Strategic Management Business Evaluation Approach

Question: Describe about the Strategic Management for Business Evaluation Approach. Answer: Introduction Strategic management is an approach to evaluate, implement as well as formulate managerial decisions in such a way that the organizations can be able to achieve its goals and objectives. In this paper, strategic management of Tesco has been analyzed. Tesco is the largest food retailers in the world with around 2318 stores. This essay represents the discussion about the theoretical concepts of strategic management. With the help of theories of strategic management the managerial decision of Tesco can be evaluated in the essay. Strategic management of Tesco Strategic management is an approach to formulate, implement and evaluate managerial decisions in such a way that the firm can accomplish their business successfully as well as fulfill their aims and objectives (Sadler, 2003). This approach is quite effective in dealing with the huge range of factors which affects the ability of the industry to develop. This approach improves the preparation for unexpected internal demands. It contains strategic formulation, strategic implementation as well as environmental scanning; internally, and externally. This is an approach which concentrates on production, marketing, computer information system, finance and management for achieving organizational goals (Saltzer Kaashoek, 2009). As for example when Tesco begins its business, the management of Tesco set their aims and goals as well as numerous kinds of methods to accomplish all goals (Commodities, 2009). So, strategic management is the approach used by Tesco for achieving its objectives. Tesco is the largest retailer company in the UK, and second largest in the world. This company has more than 2318 stores in around 14 countries and employing over 326000 people. It also offers online services via its subsidiary. The motives of this company are to provide technical as well as superior representations (Jeyarathnam, 2008). The company adds value to its goods and services as well as adds value to its customers by offering an attractive and effective solution to their customers procurement and customers design. This organization provides employment opportunities to numerous individuals at a different level. PESTEL analysis of Tesco For evaluating the managerial decisions and competitive advantage of the firm, there are mainly six forces which Tesco responses in order to influence its managerial decisions (Carroll, 2004). Such forces contain political, economic, social, technological, environmental, and legal factors. Political forces As Tesco operates globally with various stores around the world, the firms performance is quite influenced politically as well as by the authorities conditions because every nation has its own rules and regulations (Talen, 2012). For the employment authorization, the authority influences retailers to offer a combination of job opportunities from locally based jobs to highly skilled. Tesco understands that retailing has a huge effect on jobs and people, so for this, the company recruits good amount of citizens in their stores (Yksel, 2012). The political forces influence the specified company to recruit individuals for job opportunities. The examination of political factors has enhanced the organizations profits as it led the company to understand the taxation policies of foreign lands, which has its influence on the operations of the business. Economic forces Economic forces influence Tesco in terms of profits, demands, prices and costs. The high unemployment level is one of the most influential factors on the economy because it reduces the operational demand for various products, unfavorably impacting the demand need to manufacture products (Eriksson, 2010). The recent economic growth has an impact on the purchasing power of buyers which reduces the amount of sales made by Tesco. Moreover, the income level in the UK is relatively inadequate which makes few individuals fail to afford the goods provided by the organization. Social forces There is a quite powerful demographic force in the world as well as local markets. In this, population growth is one of the significant and interesting forces for the marketers in towns, cities etc. Growing population does not create capable markets for the manufactured commodities (Salazar Sawyer, 2007). Apart from population growth, location is another most significant factor which is determined by the marketers because many purchasers are identified in the urban location in comparison to rural location. So, Tesco layouts are strategically located in areas where capable purchasers are strongly targeted. Technological forces In the world of business competition, product and service standardization, as well as their quality, is more preferable by the consumers and those companies gain most consumers. Here, standardization of products or services is improved by technological advancements and Tesco is doing the same (Kash Rycroft, 2002). The speed of technology is quite rapid that the employees of the company are able to learn technological innovations for improving their performance in the organizations. Innovation is quite influential in Tesco which has helped the industry in order to improve its competitive advantage in the entire globe. Environmental force There has been growing campaigns on environmental preservation in the whole