfamiliar, unchallenged market sectors, hence fostering creativity and expansion (Yunus and Sijabat, 2021).
Tesco has a chance to use the Blue Ocean Strategy in order to stand out and exploit latent value in a fast-rising market for cruelty-free goods. Tesco can establish an undisputed market position by distinguishing its services and boosting its client base by focusing on rapid vegan food development.
The initial step is to discover unmet demands and pain areas in the vegan food industry right now. This might involve an appetite for healthier alternatives, comfort, and novel flavors. Tesco ought to perform comprehensive research and communicate with its consumers to learn about their unique tastes.
Tesco must remodel its immediate vegan food selection by adding innovative goods that address previously recognised unmet demands. This must encompass ready-to-eat vegan meals created by prominent culinary professionals, plant-based substitutes for popular non-vegan foods, or distinctive regional vegan recipes that are presently neglected in the market.
In the development of products, place an enormous value on health and sustainability. Make certain that the products you use are not just vegan, but also healthy and sourced responsibly. To attract more environmentally conscious customers, use environmentally conscious packaging and aggressively show sustainability initiatives on the labels of goods.
Tesco must use technology to improve client comfort. Implement novel packaging techniques to increase shelf life without the use of artificial preservatives. Create a smartphone app that is easy to use and provides vegan meal preparation, food ideas, and frictionless online purchasing with rapid delivery alternatives.
Create special vegan goods accessible only at Tesco by collaborating with prominent vegan chefs, nutritionists, and advocates. This technique will not only bring in new consumers but will also increase client loyalty. These unique partnerships have the possibility to provide new and interesting flavors to the market.
Make quick vegan meals inexpensive and widely available. Provide low prices, bulk purchasing discounts, and rewards programs customized exclusively to the vegan culinary segment. This strategy may appeal to those with limited funds and promote trial purchasing.
Tesco should examine both local and global expansion plans when entering unfamiliar markets. Source materials from regional farmers and engage with local vegan companies at the local level. Investigate the shipment of distinctive instant plant-based goods to nations with burgeoning vegan markets on a worldwide scale.
Tesco must engage in teaching customers about the health and environmental benefits of vegan foods. Develop marketing campaigns highlighting Tesco's dedication to quick vegan innovations in food, and additionally its distinctive line of goods and environmental activities.
| Key partners Vegan Food Suppliers Restaurant Owners Chefs | Key activities R&D Marketing & Promotion Ethical Sourcing | Value Proposition Health Unique Vegan Instant food Sustainable | Customer Relations Customised Loyalty & reward programs | Customer Segments Vegans Plant-based dieticians Vegetarians |
| Key resources Research and Innovation Teams Promotional Teams Financial investments | Channels In-store Online |
| Cost Market Expenses R&D | Revenue Streams Collaborations Product sales Subscription-based customisation |
In the constantly evolving marketing economy, strategies like product innovation are the key to achieving high profit margins among the competitors as well as maintaining the interest of the stakeholders over the desired period. In this case, the plan which can help the leaders, managers and the workforce of the company to implement the strategy is provided below:
Analysis of the stakeholders- The leaders shall interact with the key stakeholders of the company like the customers, the investors, the suppliers, the intermediaries, etc. in this step to ensure that proper flow of information can be maintained. To further promote this, various surveys can be conducted with the customers and the investors in order to acknowledge their requirements. Apart from this, feedback channels can also be addressed by the company's leaders to assess the main expectations of the stakeholders.
Transformation of the leadership style- The leaders of the company shall also consider new or innovative styles of leadership to drive product innovation in the internal structure. In this case, a new leader can also be appointed by the company to foster development and positive workplace culture which could ensure constant learning, motivation, problem-solving and participative attitude.
Clear set of objectives- The managers of Tesco shall promote the goals in a clear set of meaningful language so that it is approachable to the diverse workforce without any misrepresentation. The managers can also take help of the SMART (specific, measurable, achievable, relevant and time-bound) tool to determine the objectives of the new strategy that is attracting a wide base of customers. However, the strategy shall be aligned with the financial needs of the company to enhance the profitability of the company.
