Module Name: Strategy and Leadership in Practice

Module Code: BUS7B64

Assessment 2  

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Contents

1. Describe a situation or strategic issue in an organisation you have worked for and/or one you are familiar with, which may be considered as urgent and problematic. If you were leading the organisation as CEO, what approaches would you recommend to address the strategic issue? 2
2. Based on the resource-based view of strategy, discuss what you consider to be the dynamic capabilities needed by the organisation for sustainable competitive advantage that can help to exploit current markets and explore future opportunities. 3
3. Critically evaluate the organisation’s business model based on its value creation, value configuration and value capture strategies. How is this supported by the culture of the organisation? Discuss, applying the cultural web and/or any other culture frameworks. 5
4. a) Discuss the key drivers of change from PESTEL factors that have an impact on the organisation, highlighting the main opportunities and threats. 8
5. b) Critically assess how the organisation is dealing with its competitive environment, applying some relevant concepts, theories, and models e.g., from game theory, value net concepts and/or any relevant blue ocean concepts and models. 9
6. a) Discuss at least two main strategies pursued and implemented by the organisation for growth and competitive advantage. 11
7. b) Justify what you consider to be the most successful strategy of the organisation using the SAFe criteria 12

References 13

1. Describe a situation or strategic issue in an organisation you have worked for and/or one you are familiar with, which may be considered as urgent and problematic. If you were leading the organisation as CEO, what approaches would you recommend to address the strategic issue? 

British multinational groceries and general merchandise retailer Tesco Plc, having its headquarter in Welwyn Garden City, England has been chosen as the case company for answering this question owing to familiarity with a situation faced by it. During the attempt of e-commerce strategy implementation, challenges were faced by Tesco in the form of increased competition from big industry players who already had well established their ecommerce groceries and general merchandise business such as Sainsbury’s, Asda, Morrison’s, Aldi etc. This has emerged as a major challenge for the expansion aims of the retailer. For buying products, it has been observed that an alternate and cheaper platform was provided by the competitors. The competition, as such has contributed in denying customers to Tesco who can easily be theirs under other conditions had it being enjoying a monopoly (Kar, et al., 2021).

Another issue which hindered the smooth implementation of its ecommerce strategy is technological failure impacting the retailer’s capability. It is widely known that advanced technology application is the primary requisite of digital marketing and management of different systems. For example, for ensuring secure storing of information in a centralized database, the utilization of technology is employed by the customer management responsibility programs that are based on cloud technology. Any business having a deficient technology infrastructure for ecommerce could be leading towards a large scale failure of the business. Tesco has faced repeated failures in delivering the online customers order on time which has derived mainly from the root cause of its technological failure. This has worked for the competitors who already had a smooth and stable online platform. Regular delivery delays has made many of the new and existing customers of Tesco in not trusting its ecommerce platform, which as a consequence has lead to ample revenue generation loss (Saghiri, et al., 2017).

The approache that would have been recommended as a CEO leading Tesco for addressing the strategic issue would be tying the online and in-store experiences. Digital technology can be used for adding value to the in-store shopping experience, and for bridging the gap amidst the channels. Efforts would be made in ensuring that a consistent brand experience is witnessed by the customers heedless of the channel opted by them for buying. Coupons that could be used online and offline would be offered for creating a connection besides touch screens installed in the stores enabling customers in viewing the extended products range available in Tesco’s ecommerce portal (Güsken, et al., 2019).

2. Based on the resource-based view of strategy, discuss what you consider to be the dynamic capabilities needed by the organisation for sustainable competitive advantage that can help to exploit current markets and explore future opportunities. 

