TESCO 3 Year Strategic Plan
To: • Expand the customer base in the United Kingdom Core and enter new markets. • Create high-value brands. • Become the leading global grocery retailer. • Be a business that value the welfare of communities that we serve. • Value addition for TESCO staff. On average, TESCO’s price for food is 3% lower compared to her peers (TESCO, 2018). Place: According to TESCO (2018), The Grocer operates 6900 stores distributed across Europe, North America and Asia. Her shops include (from the smallest to largest): Tesco Metro, Tesco Express, Tesco Extra, and Tesco Superstore. She also has an online presence (TESCO, 2018). Promotion: TESCO aspires to create a strong brand that is founded on aggressive product promotion. • Being at the forefront of setting a culture of respecting human rights and providing the best labor standards.
• Spearheading healthy eating. • Hosting the best supplier relations. • Protecting the environment. • Being the haven of business ethics. 5% in the next financial year (Coresight Research Centre, 2018). SWOT Analysis This section outlines the Strengths, Weaknesses, Opportunities, and Threats to TESCO Company Limited Strengths • Strong brand name. TESCO has a 50% customer acceptance level and 83% employee approval (TESCO, 2018). • Economies of scale. Enables her to acquire procurement at reduced costs and sell at reduced costs (Coresight Research Centre, 2018). • Virtual and online shopping. Customers are fast shifting to online shopping and drone shopping that has an unexploited potential for grocery and food products that TESCO deals in. • Strategic alliance: By merging or Franchising, TESCO will excel to heights. Her 2011 merger with Booker resulted in synergies amounting to £600 million.
Threats • BREXIT: the United Kingdom is becoming an isolated economy after Britain voted to withdraw from The European Union in 2016 opening Britain firms to difficulties of doing business in Europe and other countries (Yueh, 2017). Loss-making lines will have to be scrapped as the milestones of this strategic plan are revised from time to time. BREXIT: This planning ought to take into cognizance that comes with isolationist government policies of the United Kingdom. Five Force Analysis of TESCO In order to identify the effective sources of a company’s competitive advantages and analysis of the structure of the industry in which a firm is operating in is very important (Porter, 1985). Porter indented five forces that are paramount. Applying them to TESCO, they entail: a.
Also, Alongside Tesco, the Upmarket is salient with ASDAS, Sainsbury’s and Morrison (Retail Economies, 2014). TESCO can thus through strong corporate governance maintain a strong brand presence in the future. c. The intensity of market competition TESCO is in an industry that is dense with apt competitors. Already, in the European market, ASDA and Sainsbury closely trail behind her 27. The Tesco strategic report of 2018 also highlights that most of her customers are people looking for quality foods and healthy meals. TESCO’s customers thus have a relatively small market bargaining meaning that TESCO’s slight dollar exchange to make more profits or to cater for increased business costs are not likely to impact negatively on sales. e. Suppliers bargaining power According to Retail Economies (2014), suppliers of large businesses of TESCO’s size usually have very little bargaining power; they are usually scared of losing business contracts.
For the period through which this strategic plan stretches, therefore, TESCO remains a price setter for her suppliers setting the lowest prices that will enable it to make the highest profits. Political Instability TESCO has not faced major political instabilities as she chooses to invest in the world’s most harmonious markets. Britain has not had any major political instabilities since TESCO came into existence in 1919, Likewise, the U. S. A, Japan, and China have not had a political upheaval in the recent times when TESCO entered the markets (Son & Kim, 2018). Financial performance and condition of the Operational budget TESCO’s performance is pegged on 6 key performance indicators: Sales, Profit, cash flows, customer rating, employee rating and supplier ratings (TESCO, 2017). • Debt to asset ratio has been rising.
Based on the 6 KPI’s, TESCO is doing well. From the two financial Ratios, TESCO is in a healthy financial position; the debt to equity ratio shows the debt being used to finance activity relative to investor’s equity. When it is less than five especially now that it is about 1, it shows that little debt is being used to finance TESCO activities. The debt to asset shows how much debt relative to TESCO assets is being used. Strategic goals 1. Investment on areas without experience: By the end of the second medium term (June 2019), TESCO will field a team of an internal committee that will be tasked with the role of researching on profitable areas and regions that will be required to present a report to the management at the end of every financial year.
By the end of the fourth medium term (June 2020), TESCO will have increased her global Loyalty Club Card membership by 40%. Currently stands at 17 million users (TESCO, 2018). To hit 238 million users by June 2020. To attain this, TESCO has floated a £ 1 billion to be increased by 20% every financial year ranging from June 2018-2021. A ten member strategic development committee is to be formed that will supervise the implementation of the plan. The plan conducts a SWOT analysis, Porter’s five force analysis, reports on past financial performance and outlines key deliverables that ought to be realized by 2021. By committing to every strategy herein will make TESCO enter new markets, make more profits, cut costs and improve on her global third ranked brand to become the leading global grocery and food brand.
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