Organizational Direction

Topics: Strategic management, Marketing, 2009 Pages: 22 (5613 words) Published: March 4, 2010
Table of Contents

Task 1
Task 2
Task 3
Task 4
Appendix A
Appendix B

The corporate arena of the 21st century is marked by competitiveness, innovation and an endeavour to attract, maintain and retain customers better than anyone else in the market. The growing attention being given to organisational strategy by academics and practitioners has significantly increased in recent years as it is the strategy that determines the ability of an organisation to utilise its resources to achieve its aims and objectives, despite uncertain circumstances.

This report conducts an analysis of Tesco, the UK largest retailer by giving a brief overview of the company’s mission, vision, values and its present strategy in task one. Task two analyses the present position of the company by using PESTEL analysis, porter’s five forces analysis and stakeholder analysis. This is followed by assessing the strategic capability of the company by conducting a strategic capability analysis and SWOT analysis. Lastly, a new corporate strategy is presented with related functional strategies, action plans and performance indicators for reviewing and controlling the strategic plan. The findings of the report are summed up in a conclusion.

Task 1
This section provides an introduction to the company, Tesco.

Company Background
Established in 1919 by Jack Cohen, by selling surplus groceries, with a profit of £1 (sales £4) (Tesco 2009) on the first day, Tesco is today one of the UK’s largest food and grocery retailers with a profit margin of 4.0% with revenues of revenues of $99,699 million (appendix F) recorded in the financial year ended February 2009 (Datamonitor 2009).

In 1920, Tesco, introduced its brand on tea packets. In 1929, it opened its first store in Edgeware in the UK. 1956 saw Tesco’s first self-service supermarket and 1974 the group’s first gasoline station. The 1990’s witnessed Tesco’s international expansion in Poland, Hungary, Slovakia, Czech Republic, Taiwan, Thailand and South Korea. Tesco’s website was launched in 2000. In 2001, Tesco in strategic relationship with Safeway introduced online shopping in US and also entered the Malaysian market. In 2002, Tesco purchased T&S, UK convenience retailer and HIT, hypermarket in Poland. In 2006, Tesco opened a new internet telephone service (Tescoplc 2009). In 2008, Tesco planned to set up cash and carry businesses in India, obtained 36 hypermarkets in South Korea from Homever, introduced discount brands. Tesco re-launched Clubcard in UK in 2009, investing £150 million providing customers the option to double their clubcard vouchers (Tesco 2009).

Tesco is a food and grocery retailer operating 4331 stores in 14 countries globally. The company is headquartered in the UK and has operations in Europe, the US and Asia. It employs approximately 470,000 people and its operating was $5,677.7 million and net profit was $3,835.9 million in financial year 2009 (Tescoplc 2009). According to IGD (2009), Tesco had the highest market share growth of 30.7% in the 12 weeks to 01 November 2009 as compared to 30.6 in the 12 weeks to 02 November 2008. These figures show that despite financial crisis, Tesco has been able to sustain and grow its operations.

Company Mission/ Vision and Values
According to Johnson et. Al. (2008) an organisation mission defines its purpose for existence which is in accordance with the values or expectations of its stakeholders. An organisation’s vision is where the organisation sees itself in the future. An organisation’s values are ‘those subconscious assumptions and beliefs that frame its view of itself’ (Beddewela 2009)

Tesco’s mission is to ‘to create value for customers to earn their lifetime loyalty’. Tesco’s values are that ‘No-one tries harder for customers’. Through these values, Tesco believes in understanding its customers, being the first to meet their needs, act responsibly for its...

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Datamonitor (2009) Food Retail in the United Kingdom - Industry Profile.
IGD (2009) Tesco records market share growth [online] [accessed 26.12.09].
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Source: Datamonitor (2009)

Source: Datamonitor (2009)
Source: Annual Report (2009)
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