Portfolio of the strategy- The leaders shall focus on generating instant vegan food with eco-friendly packaging as it has high demand among the customers within the grocery retail industry but is totally missed out by the competitors of Tesco Plc. In association to this, the leaders shall also allocate the resources or capital according to the planned responsibilities.
Maintain open innovation- The leaders of Tesco shall enhance the collaboration with the external stakeholders like new ventures or the partners that can provide exclusive ingredients or raw materials to manufacture instant vegan food. Apart from this, collaboration with the expertise can also be useful for the company to implement new or advanced technologies so that the shell life of the products can be increased to enhance the loyalty or retention of the targeted customers. The leaders can also associate with the open platforms like the social media channels to improve the advertisements of the new product all over the world so that targeted audiences can be attracted.
Customer-centric approach- The leaders shall recruit a highly experienced group of staff members who are able to provide constant solutions to the issues faced by the in-store customers. In this case, the leaders can also use advanced technologies like the chatbot system to provide customer services 24/7 through the online sources, which can also promote appropriate relationships with the stakeholders in the marketing environment. The company can also hire an expert who can gather real-time data on the preferences of the customers to maintain constant innovation in the workplace.
Cross-functional employees- The leaders of Tesco shall form a team of cross-functional employees who shall possess various interpersonal and workplace skills like two-way communication, empathy, honesty, delegation, etc. as compared to the departmental members. This can further help the company to maintain creativity and development for the long run.
Allocation of the resources- The leaders shall ensure proper flow of expenses in the workplace and should also track the daily budget so that high margins of profits can be achieved. The main areas to increase the investment in this case include the Information Technology (IT) department, the manufacturing department, the testing or packaging department, and the human resource department. Prioritising the funds can also ensure that a high rate of returns can be promoted in the internal structure of the company.
Leadership is an important aspect for every company as it can help to ensure that the employees working in different departments are able to understand or fulfil their roles and responsibilities efficiently to enhance the overall productivity. In this case, the two most important leadership styles that can help Tesco Plc to enhance its innovation strategy and generate new products according to the needs or requirements of the targeted audience includes transformational and democratic leadership style.
Transformational leadership: This style will be quite useful for the company as the leaders in this style helps to motivate the employees towards the common goal of the workplace that is to enhance the relationship with the audience and boost the competitive edge. Transformational style can also help the employees to align their performance with the long-term vision of the company and the leaders also share a strong belief in the workplace so that high valuation of the diverse workforce can be maintained (Karlsson, 2023). The leaders using this style are also very charismatic, due to which they are able to maintain high authority in the workplace and satisfy the workers simultaneously. The individuals using this style of leadership pays high attention to the staff members working in the company as well as meets the needs of the clients through which high morale can be presented in the workplace. This further helps to build a positive workplace culture that promotes better employee retention and attraction in the competitive world (Karlsson, 2023). Furthermore, the constant engagement among the workforce regarding the goals and missions of the company can also help it to reduce the issues of burnout so that it is able to expand in the global economy competitively. One such example of transformational leader is Elon Musk who innovated SpaceX to meet the daily changing needs of the audience in the tech industry (Project.co, 2023).
Democratic leadership- This style of leaders ensures that the decisions are made as per the opinions or ideas of the employees working in the different departments of the company so that high involvement can be maintained. It also helps to gather the feedback of the individuals working in the company so that the issues of misconduct can be resolved immediately (Pandey, 2023). Democratic leadership can be beneficial for Tesco Plc as it is adopting the innovation strategy, and the leaders can provide constant brainstorming ideas so that the complex nature of the change can be resolved. Some of the main features of the democratic leaders include that they are able to promote transparent communication in the workplace so that the issues of mis confusion can be resolved. Thus, significant collaboration is maintained in the workplace which encourages teamwork and smooth flow of operations even during the implementation of the new strategies or decisions. It also helps to enhance the satisfaction of the employees so that they are able to meet the expectations of the company and stay professionally or personally developed at the same time (Project.co, 2023). For instance, the ex-CEO of Southwest Airlines, James Parker, was a democratic leader who always trusted his team members and empowered them to take part in the decision-making process.
