Business Strategy to Drive Company Growth

This written document is supported to Tesco plc which is a British transnational groceries merchandise retailer and operate its business globally with the help of its number of products like supermarket, hypermarket and others. This written document will discuss about effect and determinant of macro environment and analysis of internal environment or capability of the firm. Further, will explain about porter's five forces model and different conceptions to devise strategic planning.

Impact and influence of the macro environment on a company and its business strategy

Stakeholder matrix

It is an activity of collecting and monitoring qualitative data to find out whose interests should be taken into account when improving and organising a policy program.

High power low interest- It indicates to those individuals who have high power and low interest in organisation. In Tesco, stakeholder refers to customers, sponsor, regulator etc. but the main stakeholders are customer because they have the power of devising the modifications in plan of actions of firm. They have low interest because in the situation of not getting product as per their requirement, they can switch to other company.

High power, high interest- It refer to those individuals who have high power and interest in company. In context of Tesco, these people can be Board of directors,  CEO, SME, BA, investors etc. who have high power to make change in plan of actions and responsible to take decisions. They have high interest because they formulate strategies for growth and development of organisation.

Low power, high interest- It refers to those stakeholder who are highly involved in the business of the firm but have low power. In Tesco, employees, developer, internal users, trainee etc. are stakeholders of the company. Employees are important because these people are accountable to perform business activities but do not have the power of taking decision. 

Low power, low interest- It refers to that people who have low interest and low power because they have not make much contribution and involvement in the business of the firm. In Tesco, these people are admins, suppliers, help desk and others because they are not involve in business of company highly and play and crucial role in success of the firm.

These all factor of stakeholder matrix analysis affect the company and its business strategies in different manners. For example, investors are the important stakeholder of company and they have high power and interest or also affect organisation when they have not get expected return on their investment (Amran and et. al., 2016). Customers are another essential external or macro environment factor that influence business and business strategy of a firm. When consumer do not get products as per their need and requirement then they can switch to the brand which affect organisation's sales and profit. 

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Stakeholder analysis-

It is a process of finding out these individuals before the project begins, grouping them according to their extents of participation, interest and influence in the project and determining how best to involve and communicate each of these stakeholder groups throughout. There are three phases of stakeholder analysis and the description of them in context of Tesco is as below:

Step 1: Identifying stakeholder-It its the first phase, in it the management of the company Brainstorm about their stakeholder and those people who affect the business actions and influenced by success and failure of the business. Chairperson, chief executive, chief financial officer and number of non-executive directors are internal stakeholder of Tesco whereas customers, suppliers, competitors, local committees and government are external stakeholder of organisation.

Step 2: Prioritise stockholders- It is the next phase, in it, the administrator of Tesco prioritise their stakeholder on the basis of their power and interest in the company like high power high interest, low power low interest, high power low interest and low power high interest.

Step 3: Understand key stakeholder- In this step the management of TEsco prioritise their stakeholder by analysing their financial and emotional interest. When the firm prioritise its stakeholders and consider attitude regarding the project, organisation should also consider creating a project management communication plan it will help in involving people and find out their needs.

Benchmarking-

It is an activity of evaluating the execution of an organisation's goods, services and activities regarding those of another business considered to be the best in the industry. In context of Tesco, the main purpose of benchmarking is discovering the best performance being accomplished, by a competitor or by an entirety different sector.

There are several steps in benchmarking procedure like considerations, Plan, collect, analyse and adapt. In consideration, before accomplish the full benefits of benchmarking, organisation must be clearly understood and under control. In planning phase, the company should make plan to accomplish its desired benefits. In collection step, the administration of respective organisation collect data directly from partner organisation. After gathering information, administration analyse data to determine gap. In Adaptation step, management develop goals, action plans and implement them. Do you want Assignment Example ? talk to our Experts !

Analyse the macro environment to determine and inform strategic management decisions

Stakeholder analysis is beneficial to make improvement among individuals and finding out most powerful stakeholder. This analysis is essential to find out the needs of individuals and get information about the issues which are faced by the company due to changes in needs of stakeholders (Chen, Eshleman and Soileau,  2017). With the help of this analysis, the management of the company can get information about the effect of macro environment factors and take decisions according to them.

Analyse the internal environment and capabilities of a company

VRIO Analysis

It is a strategic technique to find out the internal resources in the organisation and capabilities that given long term competitive advantages. It can be consider four components i.e. value, rarity, Imitability,organisation. TESCO use this model to analyse the internal resources and identify whether these resources survived for long period in a competitive world.