Businesses are becoming increasingly competitive today with technologies advancement and ever-growing innovations as work culture. It has been observed that the ultimate goal of every organization irrespective of its size currently is remaining relevant in the wake of rapidly changing market trends by getting value propositions created for their customers. The resource-based view is a strategy a company frames for developing comprehension about their business elements for a longer-term competitive advantage. For exploiting the current markets and explore future opportunities, the dynamic capabilities needed by Tesco for sustainable competitive advantage is their workforce, which is the success driver of their business. For leveraging their skills to the maximal extent, it is important for the managers in developing an extensive resource-based view strategy. This will be allowing them in seamlessly allocating of this resource to the correct job, the positive impact of which would eventually get reflected in the form of enhanced project performance and deliveries of customers’ online orders.  A resource-based view strategy overall could change the game of Tesco’s sustainability in a competitive retailing marketplace (Alexy, et al., 2018).

Taking an extension from the resource-based view, one can define dynamic capabilities as the companies’ processes using resources for creating and even creating market change. It has been observed that dynamic capabilities as such are strategic and organisational routines helping the any company in attaining ‘new resource configurations as markets are emerging, colliding, splitting, evolving, and dying’. Furthermore, the capacity of a company is represented by a dynamic capability, enabling them into creating, modifying or getting their resource base extended, or how they are ‘making a living’ in differing forms. Dynamic capabilities have been conceptualised by the researchers as the capabilities in reconfiguring or revising the routines and resources of a company besides ways perceived suitable by the key decision-makers (Alonso and Kok, 2018).

The aim of resource-based view strategy is gaining a sustainable competitive advantage which Tesco can achieve via comprehensive resource analysis, resource allocation and cross-functional utilization of resources. Only by unleashing the true potential of its employees can the retailer be innovating better and standing beyond in the retailing sector. A significant contribution can be made by the RBV strategy in attaining this by gaining visibility for productive resource allocation. Extensive view of all the resource pools helps in facilitating the managers in gaining understanding into resource expertise and competencies further empowering them in allocating resources according to the project’s scope and demand. Data-driven decisions can be made through real-time information, leveraging employees to the maximal potential and maximize profit-makings eventually (Assensoh-Kodua, 2019).  In the situations of increased market volatility, skills of both their primary and secondary workforce can be used by resource managers for executing crucial multi-faceted projects with intent to maintain competitive advantage. This is because extensive and ad hoc project demands are propelled by market volatility. Often is seen as the deciding factor of the growth and success of Tesco. It has been observed that resource-based view strategy on a centralized platform will be enabling fulfilment of demand for sustaining the retailer’s competitive advantage.

3. Critically evaluate the organisation’s business model based on its value creation, value configuration and value capture strategies. How is this supported by the culture of the organisation? Discuss, applying the cultural web and/or any other culture frameworks. 

Whether one can be capable of defining it or not, existence of culture is known by all. Culture is a fragile thing hanging in the air and influencing how work is getting done, affecting success or failure of projects critically, saying who is fitting and who is not apart from determining a company’s mood as a whole. Often during the periods of organizational change culture is seen in becoming the centre of attention – for example, when organizations are merging and their cultures clashes, or when growth and other strategic changes makes the prevailing culture unsuitable and acting as a hindrance instead of supporting the development. Cultural issues in environments more static might lead to reduce employee morale, absenteeism or higher turnover eventually negatively impacting the productivity (Clauss, et al., 2019).

One can see an immense affect of culture on the work environment and outcome of a company, for all its elusiveness. The cultural web approach has been developed by Gerry Johnson and Kevan Scholes for playing a primary role to formulate strategy or planning change. By making use of this approach Tesco has exposed the cultural presumptions and practices besides setting for working and align the organizational components with each other, and that with its strategy. The business model of Tesco is based around three pillars namely Customers, Product and Channels. This has benefitted them in working in much simple and clear way now. Little things for making a bigger difference are always focused by the retailer. Priority is always given to the customers and is being placed at the centre of anything that is done for delivering the company’s purpose – to serve a little better each day (Cooper, et al., 2019).

Tesco’s business model contributes significantly in comprehending the choices of their customers; identify customer segments; increase competitive alternatives (for instance, more products offerings); avert price wars; improve the quality of customer services; focus on things relevant to customers; and improve brand’s success. Thus, it can be said that the alignment of value creation, value configuration and value capture strategies can be seen in the business model of the retailer (Tesco, 2023).

