Impacts of Inter-Organizational Collaboration

Questions: 1. Describe the scope of your report (Strategic Fit Analysis of Tesco UK). Give a very brief introduction to the company (outline of history, current market position and strategy. 2. Task A Market Environment Analysis (1000 words): Using appropriate analytical tools, evaluate conditions in the market environment that Tesco occupies. The market environment comprises a combination of the industry itself (the micro environment) and the wider macro environment in which Tesco operates. You should highlight what you consider to be the market environments critical success factors. 3. Task B Resource and Capability Analysis (1000 words): Using appropriate analytical tools, evaluate the internal environment of Tesco, highlighting its Threshold and unique resources, and its core capabilities/competencies. 4. Task C Strategic Fit Analysis (700 words): Using the analysis completed in Tasks A and B, evaluate the strategic fit of Tesco, highlighting how Tescos strengths and weaknesses fit the opportunities and threats in its market environment. ? Answers: Introduction The report shall be critically analyzing the strategic fit of the retailer from UK, the Tesco Plc. Tesco is the largest multi retail brand of UK. The business started in 1919 while the first store was acquired in 1929 at Barnet. Since then the business have grown in volume and its operation complexities have increased too. Across the Globe there are nearly 6750 plus stores that the firm runs and have a manpower of 50, 000 as on March 2014. Today the volume of business has brought 63.5 billion Pounds revenue in 2014 alone. However this volume is comparatively lower to its pre 2011 period foot-fall. This has made the existence tough and competition fierce among the various multi-retail brands of the UK (Tesco plc, 2015). Factors like dis-satisfied customers, little engagement with stakeholders to understand and reciprocate, maintenance of cost leadership strategies are few those have been those are the reasons for the steep decline in volume of Tescos market share while other factors l ike global economic recession, growing consumer awareness and product literacy via Internet are few to name that have hugely contributed in the decline of Tescos market share reduction. The TESCO Market Share Pie Diagram (Source: TheGrocer.co.uk, 2014) The report would venture into the strategies that they are adopting with changes that the business have seen since last five years and devise a strategic fit for the same in the UK market for the coming days. Strategic fit can be explained as the strategy to align organizational and market to keep up the market share it had (Nearly 30%) and be the largest retailer well ahead of its competitors. However, in an oligopolistic market the consumers have the choice to buy from any retailer they wand where the switching cost is low. Tesco competes with Sainsbury, Asda, Adli and Lidl etc. Interestingly the latter brand has increased its market share by 9 % since 2012 with effective use of economy of scale and discount pricing in the UK supermarket retail segment. Furthermore the product offerings of the Tescos shelves would also be taken into account along with consumers perspectives to analyze the way forward. Nevertheless, the market share is still the largest in UK, but the threat comes f rom the growing competition as well as the shift in the e-commerce age retail tendencies among consumers (TheGrocer.co.uk, 2014). Task A: Market Environment Analysis A business operates in a market that is prone to various causes which have direct or indirect effect on the business. These macro-environmental factors of business are dependent on various factors. Likewise the businesses internal operational, interpersonal or mechanical issues would be their micro environments which again have a direct effect on the business and its output. Thus a careful strategizing that is suitable for its viability in both micro and macro environment for sustenance and growth. Stewart (1999) observes, the analysis is a strategic tool for all managers to decide upon their future plans to counter those barriers. The PESTLE study is an important tool in such a measurement of external environment that have direct effect on market conditions and thus the business. PESTEL Analysis: The Macro View Political: The bran of Tesco is also present in other nations out of UK where the up-heal in political ideologies gives a big barrier in those markets. The Geo-Political aspect of the business and its expanse would have an impact on the performance. Again, tax rates, changes in legislation, economic crisis are few political factors along with ease of entry, support from Authorities, stability of the government etc are few Political decision or changes that changes the firms performance. Tesco in the UK market is a stable business in terms of Political stability. Being a democratic nation the long term strategies in keeping in mind the domestic dispositions the strategies can be well forecasted for future strategies of growth of market. Economic: The condition of economy that projects the income of consumer for a particular market is the economic condition of the market and thus the viability of a product in such a market. The future directions, stability are few determinants of the business, those are very much attached with the direction that the business has to progress for its Goal achievements. The market share of nearly 30% of the UK market and is heavily dependent on UK market alone to a large extend. The change of tax rules, cost increase, inflation, accessibility of finance from banking in the market, buying power of consumers are few of those factors that effects the business. It is imperative to understand that the loyalty for a retail brand is much of quality, quantity price dependent. Therefore, the UK market where Tesco operates needs to be taken into account for further business development in UK, while foreign exchange rates for international operations may have a direct impact. The reaction of Tesco towards such external economic activity has made it to focus upon the product value aspect for the consumers. Thus the brand has put its efforts to attract a larger mass by going for Value advertising over priced luxuries items where the motive is to develop campaigns those are economical by using Social media to attract consumers by propagating the value of the goods to people that boosts sales (BBC News, 2015). Social: The social effects on the product value and perception. The culture, beliefs, likes etc of a market shows its social factor, which the business needs to keep in mind for that particular market. If the product or service is not socially acceptable the business is bound to fail in such market. Therefore