world and therefore there are also many organizations are aimed to preserve the environment, as much pollution hazardous to the environment is done by the organizational industries. In order to maintain as well as preserve the environment, Tesco utilizes licensed waste disposal services (Bortman, 2003). The customers are also quite aware of the effects of polluted environment so they purchase goods which have been manufactured by environmental friendly matters. Legal forces In the UK there is competitive legislation which is formed under the Competition Act 1998; this impacts over the behaviors of industries in the country because there is a performance in that they have to compete. It is a demand for the entire industries in the nation in order to stand with the legislation and here Tesco is also included (Verloop, 2013). Tesco actually deals with selling drinks and foods so the company has to stand with the Health and Safety Laws in the nation. SWOT Analysis of Tesco SWOT analysis signifies the internal and external strength of any organizations by observing its strengths, weakness, opportunities and threats; Tesco is also utilizing this analysis for observing its strengths, weakness, opportunities and threats which are as follows: Strengths Tesco is majorly operating numerous stores in the entire world, which help it to begin operating in the global markets in order to gain maximum numbers of consumers (SWOT analysis, 2008). Tesco currently involved in advertising its goods online where its consumers are able to know about products as well as buy it online. The goods produced by Tesco are of the high standard which eventually attracts the maximum numbers of consumers (Joekes Evans, 2008). There also has been modification where Tesco provides clothing as well as food and drinks products which help the organization in order to compete with its competitors. Weakness For distributing the products or services Tesco utilizes much fossil fuel mainly in transporting networking as it is not entirely formed to have shops in every country of the world (Arnould, Price, Zinkhan, 2004). Moreover, Tesco only aims in developed countries by excluding underdeveloped and developing countries which form capable consumers for their goods. Opportunities The current innovation and advancement in technology provide Tesco quite an excellent opportunity for utilizing internet connection for selling its goods. The internet is the maximum utilized technology in Tesco as it is able to gain numerous consumers even in locations where there are no shops (Young, 2002). There is also an opportunity for establishing alliance suppliers for reducing distribution as well as production cost. Associations are more required in the company as it shares resources by do not fear about the risk of any development and growth. Threats Every organization concerned about taxes in the country, same as Tesco concerned about taxes in UK and countries where it has its stores. There is stiff competition in the retailing market which is pretended by Tesco competitors like ASDA and Sainsbury. So innovation and advancement is other organization is a threat for Tesco. Three Strategic Management Theories by Tesco Strategic management theory is basically a system of ideas for explaining the origin, principles, evolution of strategic management. In todays competitive world, strategic management is of great importance for any firm in order to come up with a strategy which will evaluate organizations managerial decisions as well as the competitive advantage (Durand, 2006). The strategic management theory usually is said as the system of ideas that intends to summarize the principles and procedures of strategic management. The three theoretical concept of Strategic Management about Tesco are as follows: Contingency Theory The contingency theory induces the ideas that there are no approaches for managing organizations. It is based on the favorability. Tesco has specified their leaders work in their style of preference so that they can become more effective in their respective field or department (Donaldson, 2001). Though this approach has criticized the theoretical base, it remains as an important point in the contribution of understanding effective and efficient leadership. Tesco contingency approach has leaded the company to strengthen their communication between subordinate ability and leadership style. Profit maximization and strategic based theory This theory or concept is based on the belief that business enterprise aims to maximize their profit for long terms and also to gain a competitive advantage over other same businesses. The perspective of industrial companies is based on this theory as the concept examines the company external market situation for attaining sustainable competitive advantage. Here the maximum profits which are surplus above the average cost of production. Tesco has appropriately chosen both its inputs and outputs for attaining the objective of realizing maximum economic profit. The specified company applies Maslows theory of motivation to internally encourage their staffs and employees so that it can achieve its desired sales and profits. Resource-based Theory The resource-based theory is a technique to analyze the resources as an important aspect of the superior performance of the company. The VRIO attributes of Tesco has led it to gain sustainable competitive advantage. According to this theory, the attributes of this