• Valuable- The brand image of Tesco is very valuable in the competitive market because it products and services are familiar to its customers. Product portfolio is highly valuable because it is highly differentiated from the competitors. The technology  that is used by the company is valuable because it use innovative  features to design their products and is financial resource is valuable because it help in investing into extrinsic opportunities (Eaton and Kilby, 2015).
• Rare- Products that is used by the Tesco company is not rare because it is easily available in the market by competitor firms. The techniques that is used in design the products are also not rare because many competitors used similar technique in the marketplace (Evans and et. al., 2017). But the financial resource is very rare because it has strong financial resource and only few company can possessed it.
• Imitate- Tesco financial resource is highly costly i.e. difficult to imitate this will restrict the new entrants and company acquire higher profits. Technology they used in designing and  promoting the products offerings are imitate because there are many other firms in a same industry.
• Organised-  the financial resource of the organisation are organised to acquire the value because company use resources strategically and invest on right place this will create opportunity and reducing threats.

Evaluate the internal environment to assess strengths and weaknesses of an organisation

SWOT Analysis

It is an strategic plan undertaken by a company to analyse and identify its strengths, weaknesses, opportunities and  threats. In context of TESCO, swot analysis can be demonstrated below.

Porter's five forces model evaluate the competitive force of a specific market sector

Porter's Five forces model

This analysis is implemented by an organisation to analyse the competitiveness in a specific sector in which the firm operate its business. This concept is developed by Michael Porter in 1979 to understand the five competitory forces that create their impact on an industry. This analysis basically used by the company to identify an industry's structure to determine corporate strategy. The description of this model in context of Tesco is mentioned as under:

Treats of new entreats- Tesco is a company which operate its business in retail industry and to set up and operate business in this sector, companies require more capital and resources. There are several rules and regulations that are framed by the national authorities to run their business in this sector. So there is low threat to respective company because other factor is brand image of the firm which is maintained by the company by offer quality products as per consumers needs. Knowledge and experience about particular industry also create a barrier for new entry.

Bargaining power of supplier- In context of Tesco, the treat of this force is low because the company have numerous providers in retail sector (Holotiuk and Beimborn, 2017). Hence, non-compliant suppliers can be replaced in easy manner with other providers that offers the respective firm supermarket power to get goods from suppliers at the lowest possible prices to develop their profitability which has led to losses on the sides of suppliers.

Bargaining power of buyer- In Tesco, the bargaining power of buyer's is relatively high due to availability of other supermarket like ASDA, ALDI, Sainsbury's and others. These rivals companies also offer similar products at related prices and it makes products to switch prices low which offer the customers power to select products among varieties of goods in same price. Consumers like high quality products at low cost and ALDI and Lidl which offer their products form discount stores.

Source:Porter's five focres analysis,(2020).

Competitive rivalry- This rivalry force is also highly affect the company because there are number of retail organisations which create high level competition for the business of Tesco in term of offering substitutes at low cost and similar prices. For example, Sainsbury, ASDA, ALDI and others that offer same goods like food items, clothing, electronics and others which makes products switching cost low and a purchaser can easily switch from respective firm to other companies.

Threats of substitutes- The threat if this force is high to the company because there are numerous retail organisations in marketplace which offer same products like Tesco. Various retail company offer grocery and non-grocery items as per consumers needs in marketplace (Johnson, 2016). Tesco's potential food substitutes can come from retailer in other market that can provide not just food and drinks instantly to customer but also non-food products like home appliances, clothing and others. Get business assignment writing help from our experts.

Devise appropriate strategies to improve competitive edge and market position

To make improve in rival's benefits and marketplace position the management of Tesco can use Ansoff matrix in term of make growth ad development in the business.

Ansoff Matrix- This concept is formulated by Igor Ansoff and used by companies as strategy stage of marketing planning process. It is  beneficial for the development of organisation in term of making growth in their business. The brief explanation of this concept in term of Tesco is as below:

Market penetration - It is the first plan of action of this model in which organisation offer its existent goods in present market by making changes in their promotion channels and pricing strategies. In context of Tesco, there is no risk because product is offered in current marketplace and customers are aware with them.

Product development- In context of Tesco, if organisation adopt this plan of action then there is less threat because in it, company offer new good in existing marketplace to make development in their sales and profit (Martinez-Simarro,  Devece and Llopis-Albert, 2015). The firm offer new goods so it is not sure that the customer of existing market like product or not.

Market development- This growth strategy is risky more than product development because if the management of Tesco implement it in nits business. Then, the firm offer its existing product in new market so it is not clear that the consumer of new market liked these products and services which are offered by company.

Diversification- If the administration of Tesco adopt this strategy then the administration will offer its new products in new market (Mellat-Parast and et. al., 2015). There is high risk because new product are launched in to new market and it will not be sure that these commodities will be as per cutlure, needs and demands of customers of new marketplace. 

CONCLUSION

This has been summarised that from the preceding mentioned information that business concern plan of action is beneficial for the development and improvement of the company by adopting different concepts, like Stakeholder matrix and SWOT analysis, the firm can analyse the impact of external and internal environment.

VRIO framework is effective to analyse capability of the company and with the assistance of Porter's five forces it can monitor the competition in market. Ansoff matrix and Bowman's clock strategy is beneficial for  development and evolution of the business of a company. Strategic management plan is effective for the future development and growth of the firm.

Read Also-  Safeguarding in Practice of Interventions

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