Evaluating Schools of Thought on Strategic Management Essay Example

learning school, power school, cultural school, and environmental school. All these schools acknowledge the relevance of entrepreneurship. The synthesis group includes the constellation school, which integrates aspects from all the other schools in terms of constellations or transformations. This approach recognizes the complexity of strategy. In this assignment, we will analyze and apply the planning school, culture school, and positioning school to Tesco in order to demonstrate how these models work and how they help an organization achieve its goals and objectives in the global market.

The Planning School is a member of the normative school and is primarily concerned with how strategies should be articulated rather than how they should be implemented.

This model focuses on budgeting, programming, and scheduling to address various factors. In order for a business to thrive and expand, it is essential to have plans for these aspects. This model can be implemented by different companies like Tesco to assist them in becoming a global organization.

Discussion:

Jack Cohen founded Tesco in 1924 and since then, it has emerged as one of the largest retailers globally. The key to their current success lies in having an efficient plan that takes into account economic forecasts, organizational objectives, market conditions, and more.

The response to these inquiries is the planning school. Moreover, the planning school reviews the Ansoff Model that Tesco utilized for analyzing their market and products. Tesco aims to become globalized, which is why they have opened stores in many countries around the world to reach new markets. For instance, they have opened shops in Japan, where people have a preference for buying fresh food daily. Consequently, the existing hypermarket formats do not meet the

needs of local buyers.

Tesco has made a significant investment in product development in accordance with Ansoff's marketing strategies. Their goals include increasing customer numbers and sales. Tesco also utilizes the SWOT model, which evaluates both internal strengths and weaknesses, as well as external opportunities and threats (Marko Makipaa, 2004). Through the use of the SWOT model, Tesco identifies strengths such as their branch name and national store network that enable them to adapt and outperform their competitors. It also helps them recognize weaknesses like a lack of global scale or the possibility of acquisition so they can address these issues in the near future.

They acknowledged the external opportunities for Tesco extending into the overseas markets in Eastern Europe and Asia, as well as the potential for growth in their financial services. This presents a valuable opportunity to focus on and expand their presence in the global market. Additionally, there are threats to Tesco's success, such as the entry of competitors like Walmart and the emergence of local competitor Sainsbury. By employing the planning school approach, which incorporates Ansoff Model and SWOT analysis, an organization can gain knowledge of relevant theories, develop strategies for new products and markets, manage their budgeting and scheduling, and select the most suitable methods to achieve their goals. This model also prioritizes strategies based on hierarchy, with long-term strategies taking precedence over average and short-term plans.

Limitation

Despite its benefits, this model may encounter some challenges as it may involve issues that can impact the administration.

Firstly, contrivers may focus too much on developing new strategic concepts, which can divert attention from the original

intent and lead to false beliefs. This model poses a risk as individuals implementing these concepts may decide to compete against rival opponents and introduce new strategies, which can be very dangerous (Sadler P, 2003). Secondly, planning based on future projections and current economic trends is challenging and risky. Making decisions and implementing them based on assumptions and uncertainties can deviate from the organization's original strategy and overlook the organization's strategic needs.

The Culture school

Definition
The cultural school is a subset of descriptive schools. It views strategy formation as a collective process.

"The purpose of this school's attack is to impact various groups and subdivisions within the company. Scheme formulation is seen as a fundamentally corporate and collective process. The formulated scheme is a reflection of the administration's corporate culture. This model emphasizes the important role that social processes, opinions, and values play in decision making and strategy formulation. Additionally, it not only explains resistance to strategic change but also helps address core values in organizations or regions.

Discussion

The culture of Tesco is an integral part of the company, greatly concerned with the way people interact within the organization. A lack of comfortable interaction among individuals could negatively affect decision making and lead to poor decisions. Tesco has a positive culture."

Tesco is known for its customer-centric culture, which is evident in their commitment to improving customer service, conducting market research, hiring the right employees, and providing training. The company is currently focused on upgrading their e-commerce technology. Furthermore, they have a positive work environment that encourages effective communication among staff members. They embrace change as an opportunity rather than avoiding it. Overall, Tesco's

culture is seen as dynamic.