Applying the cultural web it can be claimed that Tesco’s team-oriented culture lends support to the retailer’s business model by comprehending their people i.e. customers, colleagues, communities through its six elements stories (previous events and people talked about inside and outside Tesco), rituals and routines (people’s regular behaviour and actions signalling admissible behaviour), symbols (company’s visual representations), organizational structure (both organization chart defined structure and lines of power and influence that are not written), control systems (how the company is controlled e.g. financial and quality systems, rewards), power structures (company’s pockets of real power). Things mattering to people and putting genuine efforts for making them better is at the company’s heart. They are heard and interacted with the help of tools at the retailer’s disposal, right from social media to Clubcard data, which is then acted by bringing a change and innovation for getting their needs met. Hence, value creation, value configuration and value capture strategies base the business model (Cooper, et al., 2019).

4. a) Discuss the key drivers of change from PESTEL factors that have an impact on the organisation, highlighting the main opportunities and threats. 

PESTLE stands for Political, Economic, Sociological, Technological, Legal, and Environmental. From this analysis the factors acting as the key drivers of change having an impact on Tesco are:

Political – Tesco operates in a global environment, with its performance influenced highly by the political and legislative conditions of these countries, which includes taxation rates, legislation (current and impending), political instability, unemployment rate, and economical conditions. For instance, the retailer’s business can get affected from increased import duties as some of its inventories are imported from China and East Asia. A risk factor for investors has been greatly created by the European Union referendum (Brexit ), which made the British economy pass through tough times. Global lockdown in the wake of Covid-19 has emerged as the main threat, which has caused fall in its volume sales (Pan, et al., 2019).

Technological – various new opportunities has been opened by the technology advancement for Tesco. The development and introduction of online shopping with home delivery option are the two most significant opportunities that have driven change in the company. Comfort and convenience to customers have been provided with the help of self-service checkouts, which has become possible by incorporating technological change. In turn, this change has contributed in reducing the costs of labour. Moreover, heavy investment has been made by the retailer in projects related to energy efficiency for the achievement of their long-term goal to lessen its environmental footprint. In addition to this, the pressure on supermarket industry derived mainly from the coronavirus pandemic has also served as a main opportunity for Tesco into believing that direct supply chains and home deliveries are the future. The retailer by embracing the new opportunities brought by technology advancement as an opportunity with the adoption of retrial technologies has benefitted in regaining the trust of their customers worldwide (Anastasiadou, et al., 2020).

b) Critically assess how the organisation is dealing with its competitive environment, applying some relevant concepts, theories, and models e.g., from game theory, value net concepts and/or any relevant blue ocean concepts and models. 

By applying the blue ocean strategy, how Tesco is dealing with its competitive environment can be understood in detail. This strategy is seeking for bringing differentiation to companies and brands like that of the chosen retailer for creating awareness and presence in a newer marketplace besides getting demand amidst customers created. It has been observed that the principal focus of the blue ocean concept is on to create demand in the market spaces that are not contested by other industry players. By getting this done, competition is made unassociated and irrelevant. Tesco with the help of blue ocean strategy has successfully reconstructed the market boundaries along with the industry structure via its strategies and actions. The structure of an industry under the blue ocean model and frame are presumed as adaptable, and not fixed (Rahman and Choudhury, 2019).

The blue ocean concept has enabled the multinational retailer in exploring newer marketplaces that not have been competitive or are used in an active way by the current players of the prevailing business environment. It has been observed that by getting this done Tesco has been capable of creating newer demand instead of battling over and encroaching the current competitive spaces across their globally spread market. In addition to this, it has benefitted the company into experiencing quick business growth other than enjoying rise in profitability. When the blue ocean strategy is adopted by Tesco for dealing with its competitive environment, the rules of the game are changed by it. This is done with intent to eliminate the competition – render them not so important and relevant factors of the environment (Rebbouh, 2019).