the changing social beliefs, associations and thus the social outlook for the consumers for the market, targeted. The changing social stance on global warming, healthy food, lesser cholesterol in food, fresh and reliability from products as well as value added services and effective is the key in such social trend management. The organic food, training for people development, consumer- employee scopes, feedback collection etc are being made part of their operations in Tesco. Further in market where the business has to expand it needs to keep the local choices so as to see that the venture adopts all the social aspect in its promotions where the consumers have all the choice to t ake one of those a product of choice. Thus Tesco has to incorporate various items for the multitude of cultural that the brand wishes to attract with product diversification, advisements, culture friendly products that makes the brand go for more diversification, packaging, pricing, flavor etc to attract the larger audience in their future strategies. Technological: The use of technology have changed the way the business is conducted nowadays like the use of internet, e-commerce, robotics, better comfort etc have been well adopted by the retail business. The use of integration have made product tagging, stock maintenance, supply chain, sales integration complete for a more comprehensive managerial control. Again, e-commerce channels are posing challenges too as the producer can reach consumers without intervention of the retailers. Thus the new operation processes are being developed where e-commerce, capacity management, control, purchase, sales are all integrated together. Newer designs via Architecture have been a great addition in consumers shopping experience enhancement. Self help counters too have the same advantage that has helped in reducing manpower cost. The lowering of carbon footprint in the long term as a goal had been a fruitful venture for the business with the aid of technology that too have reduced the cost as we ll as helped the business increase its social appeal (Sundaraman, 2005). Tesco too have adopted them in time to be at par with other competitors. Environmental: The increasing carbon footprint of business is a social concern as well a concern for the business so the objective is to incorporate those processes those yield least labor cost. Thus the decision of Tesco is to reduce its carbon footprint by 50% within 2020. Legal: The legal aspect is the legislative changes in the government. For an example the Food Retailing Commission of UK has given a model code of practice for all retailers so that it helps both consumers about getting a information like change in prices in advance as well as facilitate the business to take necessary steps to implement such changes. The quality standards as well as pricing and value for product are been segregated to ensure that people gets the best of the value for money they pay. The micro and macro business environment of TESCO has been elaborated to access the spaces that business needs to work upon. Task B: Resource and Capacity analysis The resources of a business can be further sub divided into its experience of manpower, financial strength, brand value, recognition, expanse like assets that it uses to be viable and sustainable in a particular market. Nevertheless, the resources are planned with a capacity projection, generally in the planning phase of business. This capacity is the quantum of quality output that the business looks forth to achieve with the maximum utilization of its resources. The capacity is been elaborated as the maximum output that the business can generate with its resources (Loo and Loewen, 2003). The measure of capacity is generally denoted in numerical and units. Packalen (2009) argues that the capacity is dependent upon the efficiency of manpower and machines too where the maintenance of standards and operational excellence enhance the capacity. Thus the capacity management gives the managers a framework of time based output where manpower planning, raw materials, process efficiency are ta ken into account prior to production to achieve the targeted capacity. The capacity and resource planning is thus an integral part of business and the strategies of sales and distribution, raw material planning, shifts are being developed keeping the frame work and its objectivities in mind. However, Hughes (1995) argues that the capacity needs to keep the seasonal demands in mind and prepare likewise. Tesco being a retailer depends upon various sources for its capacity like suppliers, distributors, supply-chain management, sales tracking etc. The business have used the personalized software for its operations developed specifically to integrate all the business departments with each other to have a control and integration among various departments as a part of the operational excellence that they aim to achieve (Wong and Ma, 2013). Hence it is imperative for the business to identify the consumers needs and future demands to effectively measure its competencies and lacunas to further strengthen the strengths while reducing the weaknesses and mitigate the threats, if any. Nevertheless, the process is a managerial exercise where all needs to participate keeping the customer focus. The aspirations of consumers, competitors strategies, trends and the pace of change are few elements those the business takes upon to be competent and stable in a market. Furthermore, Elsom (1999) suggests that the gaps are found in such an exercise which is further mitigated by the management with training and knowledge development and product development, better price, better service delivery to consumers. Since the switching cost is low so the frequency of consumer visiting repeatedly is dependent upon the satisfaction and value that they get from Tesco while shopping. Tesco have employee strength of 500,000 with its 6700 plus stores across the globe. Again, the products sold are of diverse range that caters various income groups thus the prediction is important so is the future demands to build the needed capacity for future deliveries. They have launched Club-cards and discount offers to pull consumers while have also increased consumer focus for feedbacks to do things that generates the best of attraction to build consumer loyalty. The idea of pilling and selling cheap to have economy of scale is now followed by all retailers which the Tesco pioneered (Ketil-Arnulf, 2012). Further the environment is suitably developed to support the operational objectives. Therefore, what to buy, when to buy, at what price and quantity of goods to buy, is forecasted in the process of capacity management. Thus the resource to cater the vast chain, best price identification, quality controls, packaging