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Tesco Strategic Decisions Problem Solution Essay


Abstract

To attain competitiveness amidst of modern changing business environments, an organization’s leadership team needs to implement operational, project and strategic management strategies that are responsive to the needs of the particular market the company is trading. With effective strategies, a company is able to resolve problems and conflicts that are likely to create a weak link in the companies operations.

Modern contemporary business environments are also posing some dangers to organizations as leaders are finding their old policies and business approached being challenged by the environment prevailing (Wheelen and Hunger,1998). This paper discusses the strategic issues facing the retail industry in the domestic and international market; it will focus on Tesco Merchandise Company.

After discussing the issues, the paper will discuss some strategic measures that the company can take to improve its business as well as improve its competitiveness.

Background of the company

Tesco is an international merchandise company with its main market in the United Kingdom; the company operated a chain of grocery that can amount to over one thousand supermarkets, convenience stores, and hypermarkets in Ireland, the United Kingdom, Asia and Central Europe. Although the company was initially involved in the food sector, it has diversified its operations to clothing, consumer electronics, financial services, and internet services.

The company’s management vision is to develop lifetime customer loyalty and ensure that it adds value on consumers. The company’s vision and mission statement establishes close links and connections with its customers and aims at understanding their needs and enacting policies that improve the relationship.

Other than focusing on customer needs, the company maintains an effective human resources department that ensures the Tesco maintains and sustains trained, motivated, and adequate staffs at any one point in time. Despite the company being among the oldest and successful retail companies in the world, it is facing some challenges that are limiting it meet its profitability (Tesco Limited Official Website, 2011).

Problems facing Tesco

Other than being a leader in the retail industry, the company is facing some challenges; the first issue facing the company is regard the use of e-commerce tools. Although the company has a computerized system of marketing as well as payments for goods, it is still lagging behind some of its competitors like Wal-mart that seems to have moved a step ahead.

Tesco’s system accepts only a limited number of electronic payment systems like debit cards, credit cards, and online payments buts lack some of the main upcoming e-business or payment methods like PayPal, western union transfer, and wire transfers. The weak system has locked some customers from buying form the company.

In the same line of computerization, the services cannot be differentiated thus a customer lacks the motivation or the drive that can make him or her come again for the services. The internet section of the company is facing some challenges especially when it comes to browsing and downloading works; the computers are slow and sometimes customers are expected to wait for over ten minutes to get a download.

With the large chain of works and variety of commodities they stock, the company has had deficit of products in some stores; at times, the products may have run out of stock without the management being aware or there has been a delay in delivery.

This is brought about by system failures and the interdependence of branches (when buying commodities that cannot be bought in bulk; the company joins the needs to two or more branches than orders the product in bulk), when this happens, some commodities are found not in their shelves (Tesco Limited Official Website, 2011).

Genetic tool kit to identify challenges and how to solve them

To identify the above problems and solve them, the company should use a hybrid management toolkit; a method of management that combines the strength of Six Sigma management approach and Total Quality Management strengths. Under the method, the company will be required to set some benchmarks of operations that should be maintained at all times in the organization.

To ensure that the benchmarks are attained, the management should set some operational system appraisal methods.

Identification of problems

All operations with the organization should be documented and optimal operation levels set; the document whether in print or electronic should be made available and accessible to every employee in the firm; the responsibility of every staff as long as the attainment of the set standard should be well defined.

Some challenges face an organization because of reluctance of employees or those companies that have been subcontracted; to ensure that this does not happen, the company should have a punishment mechanism of any person whether natural or artificial who limits the attainment of the benchmarks set.

The blue print document acts as the point of reference in day-to-day operation and the best strategy line of operation should be formulated. With the strengths of Six Sigma, which allows a company to establish its areas of weakness and inefficiency, then the approach will help know those areas that need to be addressed for a competitive business.

To have efficiency, the company should strengthen its internal control and review its contacting policies; those operations that are not core, like cleaning the stores, should be outsourced to ensure that the company’s management concentrates in the main line of business (Wheelen and Hunger,1998).

The over one thousand chain should have an independent or regional management approach; having a central management structure of more than one thousand stalls is not practical and If made, then chances of high inefficiency can be expected. The management should change its structure to ensure that managers are responsible for few stalls.

This will improve e delivery and facilitate solving of problems at local or regional level. The computer and internet system seems to be one of the thorns that the company should be looking at; the failures that the company is getting are coming from adopting technology that is outdated or one that cannot be fully be relied upon.

As far as the system is concerned, the company has two options; to either change the complete system and adopt a better version or improve the current one. The choice of the matter depends on the situation and the availability of either option.