It has been observed from various literature reviews that Tesco over the last 10 years has made business expansions from its conventional stores for creating blue oceans in the form of ecommerce ventures. For instance, buying apps on iPhone, iPad, and Android are today offered by the company. This has allowed their customers in shopping for daily groceries and other merchandises from their online stores from anywhere and anytime. By doing this it has successfully attained Tesco’s mission to promote good customer experience via ease and convenience in purchasing. Moreover, information with regard to current product features such as sizes, benefits and prices is also provided by the retailer via the online apps. Therefore, it can be seen that the digital technology has enabled consumers in making informed buying choices from Tesco.  

The company, with the presence of ever growing number of online users has tapped immense potential and is ready for responding to its competitors through innovative services. By developing new forms of digital media, an online store called Tesco.com has been launched by Tesco for offering their customers with the choices of buying products online (both food items and general merchandise). Even though online shopping is also provided by its competitors, the primary focus of the retailer is on unbeatable customer experiences and meeting their needs. Customised services are offered for effectively meeting the preferences and lifestyles of the customers (Rebbouh, 2019).

5. a) Discuss at least two main strategies pursued and implemented by the organisation for growth and competitive advantage. 

Tesco’s although has a large-scale operations, the UK continues in being the biggest market of the multinational retailer. The company within the dynamic business environment has been managing successfully in staying one step before their competitors. They have been doing this over the years by focusing on the people – customers, employees and community. In the fast changing global environment of today however, anything can be happening anytime. At present organizations are in need of continuously innovating and reinventing themselves for maintaining their edge over the competition. Both opportunities and threats are provided by the macro environment Tesco is operating into. Hence, the retailer is in need of right strategic direction for witnessing sustainable growth and development that will be addressing these macro environmental challenges in an effective way. 

The McKinsey 7S Model is a frame for organization’s effectiveness postulating the 7 internal factors needed in being aligned and reinforced for it to achieve success. The seven factors specified by this model are categorized into hard and soft components. It is easy to identity and influences the hard elements by the company, which includes strategy, structure and systems. Whilst the soft elements comprises of shared values, skills, style and staff. The two main strategies pursued and implemented by Tesco for growth and competitive advantage are leveraging on new technology and delighting their customers. The company uses new technology such as live chat for providing direct and immediate involvement to their consumers. Getting such technology to its digital repertoire has given a good reason to the buyer for shopping with the brand over their competitors. Moreover, it keeps delighting the customers through real time marketing drives. Tesco, as part of their social media presence aims for responding to their customers routinely and quickly, within 1 hour usually (Bismark, et al., 2018).

For the strategic implementation of these strategies the changes and adjustment that were made by Tesco can be understood by applying McKinsey 7-S. The retailer has build a strategy for balancing amidst its short run cost savings and protect their core competitive advantage. The existing structure and its supply chain management were questioned during the Covid-19 pandemic. For becoming a stronger company and preparing resilient for future disruptions having same immensity, the retailer ensures its income is focusing on getting their suppliers diversified geologically, lessen dependency on China and Eastern Asia. For stable income Tesco has also placed focus on systems by improving internal processes like risk management, web app optimization, Customer Relationship Management etc. Moreover, staffs have been strengthened by building a system for remote onboarding to hire people to work from remote locations. Whilst for skills improvement a structured training and development program for employees who work from remote locations have been built. For handling the employees working from remote locations, changes in the leadership styles have been made by encouraging the managers in pursuing a collaborative leadership. Based on its values, vision and mission, a productive business model has been cultivated by Tesco. Not much in the shared values has been made (Bismark, et al., 2018).

b) Justify what you consider to be the most successful strategy of the organisation using the SAFe criteria 

Often it can be a challenge for selecting the correct strategy when a business strategy is framed by a company, not minding the difficulties in its actual implementation and assess how useful and effective it is. So how a company chooses? The very initial thing that is being done by the company is deciding on criteria for evaluating the choices. The Suitability, Acceptability and Feasibility of every choice are considered as a beneficial way. Using the SAF criteria, the most successful strategy of the company that can be considered is leveraging on new technology. Possibly suitability is the factor most crucial in this strategy model. This is mainly because the suitability of a choice is key to if the strategy would be doing what is intended by the company or not. For assessing the suitability of the strategy to leverage on new technology, Tesco has asked questions like ‘If the company’s strengths are used effectively by this strategy?’; ‘Is the difficulties determined during the analysis overcome by the strategy?’ and, ‘Is the strategy aligning with the objectives Tesco intends of attaining?’ (Lucidity, 2023).