are all considered in the capacity management with adequate st affing, Standard operating processes, shelf planning, goods storage and display are all part of the resource planning where the base of such calculations are based upon dependent on demand forecast. Product innovation, delivery and distribution with a good pricing strategy with quality guarantee would be the way forward for Tesco to develop its capacity management policies and thus future requirements to cater the consumers and generate value to their purchase experience. The forte for such activity is there in Tesco due to its presence for such a long period. In the words of the management the Clubcard has been introduced to have a steady flow of consumers where the mutual benefits are that consumers gets the best price while the business gets an idea of the inventory that they need to store. The changing business channels like web media, business to consumer direct contact is a concept that the business needs to integrate with. The changing management shall be consumer feedback dependent. Task C: Strategic Fit Analysis The micro environment would need a SWOT analysis that would let the manager identify their strengths and weaknesses and also to identify future opportunities and threats. The vulnerability in the ever changing world, integration of new, molding is the key where SWOT plays a vital role. The integration needs a mutually agreed development where the leaders of change shall defreeze, change and thus freeze the standards of operations. Better services, better experience, and generation of value thus earn loyalty, the singular focus for the brand to keep and further increase its UK market share. Strengths: The strength of Tesco is its expanse all over the nation and its strong brand knowledge among fellow retailers. The economy of scale that the brand can generate is thus many times more than their competitors. Further the huge market share that it enjoys is far larger than its competitors. The economy of scale that the huge retail chain generates is its other strength and likewise its financial performance over others. Weaknesses: The year 2010 on the business has seen the recall of many of its products so that has harmed the brand image. Further the business brands its own products giving the choices to select limited among the consumers. Nevertheless, the diversified or the expanse of the business carries another threat as the control issues due to large distribution have posed challenges those Tesco needs to handle well. The decreasing number of footfall along with UK concentrated strength maybe considered its weaknesses. SWOT Matrix for Tesco in UK market Source: Cityam.com (2012) Opportunities: The focus on Global expansion the brand has launched its e-commerce medium. These have reduced the overall cost resulting in better margins. Again, entering new markets with local joint ventures is what the brand is opting for in the longer run. Threats: The increasing oligopoly and competitiveness of the market have made the threats more strong. The global recession has reduced the disposable income of consumers reducing the buying capacity of the consumers. So the retail as a sector has been in deep muddy waters for some time that is estimated 2.4% of UK economy contraction in 2009 alone. The product recall may be a threat to the image which needs supervision to see such loss of face do not happen. These threats are to be kept in mind for futuristic strategy formulation. Tactical logistics supply chain with innovation and employee development is what that the business needs to manage. A strong foothold in the home market would thus eventually act as an anchor to establish the business as Global. Training needs would be identified; leaders would be developed innovation expression space, using social media as employee voice (Barnes, 2011). The core of Tescos competence lays economy of scales and in its expanse in UK. However, the local players along with other competitors are going pan UK in expanse. Therefore, the people are to be developed along with integrating and innovation. Cost competence has to be the focus as the margin way has kept least space for the business to be idle in terms of a strict monitoring and execution. The training and motivational strategy that keeps the employees be the trust for consumers choices. Push sales, pull sales discounts, below the line benefits on other products for being card holders and loyal. Thus remuneration, work life balance, praise and rewards along with continuous learning team and recommended. The weakness of consumer employee communication gaps, operation standards and policies needs to be very clear to the people working there. The consumer focus and satisfaction is the future while the business would try to get there attraction by customizing and thus retaining them. T he market share maintenance along with increment in volume is the Strategic approach that Tesco has started and to support it all components are been equipped with job related data. Empowering employees, more flexible supervision till it served the business need. Employee voice along with grievance management, career path clarity, security of job, benefits for family are few components that an employee seeks in their employment (AbouAssi and Jo, 2014). Conclusions The business of Tesco has made a strong foothold prior to its European expansion. This has helped the business to utilize its experience in economy of scale where the competition of price becomes major. However, the changing inter-phase of retail transition have made the brand rethink about its strategies from resource point of view. The innovation and e-commerce induction in business are well integrated with training and feedback wise reforms. The threats are being converted to opportunity where the consumer to business relationships are more prominent and close than ever before. Further social media use for promo as well as a platform for employee voice platform is suitably used. However, the threats from local and other multi brand retail is obvious to occur in open economy where the maximum utilization of resources as well as cost control and inventory management have brought in pioneering results. The employee consumer relation is trust based which again is a tool for priority s etting for business. The threats in international market can be mitigated if only Tesco builds its domestic stronghold, strategies and execution for the best of the brand, in the long run, innovation are needed. List of references AbouAssi, K. and Jo, S. (2014). Impacts of Inter-Organizational Collaboration on Nonprofit Human Resource Capacity. Academy of Management Proceedings, 2014(1), pp.17074-17074. Anderson Strachan, P. (1996). 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