The company should continuously restructure and rebuild its vision and mission; developing a strategic vision and mission involves thinking strategically about the following three questions

  1. What are the customer’s needs?
  2. How much is the company offering? Can we do better?
  3. Where are we now?
  4. Where do we want to go?
  5. How will we get there?

The following diagram shows how the company can use the Hybrid system to counter check its processes and probably improve them:

Chart 1

Organizations future and business course

A vision is a view of an organizations future and business course: it is a guiding concept for what the organization is trying to do and become. All must be looked into to ensure that there is no one area that benefits at the expense of the customer. Setting objectives that are aimed at meeting the gap that the company had not been filling in the past; the aim of setting the objective is to ensure that the company has embarked on the fulfillment of the need of the customer.

The aim is to improve the feeling that the customer will get when he has transacted with the business. The objectives are aimed at improving all the area of the organization and the measurement is the satisfaction that the customer will get. A satisfied customer will be a loyal customer and the business stands to benefit (Kotter and Schlesinger, 2008).

The failures in deliveries can be a matter of internal controls, supply chain management or the computer system; this is a sensitive area that needs to be addressed independently; by independent it means that the problem should be handled separately and the root causes sort. After noting the area with a problem, then the management should seek to handle and solve the root cause.

The following is a sample of a supply chain chart that the company can adopt to have an effective supply chain management:

Chart 2

Effective supply chain management

(Goold and Campbell, 2002)

Periodically, the company should be taking internal and external business analysis: internal business analysis seeks to show the strengths of the company, how well it is compiling with the set standards and establishing any area that need improvement. When undertaking internal analysis, the managers should ensure that the benchmarks they have set are complied with and when they have not, the cause of the deficit should be diagnosed.

Through TQM, the company will be able to develop customer royalty; it will be able to surpass other companies to become the world largest merchandise retail chain. For a company to continuously improve its processes and attain the set goals as well as surpass the expectations of the customer the company should keep reviewing its policies (Fred, 2008).

Strengths of the proposed method

A hybrid management-tool kit has its main strength in the approach that it will take; the method address all areas of the business and ensures that problems that the company may be facing are recognized at the earliest time possible. On the other hand, the process involves every human capital in the organization for its success; it does not overburden the managers but spreads the functions across the board.

Strength with hybrid system is that it ensures that a benchmark has been set which operates as the line of best business pathway. With such moves, Tesco will establish those areas that might be causing problems and be able to address them accordingly.

Weaknesses of the method

The method is an overall quality and problem recognition approach, this means that it can only operate when all mechanisms are set to go; it does not offer advice on what to do but only evaluates the mechanism set.

The method establishes weaknesses and areas of inefficiency but does not offer mechanisms of preventing the occurrence of challenges; the main concentration is how to identify a problem and solving it but no-much has been provided to avid the occurrence of a problem, thus the business may be identifying problems when danger has already happened.

Method of improving the system

To ensure that the system works better, management should integrate a gap analysis mechanism: gap analysis is a tool used by managers to decide which tactics and strategies to use in order to increase production. It is a tool used to link a business vision with its strategies and goals. It helps in identifying a discrepancy in the performance that helps in selecting appropriate strategies to fill the discrepancy.

It was necessary to conduct a gap analysis on the implementation and use of TQM in the company. This was done by asking two simple questions, where is the company now? Where does it want to be five years from now? The following diagram shows the process of identifying the gap within the company (Camillus, 2008).

New policies

As Tesco continues with the hybrid system of detecting and solving issues, the management should understand that every outlet has its unique issues that can be solved by unique management techniques. They should be open to adopt new approaches to different outlets.

Conclusion

Tesco is an international merchandise retail company that is facing strategic issues; the main issues are caused by changing business environments that calls for continuous policy formulation. To ensure that the company remains competitive amidst changing business environments, the management should adopt a hybrid management system. The system will assist the company identify weak points and solve them before they become substantial threats to the company.

References

Camillus, J., 2008. Strategy as a wicked problem. Harvard Business Review. 86(5), pp. 98-106.

Fred, D. ,2008. Strategic Management: Concepts and Cases. New Jersey: Pearson Education.

Goold, M. and Campbell, A. ,2002. Do you have a well-designed organization? Harvard Business Review. 80(3), Pp. 117-124.

Kotter, J.P and Schlesinger, L.A.,2008. Choosing strategies for change. Harvard Business Review, 80(30), pp. 117-124.

, 2011.

Wheelen, L. and Hunger, J.,1998. Strategic Management and Business Policy: Entering 21st Century Global Society, 5th edition, Reading, Massachusetts and Harlow: Addison Wesley.

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