enables a company to examine the sources of competitive advantage within it, rather than looking at the competitive environment for it. The theory relies on the tangible and intangible resources of the company and must be heterogeneous and immobile. All these resources should also have VRIO attributes to provide competitive advantage. The resource-based theory of strategic management of Tesco, has led it to give resources the major role in order to achieve developed organizational performance. Tesco has valuable and rare resources that help it to gain competitive advantage. How theoretical concepts of strategic management influence managerial practices in Tesco A well-organized strategic plan increases the performance, decision-making process, and changes in the business and also contributes in the strategic direction of the company. For the formal managerial process, strategic plan includes the order of analytical procedures to express a planned strategy. It also brings into line the main objectives, planning, and policies and the allocation of resources to attain organizational goals. The strategic management of Tesco has led the decision makers of the company to advance their respective roles. They are told to must perform some duties of a ceremonial nature to have smooth functioning in the procedures of the organization. This responsibility has also led the managers to involve their leadership directly in order to encompass a relationship with subordinates by providing them encouragement. The strategic management has also influenced the managers to create contacts inside as well as outside of the organization with wide range of peoples. Recommendations that would enhance Strategic Management of Tesco For a business enterprise, the most important thing to achieve successful performance is the understanding of their performance and their competitors, and this could only be done by an appropriate strategic management. Though the strategic plan of Tesco are quite good, there are still many left where the company could focus for improving their strategic plan. The company should structure their planning sessions to reflect and examine their desired or planned contribution level. The company should also create a specific agenda to manage their time frame. It should also target its annual budget process to drive alignment of its key strategic initiatives. The management of the company should also monitor their procedures and commitment towards the customers in defined periodic intervals. The head administrators of the company shall also recruit high-potential employees and assigned them to each team before the work starts. The specified company should also incorporate their views of the ir customers so that they can enhance their customer service management. The departmental managers of the Tesco should start their planning process by deliberately identifying their strategic issues to have a great impact on the result in the future. Developing an effective strategic planning that suits the process of the organization will drive the best from it. Conclusion It has been concluded in this paper that Tesco uses PESTEL, SWOT analysis for evaluating influential managerial decisions. The firm also applied various strategic theories to encourage its managerial decisions. For achieving a maximum field in competition than its rivals, Tesco needs to improve the management to get sure about entire stores that it is well managed or not, so that standard services provided to their customers. The organization need to influence their employees advancement for competing with other organization. Tesco should also enhance its store population by establishing new layout in different nations to attain maximum consumers. References Arnould, E., Price, L., Zinkhan, G. (2004). Consumers. Boston: McGraw-Hill/Irwin. Bortman, M. (2003). Environmental encyclopedia. Detroit: Gale. Commodities. (2009). [Mosman]. Carroll, K. (2004). Property rights and managerial decisions in for-profit, nonprofit, and public organizations. Basingstoke, Hampshire [England]: Palgrave Macmillan. Donaldson, L. (2001). The contingency theory of organizations. Thousand Oaks, Calif.: Sage Publications. Durand, R. (2006). Organizational evolution and strategic management. London: SAGE. Eriksson, T. (2010). Advances in the economic analysis of participatory and labor-managed firms. Bingley: Emerald. Jeyarathnam, M. (2008). Strategic management. Mumbai: Himalaya Pub. House. Joekes, S. Evans, P. (2008). Competition and development. Ottawa: International Development Research Centre. Kash, D. Rycroft, R. (2002). Emerging patterns of complex technological innovation. Technological Forecasting And Social Change, 69(6), 581-606. https://dx.doi.org/10.1016/s0040-1625(01)00171-8 Salazar, A. Sawyer, S. (2007). Handbook of information technology in organizations and electronic markets. New Jersey: World Scientific. Sadler, P. (2003). Strategic management. Sterling, VA: Kogan Page. Saltzer, J. Kaashoek, F. (2009). Principles of computer system design. Burlington, MA: Morgan Kaufmann. SWOT analysis. (2008). [Washington, D.C.]. Talen, E. (2012). City rules. Washington, DC: Island Press. Verloop, J. (2013). Success in innovation. Burlington: Elsevier Science. Young, M. (2002). Internet. New York: Osborne/McGraw-Hill. Yksel, I. (2012). Developing a Multi-Criteria Decision Making Model for PESTEL Analysis. IJBM, 7(24). https://dx.doi.org/10.5539/ijbm.v7n24p52