STRATEGIC MANAGEMENT

Strategic Management

Strategic Management

Introduction

The analysis of main initiatives of an organization's upper management with authorization from the owner of the company for maximizing its performance and production is known as strategic management. The examination of external environment is vital in strategic decision making, because it helps in devising strategies needs to be adopted. Strategic management involve the identification of organizational objective, vision and mission while developing plans and policies in relation to the programs or project designed for the achievement of objectives (Balchin,1994). All these factors help in the determination what resources need to be allocated, where and when so that programs or projects can be executed timely and effectively (Clarke, Bennison and Guy, 1994). In relation to the strategic management, the paper is going to analyze Tesco Plc in order to conduct a critical analysis of the ways in which the company has developed its strategy in recent years.

Porter's five forces model and Porter's generic strategies

These are the two methods the study will adopt in order to determine the strategy development process at Tesco Plc. Porter five forces helps in the examination of external factors affecting the organization while Porter generic strategies helps in understanding the approach embraced by organization for several factors. Using in combination, these two strategies will help in the development of understanding how Tesco Plc develops its strategies and is it adequate in accordance with the present market situation (Tesco Plc, 2012).

Porter Five Force Analysis

Porter five force models is often considered complex because it recognizes the patterns of development, nurturing, declining and maturing of different organizations, while assessing their competitiveness as per the market in which they operate. However, there is a fact that competitions among business can be understood from the basic economic structure of the market. The Porter five force models analyze (Porter, 1980):

The threat of new entrant into the industry

The threat of substitutes of the services or product by competitors

The bargaining power of buyers of industry's products or services

The bargaining power of suppliers into the industry

The extent of rivalry between competitors

Porter's Five Force Framework Application in Tesco

For the examination of the external factors affecting Tesco Plc, Porter five force model is being used by the company. In connection to the threat of new entrants in UK industry, Tesco has created coordination with its rivals of UK industry, i.e. Sainsbury, ASDA and other retail stores, has put up efforts to minimize the threats of new entry by creating more barriers. One such example in this regard is making close liaison with the suppliers providing them more benefits, so that new entrants will not find it easy to find a supplier that offers price as competitive as Tesco, thus new entrants will not be able to offer discounts comparable to Tesco and other giants of UK supermarket (Humby, Hunt and Phillips, 2008). Tesco make purchase in bulk with its suppliers leading to economies of scale, and ultimately new entrants will either have to pour in more money which in turn ...