To measure the return, risk and stakeholders reactions about the strategy is the acceptability aspect of this criterion. Returns of leveraging on new technology can be measured on the benefits that have been received by all the key stakeholders of Tesco, both in terms of profitability and non-financial. With the help of methods like cost-benefit and profitability analysis, the calculations of the returns can been performed by the company. In risk context, likelihood of the failure of the strategy, any fiscal loss, impact on the brand must be also considered. The selected strategy’s making or breaking is the feasibility part. Tesco has the resources, ability of getting the strategy implemented – the key behind making it successful. 

References

Alexy, O., West, J., Klapper, H. and Reitzig, M., 2018. Surrendering control to gain advantage: Reconciling openness and the resource‐based view of the firm. Strategic Management Journal, 39(6), pp.1704-1727.

Alonso, A.D. and Kok, S., 2018. A resource-based view and dynamic capabilities approach in the context of a region’s international attractiveness: The recent case of Western Australia. Local Economy, 33(3), pp.307-328.

Anastasiadou, E., Anestis, M.C., Karantza, I. and Vlachakis, S., 2020. The coronavirus’ effects on consumer behavior and supermarket activities: insights from Greece and Sweden. International Journal of Sociology and Social Policy, 40(9/10), pp.893-907.

Assensoh-Kodua, A., 2019. The resource-based view: a tool of key competency for competitive advantage. Problems and Perspectives in Management, 17(3), p.143.

Bismark, O., Kofi, O.A., Frank, A.G. and Eric, H., 2018. Utilizing Mckinsey 7s model, SWOT analysis, PESTLE and Balance Scorecard to foster efficient implementation of organizational strategy. Evidence from the community hospital group-Ghana Limited. International Journal of Research in Business, Economics and Management, 2(3), pp.94-113.

Clauss, T., Abebe, M., Tangpong, C. and Hock, M., 2019. Strategic agility, business model innovation, and firm performance: an empirical investigation. IEEE transactions on engineering management, 68(3), pp.767-784.

Cooper, M.D., Collins, M., Bernard, R., Schwann, S. and Knox, R.J., 2019. Criterion-related validity of the cultural web when assessing safety culture. Safety science, 111, pp.49-66.

Güsken, S.R., Janssen, D. and Hees, F., 2019. Online Grocery Platforms–Understanding Consumer Acceptance. In ISPIM Conference Proceedings (pp. 1-17). The International Society for Professional Innovation Management (ISPIM).

Kar, S.K., Bansal, R. and Mishra, S., 2021. Tesco: Entry and Expansion Strategy in India. Emerging Economies Cases Journal, 3(2), pp.65-76.

Lucidity. 2023. Guide to the SFA Matrix. (Online). Available at: Accessed on 10/1/2023

Pan, W., Chen, L. and Zhan, W., 2019. PESTEL analysis of construction productivity enhancement strategies: A case study of three economies. Journal of Management in Engineering, 35(1), p.05018013.

Rahman, M.H. and Choudhury, S., 2019. The influence of blue ocean strategy on organizational performance. Global Disclosure of Economics and Business, 8(2), pp.91-104.

Rebbouh, M., 2019. Identifying a Comprehensive Theoretical Picture of Blue Ocean Strategy. Management & Economics Research Journal, 1(3), pp.38-53.

Saghiri, S., Wilding, R., Mena, C. and Bourlakis, M., 2017. Toward a three-dimensional framework for omni-channel. Journal of Business Research, 77, pp.53-67.