Introduction of Firm
Tesco PLC is currently the leading retailer that specializes in household goods and groceries. Having been founded in 1919, it has grown exponentially by acquiring small businesses, forming alliances, and promoting value. With its store formats based on existing goods and locations, Tesco has managed to enter new markets in Asia, Europe, and the United States. It is presently the largest retailer in the United Kingdom. This paper gives a detailed analysis of this company, its current problems, and future strategies.
Overview of Firm Competitive Advantage
This organization has several competitive advantages that make it successful in its industry. Firstly, the senior management team remains committed and focuses on future performance. Secondly, Tesco has a powerful vision that supports its objectives. Thirdly, it utilizes available resources effectively to promote organizational success. Fourthly, it establishes alliances and exploits emerging capabilities to attract more customers.
The presented case study does not identify a specific problem that might affect performance. However, it is evident that Tesco’s leaders should consider and implement the most appropriate strategy that will increase profitability, attract more customers, and will eventually make it the leading global retailer (Haddock-Millar & Rigby, 2015). The other issue is for the company to retain its current model to emerge successfully.
The managers at Tesco PLC should consider various alternatives to support the current performance and continue delivering additional results. The first viable option is to maintain the existing business model but consider untapped markets, such as Latin America and Africa.
Pros: This model is capable of attracting more customers and making Tesco more competitive.
Cons: This option requires additional resources to hire expatriates, conduct market research, expand logistical operations, and overcome cultural barriers (Haddock-Millar & Rigby, 2015).
The second strategy is to increase its product portfolio and consider the concept of diversification. This approach will deliver various pros and cons.
Pros: Tesco PLC will become more competitive and increase its profits. It will reduce business risks and stakeholders’ bargaining power.
Cons: This approach might complicate operations and attract more competitors.
Decision and Support
From this analysis, the first option appears to be the best for Tesco. This is true since this company has succeeded in Asia, Europe, and the United States. Expanding operations to Africa and Latin America will improve competitiveness. The outlined cons can be addressed using the existing business model. While the idea of diversification appears effective, it might complicate operations and disorient the targeted outcomes (Müller, 2016). The selected option will address the current level of competition. The choice can be coupled with additional products depending on customers’ needs in every market.
A powerful action plan is needed to implement the outlined choice. The company’s top managers should use Kurt Lewin’s model to prepare the stakeholders about the option, introduce it, and eventually make it part of the organization. This approach is less costly since the level of opposition will decrease significantly. It is also practical and can deliver positive results within a short period. The possible negative consequence is that the company will face stiff competition in the identified new region or markets. The initiative needs to be implemented within a period of two years.
The first one will be used for conducting feasibility studies and identifying potential locations (Pitt & Koufopoulos, 2012). The second-year will be considered to launch the strategy successfully. The best contingency plan revolves around the decision to hire expatriates and local managers to support the entire transition. These measures will support this action plan and eventually make Tesco more successful.
Haddock-Millar, J., & Rigby, C. (2015). Business strategy and the environment: Tesco PLC’s declining financial performance and underlying issues. Review of Business & Finance Studies, 6(3), 91-103.
Müller, M. (2016). Critical analysis of the financing policies of Tesco PLC. Munich, DE: GRIN Verlag.