This text examines the perpetual pursuit of businesses to improve operations and expand their customer base. Nonetheless, resistance to change is prevalent due to a firm commitment to existing beliefs and assumptions. This resistance stems from the ambiguity of the current model, which poses difficulties in justifying the need for change.

As a result, every administration has also focused on overcoming the strategy limitations of organizational culture.

The Positioning School

Definition

The Positioning school allows the administration to define its strategic position within the industry. In other words, it involves positioning oneself in a competitive strategy. This model views strategy development as an analytical process.

Porter (1980) was the founder of the aligning school, focusing on the impact of industries on strategies. The positioning approach aims to differentiate an organization from others in the same field within the economic market. (Steward C, EL at, 2005)

Discussion

This model has been utilized by many companies like Tesco to establish their position in the market and stand out from competitors, ultimately achieving higher profits. Tesco implements Porter's five force analysis to understand the competitive landscape. Porter's Five Forces Model suggests that businesses are influenced by supplier power, threat of substitutes, customer power, barriers to entry, and competition.

This theoretical framework also suggests that businesses need to be conscious of the industry conditions in which they operate. TESCO, along with other companies such as Sainsbury, faces intense competition from their main competitor ASDA. ASDA is owned by WalMart, the dominant grocery chain in the United States, renowned for its affordable products.

One reason why people prefer going to their stores for regular shopping needs is that when they expanded in the United Kingdom,

they brought along a cost-effective strategy. This led to the same level of success as they have in the United States. However, last year TESCO was able to surpass ASDA. The way Tesco overcame ASDA using Porter's strategy is explained as follows: According to Porter (1985), a business position is determined by its strengths, which can be classified into two categories - cost advantage and differentiation.

When these strengths are utilized, it results in three generic strategies: focus, differentiation, and cost leadership. Among these strategies, cost leadership is crucial for TESCO to gain a competitive advantage over ASDA. Cost leadership refers to the business being the low-cost producer or supplier of a specific quality product in a targeted industry.

Restriction

While considering the positioning of a school, director, or organization, they must be aware of certain limitations and take them into consideration.

In an administration, the highest level of authority is responsible for formulating strategies, while lower-level employees carry out the implementation. However, this can lead to issues such as conflicts. Directors may have ideal plans but they struggle to effectively communicate these plans to lower-level employees, resulting in unsuccessful execution. This lack of communication also leads to demotivation among employees (Susanne, R 2005).

The main focus of this theoretical model is its narrow scope. It only considers information that is economic or quantitative, ignoring important factors such as social, technological, or political information. This model also relies on predicting future trends based on current trends, which can change quickly for various reasons. If the only references used to predict trends are previous and current trends, the strategies implemented are likely to be unreliable.

Whittington - school of strategies

However, according to

Whittington, there are four types of strategy schools, and it would be incomplete to discuss strategic management without mentioning Whittington's theories.

Each theory focuses on the differences in human capability to think logically and act more efficiently. When facing these challenges, directors can analyze their own actions and determine which theory is most suitable for their needs. These four perspectives are considered important tools for the strategic management of businesses. Let's examine the figure below to see a summary of the four common theories: Tesco remains in an evolutionary phase as their strategy is to maintain low prices, offer promotions, and have a wide range of choices to attract more customers. When comparing the costs of Asda and Sainsbury with Tesco, it is evident that Tesco has significantly lower prices and also invests more in promotions compared to its competitors.

Additionally, customers who visit Tesco for discounted items not only purchase those particular products but also buy other essential items. As a result, despite offering more promotions and lower prices, Tesco continues to maintain their sales and budget. Therefore, adopting this strategy is the appropriate approach for Tesco to achieve increasing success in the future. Nevertheless, from a systematic standpoint, there is no superior strategy: "simply adhere to the local regulations".

