Executive Summary
The main purpose of this company wide strategic plan for information systems is to provide a 5-year vision of the company development of the information systems. This would be in line with the company’s main aim of integrating the information systems to ensure that the company continues to grow both locally and internationally.
This plan provides a strategy through which the company will undertake to develop its information systems. It entails the improvement of the existing systems to enable it to gather information accurately from the other branches worldwide. The strategic planning of the information systems will help the company in meeting the needs of the information systems in line with its growth strategy.
Through the strategic planning of the information systems, we intend to integrate the newly acquires or opened stores into the organization. The strategic planning of the information systems therefore involves all the branches, which the company currently has and the branches which it intends to open in the future.
Background and assumptions
The top management of different organizations for a long time ignored the idea of the strategic planning for the management systems. They used to undertake the strategic planning of all the other aspects of the business and ignored the strategic planning of the information systems. However, information systems are a very important aspect of any organization.
Tesco usually attaches great importance to the information systems of the organization. It has undertaken many developments in its information systems. The point of sale continues to be an effective and innovative way through which the organization reaches out to its customers needs. Tesco therefore seeks to increase the number of point sale centers so as to reach a wide range of people.
The company also intends to open many other points of sale centers, which are not attached to any of the chain stores. Some of the point of sale centers will be in areas where the company is yet to open its branches. The company intends to use the information on the sales from the centers to determine whether it would be viable to open a branch in the areas or not.
Mission statement
To make Tesco be the leading company in the UK and globally in integration of information systems in all its activities.
Goals and objectives
To improve on the data collection from the point of sale
To effectively analyze and collect data from the sale from tesco.com
To increase the information systems data through installation of necessary hardware to capture the information systems
Remote environment
The remote environment refers to the aspects, which affect the company, but the company has no control over them. These include economic, social, political, and technological factors. The company has to clearly understand the factors and hence make the necessary adjustments to enable it to cope with the situations brought about by the factors.
Economic factors
Economic conditions greatly affect our activities. The UK has recently been affected by the financial crisis that has made many businesses to cut back on their expenses so as to protect its interests. However, even with the financial crisis, Tesco managed to post a nice profit. However, the company continues to be affected by the financial crisis.
Political factors
Tesco has branches in many different countries. Some of the countries are third world countries in Africa. In some of the countries where the company has its operations, the company must factor in the ISSP various political situations.
Social factors
The strategic planning of the information systems tends to capture the different types of spending of different people. The current population of the UK has many people who are aged. The aged usually have much more money to spend as they have accumulated their savings. This phenomenon is expected to increase in the foreseeable future. The company should therefore ensure that it benefits from the situation by creating products that suit these people.
Technological factors
The retail industry is currently faced with stiff technological advancements. Various products are developed by the other competitors. Most of the products and innovations are mainly aimed at retaining the customers. The company therefore needs to be vigilant in the technological development of its products to cope with the stiff competition effectively.
Industry environment
The industry environment is well understood by looking at the porter’s five forces model for Tesco.
The risk of entry by new competitors
For any retailer that intends to enter in the UK market, the retailer must first analyze the risks posed by the retaliation of the other companies, which are already in existence. The recent acquisition of Asda by walmart, a US based retail chain store will have the effect of increasing the competition in the retail market industry (Lang and Heasman 2004 p 165). In addition, the acquisition of Safeway by Morrison is also expected to increase the competition considerably (Griffiths and Bingham 2003)
Rivalry among companies in the retail industry
The UK retail industry is characterized by four major retail companies, which share a large percentage of the market. The companies are Tesco, Asda/Walmart, Morrisons/Safeway, and Sainsbury. Together these companies share over 80 percent of the sales of household goods and groceries (Great Britain: Parliament: House of Commons: Communities and Local Government Committee 2009 p 128).
However, Tesco is the leading company in the industry. The presence of four major retail companies therefore shows that there is a stiff competition in the industry.
Bargaining power of buyers
The customers in the retail industry have the ability to choose the prices of the products from different retail outlets, even the ones that are competing against each other. However, Tesco‘s club card membership ensures that the customers are loyal to the company and do not go to the other companies.
Bargaining power of suppliers
Tesco usually reaches a wider number of customers in the areas in which it operates. The goods in most of the shelves of the company are usually from big suppliers. Tesco usually gives the shelf space to the large suppliers. These suppliers ensure that the company gets maximum profit per unit space in the shelves of the products.
This arrangement usually makes the small companies to face difficulty in ensuring that their products are on the shelf of the company, as the small firms cannot effectively compete for shelf space with the large companies. However, Tesco sources some of its products from small suppliers. Most of these products are mainly farm produce e.g. poultry products, dairy products.
Closeness of substitutes
Most of the products that Tesco offers usually have their substitutes. Therefore, to ensure that the substitutes are not selected by the customers leaving the products of which Tesco sells, Tesco ensures that the products it sells are at a lower price compared to the substitutes that are in the market.
The pricing of the substitute products in the market usually determines the profit margins that the company will get through the sale of the products. If the substitute products are at a lower price, the company is automatically forced to reduce the price of its products so that the product may effectively compete with the substitute products.