As a transformational leader focuses on influencing the employees to bring positive changes in the workplace, it can be used by the leaders of Tesco Plc to drive product innovation for the long run. In this case, the leaders shall prepare a strategic plan which includes the marketing and budget of the vegan ready-to-eat products as mentioned earlier and then they can constantly communicate the main ideas or values with the employees (Chugh, 2023). In association to this, the leaders can also promote weekly meetings to resolve the workplace issues and to promote overall flexibility that can lead to the motivation of the employees. The leaders can also maintain training programs so that the employees are able to maintain continuous learning and development, which further promotes a growth mindset in the internal structure of the company. In association to this, the transformational leaders can promote agility and adaptability in the company that can make it open to new challenges as well as opportunities like reaching out to the new customer base with the innovation of the new range of vegan food in the marketplace (Chugh, 2023). However, transformational leaders also play an important role in managing or implementing the corporate social responsibilities or CSR policies in the workplace. For example, the leaders can assure that the employees are equally focused on the CSR objectives of the company and are able to reduce the land pollution by producing less waste of the products during the implementation of the product innovation strategy. To further achieve a better position in the marketplace and outcomes based on CSR, the transformational leaders in Tesco can encourage efficiency in three different aspects: motivation of the employees, high satisfaction of the customers, and overall organizational performance. Thus, by maintaining an ethical behaviour in the workplace genuine engagement or commitment can be promoted that can lead to the sustainability of the environment with high profitability of the company (James, 2023).
Democratic leadership style is also considered one of the best styles to promote high productivity in the workplace because the employees are actively engaged or involved in the decision-making process, due to which a participative and collaborative workplace culture can be maintained (Quintana, 2022). The main functions of a democratic leader which can help Tesco Plc to enhance the innovation of the new vegan product includes fair and equal distribution of the responsibilities among the team members, proper empowerment of the members, and boosting the efficiency of planned decisions with the help of informed data. These core principles can help the leaders of Tesco to generate a mutual understanding among the diverse team members that can further lead to workplace delegation and collaboration. However, an ideal environment in association with certain conditions shall be created to enhance the performance of the democratic leaders in the internal structure of Tesco. The conditions in this case include that the team members should have appropriate skills as per the requirements of the company, or they shall be eager to share their positive ideas amongst their fellow subordinates, and a proper time schedule shall be allowed to create an innovation plan or strategy (Quintana, 2022). As democratic leadership is used to make delegate plans or decisions, it can be effective to maintain the CSR policies in the company. For example, the leaders can assure daily performance of the employees and align them with the sustainability goals so that appropriate waste management can be maintained (Forbes Council, 2023).
5. Recommendations & Conclusion
Various plans can be used for a successful strategic management or implementation in Tesco which are further mentioned below:
It can be concluded through the study that the product innovation strategy adopted by Tesco can help it to reduce the negative political aspects such as regulating changes in the demands of the marketing environment and can enhance its growth in the developing or emerging economies. In association to this, the adaptation to the new technologies like the e-commerce sites and ensuring delivery services can also help the company to achieve the target audience or retain them efficiently. The study also shows that Blue Ocean strategy can be used by the company to detect the main strategies that can help the company to stick to its goals, mission and vision so that it is able to maintain high customer satisfaction for an extended period. The manufacturers of the company must, however include eco-friendly packaging, which shall promote the shell-life of the products so that the needs or demands of the customers are met on time. In relation to this, it was found that the managers of Tesco can also collaborate with highly reputed vegan brands to know new recipes of the vegan food and convert them into frozen materials to attract the healthy customers all over the marketplace. The study has also shown that to maintain high performance as per the new strategy the selection of transformational or democratic leadership can be useful as it can help to undertake and implement the decisions appropriately with high motivation of the workforce. These leadership styles can also help to maintain a collaborative workplace so that an innovation culture can be promoted. However, the main strategic management issues found in Tesco Plc can include major conflicts among the employees as a diverse culture can be noticed in the workplace. This is also associated with the high cost of the logistics or the delivery of the products, which further reduces the profitability of the company.
References
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