The four approaches to strategy have diverse management recommendations. It is essential for organizations to comprehend and execute each approach in order to actively engage in the global market. Tesco's successful strategies are either already implemented or potentially applicable to achieve their goals and objectives.

Global Retail Strategic Decision

In today's retail industry, globalization has emerged as a challenging trend that has posed significant difficulties for many retailers in

the past twenty years.

Changes in consumer behavior greatly impact the operations of retailers in the local market. Consumer preferences, purchasing habits, and expenditures vary significantly in new market countries such as Brazil, Indonesia, and Thailand. Despite attempts by many retail businesses to expand into global markets, they have been unsuccessful. This section of the assignment focuses on understanding and preparing a global strategy for Tesco Plc.

The subdivision will use various analytical tools like Porter 5 Force, Porter Diamond scheme, Porter generic, and PLC theoretical account to analyze Tesco's position in the international market. This analysis will help the management in making strategic choices for corporate and global strategies, taking into account the challenges that may arise from operating in unfamiliar environments such as new customers, suppliers, and competitors in each country where Tesco expands.

Overview of Tesco's Strategy

Tesco PLC aims to increase its revenues by making itself more appealing to customers, thus attracting more people to shop with them. The reason behind their success is simple: millions more customers worldwide have chosen Tesco, leading to an increase of 10 million visits to their stores every week. In 1997, Tesco introduced their four-part strategy: a strong UK business, non-food retailing services, and international expansion.

Currently, Tesco is a global retail merchant known for their strength in non-food and retailing services. Although Tesco has implemented a successful strategy for the international market, they have encountered difficulties in some countries. For example, in 2002, Tesco faced challenges with expansion in Poland due to economic problems that increased their market presence costs. Additionally, in Taiwan in 2000, Tesco faced competition from Carrefour, a French retail giant. There are now speculations about

Tesco's withdrawal from Taiwan. These unsuccessful experiences have led Tesco to recognize the challenges of entering new international markets and the need to be more aware of the competitive market environment.

Poter's analysis is useful in evaluating the competitive environment of companies today.

Porter's Five Force

Discussion

According to Porter (1980), this model can be applied to various organizations. It examines the external environment and how it relates to the industry's structure. The goal of this analysis is to develop a strategy that allows companies to capitalize on opportunities and mitigate threats.

By implementing this strategy, one can achieve a competitive advantage in the market. This idea is derived from Porter's 5 forces model. The threat of new entrants is significant in the supermarket retail industry due to high barriers to entry, such as substantial initial investments and fixed costs, which discourage potential newcomers.

One additional obstacle for new entrants is the economic advantage gained by large supermarkets like Tesco. These supermarkets have the ability to purchase a significant percentage of goods at lower prices. On the other hand, smaller new entrants are more likely to purchase smaller quantities of goods at comparatively higher prices. New entrants must also consider that Tesco already has a loyal customer base.

The threat of replacements is a major concern for Tesco as their products are similar to those sold by other retailers. Tesco needs to assess the likelihood of customers switching to alternatives. In these situations, Tesco must ensure that buyers are satisfied with their products or services. Additionally, other companies in the industry may choose to compete on price, which will reduce profit margins. The bargaining power of suppliers is also significant as

consumers have the option to choose from various supermarket chains that offer competitive pricing and promotions. This gives suppliers leverage in negotiations.

However, Tesco is diversifying its suppliers by not only ordering from one large provider but also accepting a number of smaller ones. This, in turn, strengthens Tesco's bargaining power as it can switch to another provider if a particular one is charging too much. In addition, there is intense competition among major players in the global market like Carfoure and Wal-mart, who are aggressively vying to increase their market share.

Therefore, the grocery market is particularly ambitious.

Challenges

Tesco's scheme, construction, and competition are established on the model. Its scheme is authorize, with development being acted on from four countries: the nucleus UK food market concern, non-food, international enlargement, and retailing services such as fiscal services, the dotcom concern, and telecom bundles. Basically, Tesco is utilizing its strong stable nucleus to maintain the concern clicking over while it contrives new more risky countries of growing.