SWOT analysis of Tesco
Strengths
The company has the largest market share in the UK. It has a 30.7 percent share in the market (Finch 2009). The market share of the company in the food products segments is expected to grow hence consolidating its market share and influence in the industry.
The company has many customers who are loyal to the company
The company has a recognized brand name that improves its image. The improvement in the brand name is mainly brought about by the financial stability of the company. Tesco became the first UK Company to post 2 billion pounds in the year 2005. In the year 2009, when most of the UK companies were adversely affected by the financial crisis Tesco made a profit of 3 billion pounds. In addition, the company has high growths in its income.
Strong investments in the use of IT and information systems in its operations offer Tesco a competitive advantage compare to its competitors. Club card membership, Tesco online and point of sale ensure that the company attracts more customers (Rainer and Cegielski 2009 p. 327. Tesco online and point of sale provide additional source of revenue to the company.
Weaknesses
The stiff competition from the other supermarket chains
The company also relies heavily on the UK market to fuel its growth
Changing economic conditions in the countries where company has operations
Opportunities
Growth in the markets in other countries
There is fast growth in the non-food retail sector. Tesco mainly depends on the sale of food products. This market segment has experienced rapid growth in recent time hence enabling Tesco to greatly benefit from the growth
Tesco has also diversified the products it now offers in the shelves. Apart from the traditional food products, the company also offers other products such as electronics and beauty products.
Diversification into other products such as financial services and insurance through Tesco.com (Shajahan 2007 p 250)
Threats
Price wars seem to be gaining pace in the UK market. The acquisition of Asda by Wal-Mart is expected to result in stiff competition in the retail industry. In addition, stiff competition in the UK market by the other large competitors is an expected threat, and so is the heavy cost of international investments.
Competitive advantage
Due to the fact, the company is the leading retailer in the UK; this factor may enable it to have better growth than the other companies that operate in the same field.
The information systems of the company also give it a competitive advantage over its competitors. The point of sale and the clubs card system help in increasing the sales of the company. The club card system ensures the personalization of the services given to the customers hence leading to improvement of the consumer loyalty to the company.
Critical success factors
The company should ensure that it stop being over reliant on the UK market. The market in other countries has a higher growth potential than the UK. The UK is saturated by the presence of large retailers who offer stiff competition, therefore curtailing the growth in the UK retail market. Venturing into the developing markets would be of great importance in reducing the over reliance on the UK market as the markets offer a higher rate of growth hence ensuring the financial profitability of the company.
The company should also strive to continuously invest in information technology and information system. These are the main factors that will lead to the growth of the company in the foreseeable future. The diversification into other non-food products will also ensure the success of the company.
By providing a wide range of products, the company will be able to reach out to more people. The diversification also ensures that the company stops being over reliant on one product type and therefore cushion it from any price wars in the food products.
Discussion of strategy
Short term goals
The company intends to improve on the current information systems to ensure that the information derived from it covers most aspects of the business. The target in this financial year is to ensure that the company can ensure that the club card members will account for 50 percent of the sales made by the customers of the company.
In addition, the company intends to ensure the club card members get personalized information regarding what they may prefer to buy once after every two months. The company intends to appoint an independent client to handle the development of it information systems.
Medium term goals
The company intends to set up a department, which will mainly deal with the information system requirements of the company. These will remove the subcontracting of the information systems to third parties who may not effectively undertake the work as required by the company.
Long terms goals
The company intends to diversify its region of operation to other areas in the near future. These branches will be semi autonomous and will not depend on the headquarters for information systems management. To ensure the complete semi autonomy the company intends to locate and set up keys centers from which the information systems of oversees branches will be monitored.
This information will be further relayed to the main headquarters where it will be efficiently stored and interpreted. To facilitate this the company intends to ensure that avails the necessary infrastructure in ensuring that the company sets up an information architecture which will be able to capture all the aspects of the business.
Conclusion
Tesco holds a key position in the retail market industry. It is a market leader in the UK and some of the countries in which it has its operations. The strategic planning of its information systems would therefore greatly benefit it, as it would enable it to cope with the expected future changes in the information systems brought about mainly by its growth.
The strategic planning of the information systems shows that Tesco stands to gain greatly from effective planning of its information systems and this would give a competitive edge over most of its competitors.
Reference List
Finch, J., 2009. Tesco increases market share. Web.
Great Britain: Parliament: House of Commons: Communities and Local Government Committee. 2009. Market failure: can the traditional market survive? Ninth report of session 2008-09, Vol. 2: Oral and written evidence, Volume 2. NY: The Stationery Office.
Griffiths, B. and Bingham, J., 2003. Morrison cleared to take over Safeway. London: The Independent. Web.
Lang, T. and Heasman, M., 2004. Food wars: the global battle for mouths, minds and markets. London, Earthscan.
Rainer, R. K. and Cegielski, C. G., 2009. Introduction to Information Systems: Enabling and Transforming Business. NJ, John Wiley and Sons.