Porter Diamond scheme

Discussion

This scheme focuses on becoming the cheapest manufacturer in the industry. Tesco's divisions prioritize understanding and minimizing costs. If Tesco's prices can at least match or come close to the market average, then the low-cost manufacturer will earn the most profits. This strategy is typically associated with large companies that offer standard products with minimal differentiation, which are satisfactory for the majority of customers. Occasionally, a low-cost leader may sacrifice profit margins to increase sales, especially if it has a significant cost advantage over competitors, thus increasing its market share. In order to compete with discount retailers Aldi and Lidl, Tesco has

introduced a new low-cost food line in its supermarkets.

Tesco has to establish its own versions of the discount stores' products within its existing stores. This way, it hopes to keep its current customers satisfied while also attracting new ones.

Challenges

As the company faces new situations and makes small mistakes while experimenting and expanding, management gains a more realistic understanding of the foreign market. The need for learning through hands-on experience at the local level suggests that the learning process during internationalization is often gradual and iterative. Tesco realized that the opportunity to become a major player in France was unlikely to happen under the current conditions where obtaining planning licenses is difficult and performance evaluations are rigorous. As a result, Catteau became less strategically important. Tesco has learned that consultants can only provide advice but nothing more.

Investment banks are advised to avoid swearing or committing to any investment ventures today, especially in the European Union or UK markets where demand is continuously increasing. The overall effect will be a rise in oil prices and a liquidity crisis, which will ultimately result in decreased demand. Tesco, being a food retailer, will also face challenges as the food and agriculture industry experiences a surge in demand due to individuals prioritizing their basic needs. It is possible that Tesco may need to invest more in future food supplies. Additionally, the reliance on oil, gas, and coal as the foundation of major technological advancements poses another challenge for companies like Tesco. If they fail to adapt, they risk suffering the same fate as a UK retailer that closed its doors last winter.

Even Tesco could focus on E-commerce.

Product Life Cycle

( PLC )

Discussion

The PLC model is useful in explaining production models for certain types of products, like interchangeable consumer goods, but is less useful in predicting future patterns, especially in industries dominated by global players. The model presents dynamic comparative advantage. The country that has the comparative advantage in producing the product changes from the innovating (developed) country to the growing countries. Tesco is constantly expanding its business to stay competitive at a high level, so it is crucial for Tesco to invest in new services and products to fulfill customer's needs.

Tesco, a large supermarket chain, can use their customer loyalty to expand their product range. While groceries remain the main focus for Tesco, their website and stores also feature information on unrelated products. Tesco is introducing these new products and selling them to their existing customers to enter new markets. For example, they offer Tesco Finance and Insurance, where customers can apply for a Tesco credit card and savings account, products that would traditionally be obtained from a bank.

Tesco Direct, a catalogue shopping service, aims to compete with traditional catalogue retailers like Argos. By understanding the lifecycle of their products, Tesco identifies new areas to expand into. Currently, Tesco offers a range of electronic goods and services, but they lack affordable laptops. Dell and PC World are the leading retailers for low-priced laptops. In order to increase sales and productivity, Tesco needs to purchase quality laptops at competitive prices.

Challenges

Daniels (2007) states that due to rapid innovation, product lifecycles are very short, making it impossible to achieve cost reductions by relocating production from one country to another.

As previously mentioned,

Tesco is a global retail market that is expanding worldwide. Therefore, when moving into new markets and environments, Tesco must reduce costs and select the best products to compete with its rivals. One of the challenges Tesco faces in this competition is conducting thorough research on the environment in order to anticipate the best products that will outperform competitors in the global market.

Decision

In essence, all strategy schools and models serve as tools for obtaining strategic information and understanding various potential futures for a company. These frameworks help set goals and objectives for businesses, as well as determine investment decisions and resource allocation.

Thanks to the utilization of strategic theoretical models in operation, Tesco has actively participated and made significant advancements in the global market. This is evident from Tesco's success and growth in numerous countries worldwide.