Sample on Importance of Global Business Strategy for an Organization

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GLOBAL BUSINESS STRATEGY

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TABLE OF CONTENTS

INTRODUCTION ......................................................................................................................1

ACTIVITY 1 ..............................................................................................................................1

A) Techniques to analyze the Environment and their Suitability ..............................................1

B) Analysis of Micro and Macro Environment of Tesco ..........................................................3

Micro Environment Analysis ...............................................................................................3

Macro Environment Analysis ..............................................................................................4

C) Impact of International Business Environment on Tesco .....................................................6

D) Benefits, Opportunities and Challenges of Globalization to Tesco ......................................7

E) Extent of Globalization on Tesco ...................................................................................... 10

F) Structure of Different International Organizations ............................................................. 11

ACTIVITY 3 ............................................................................................................................ 12

Evaluation of International Operations of Tesco .................................................................... 12

CONCLUSION ......................................................................................................................... 13

REFERENCES ......................................................................................................................... 15


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INTRODUCTION

With the change in time, competition in the market place has been increased up to a

great extent and with this situation, it is required to incorporate sound business strategy so that

firm can be able to attain their set objectives in a desired manner. In this context, business

strategy can be understood as a strategic tactics that supports organization inn determining ways

from which they able to reach the set objectives over a period of time and hence attain it in a

desired format. Apart from this, it is also being observed that globalization also possess influence

over the business activities of organization and therefore it is require to set strategies by

considering it (Eshun, 2009). Beside this, firm being a profit making organization operates

within society and therefore it is required that they must be incorporated CSR (Corporate

Social Responsibility) practices with a motive to safeguard the interest of society at large. In this

respect, present report is prepared in order to attain deep insight of global business strategy along

with discussing the importance of CSR activities on business organization. For this purpose,

Tesco is being taken into account which is one of the retail giant of UK retail sector and possess

highest market share and profit margin (Immordino, 2009). Company posses their operations in

12 countries across North America, Asia and Europe.

ACTIVITY 1

A) Techniques to analyze the Environment and their Suitability

It is essential to analyses the business environment of an organization with a motive to

reframe strategies and tactics so that most effectual results can be attained through it. Same is

required by Tesco so that they are able to sustain in market for longer and can also strengthen

their activities in a desired manner. In order to analyze the environment of Tesco, tools like

PESTLE, five force analysis and organizational audit can be done so that they able to gain

information from every perspectives (Allio, 2006). PESTLE analysis possess huge scope in it as


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it aids in assessing the macro environment of Tesco. This involves analysis of firm on grounds

like political, economical, social, technological, environmental and legal. These are the factors

that possess high amount of influence over the business enterprise and also one is not in a

situation to control it in any manner. However, Tesco is able to frame their strategies in a

manner through which they are able to gain opportunities that lies in external environment

(Rowley, 2002). It is suitable in analyzing environment for Tesco because it offers information

of every nature which is utmost required while framing new strategies and practices for their

operations.

Apart from this, five force analysis aids in gaining information about the industry

competitiveness from which Tesco can be able to assess their strategies position within the

industry and hence on the basis of it, better practices can be entailed by them. It is suitable

because it delivers information over the industry attractiveness and hence they are able to take

strategic decision in a desired manner (Johnson and Scholes, 2002). Further, it also supports in

deciding whether to invest in certain activities or not and hence aids in assessing the feasibility of

any plan. This analysis tools along with PESTLE analysis offers fair ideas about the business

environment and areas that are influence organization majorly. Both activities essentially aids

in redrafting strategies that are appropriate for current business environment.

In addition to it, organizational audit assist in identifying the areas that requires

addressing and also it supports in matching standards that are required as per the external

environment. With this, Tesco is able to assess their organizational competency and weakness

so that they able to frame strategies in order to gain opportunities and benefits from external

business environment (Simmons and Lovegrove, 2005). It is suitable because this aids in

matching findings of the external environment than that of organizational setting from which

deviation can be rectified in a desired manner and also efficiency can be attained in this context.


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B) Analysis of Micro and Macro Environment of Tesco

Micro Environment Analysis

This can be articulate as small scale environment of a business enterprise that are under the

control of management and hence can be altered in a desired manner. For conducting micro

environment analysis, organizational audit is taken into account for Tesco. This majorly involves

customers, employees, competitors, suppliers and few others. Tesco offers quality products and

services that are being generally demanded by their retarget customer so that they are able to

gain loyalty from their side and hence retain majority of them on their side (Li and Solis, 2013).

With this practice, they able to enhance their market share in a significant manner and also able

to attain an edge over their rivals.

Moreover, they offer fair working environment to their employees in order to boost their

morale and productivity. This essentially supports a firm in gaining high amount of commitment

from their employee base and at the same time they are able to enhance their competency up to

a great extent.

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Global Business Strategy

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This gradually supported Tesco in emerging as a retail giant. Cited organization also

incorporates ethical practices while dealing with competition so that they able to retain their

brand image and also able to develop healthy relations with their competitors (Ireland, Hoskisson

and Hitt, 2010). Beside this, they make timely payment against their orders to the suppliers so

that a healthy bond can be developed between them. This aids Tesco in offering varied range of

products to their customers at the time of requirement and hence able to attain an edge over their

rivals. With this, it can be articulate that Tesco possess high amount of competitiveness in their

operations which certainly supports them in gaining high amount of benefit from their

operational market place and also they are able to boost their competency in a significant

manner (Hill, 2001).

Macro Environment Analysis

In order to conduct Macro environment analysis of Tesco, Pestle and five force analysis are

being taken into account so that better inferences can be drawn through it. These are as follows:

Pestle Analysis

Political and Legal factors: Company is highly being influenced by local and national

laws in the countries in which they possess their operations. This requires them to

redevelop their strategy in every operational market so they able to sustain them in a

effectual manner. Further, they also being influenced by employment laws of fair

working condition, fair remuneration and other related guidelines in order to ensure that

they are safeguard from several penalties imposed by government bodies (Wacker and

Lummus, 2002).

Economic and Environmental factors: Company are highly influenced with this factors as

they possess their operations in distinct market that lies under distinctive economic

setting. Also, deviation rised in operations at the time of recession in UKand this


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certainly makes an impact over their profit margin also (Singer and et. al. 2008). Beside

this, inflation and change in foreign exchange is another area that affects the effectiveness

of an organization.

Social factors: With the change in demographic factors of their consumes and also due to

deviations in the consumer behavior, demand of different set of products got shifted. For

instance, now a days demand of ready to eat food got increased with the rise in ratio of

working customers. This requires them to enhance their product portfolio so that different

needs of customers can ne fulfilled (Oetinger, 2004).

Technological Factors: Company is highly adhere to technological factors and hence they

able to gain benefits in this regard. They are able to serve their customers in a desired

manner and hence also able to gain loyalty from their customers.

Five Force Analysis

Threats of New Entrants: Moderate- It requires high capital in starting a new retail

chain but by seeking lucrativeness of retail sector, few of the participants can enter in this

sector (Kourdi, 2010). Further, there exist low product differentiation and also possess

very nominal switching cost which signifies the situation that Tesco can loose their

customers with the entry of new players.

Threat of Substitute Products: Low- As such there is no substitute to grocery products

and this signifies that there is a low threat from substitute products.

Bargaining Power of Suppliers: High- This industry works due to suppliers especially for

farm products and this replicates that supplier possess high bargaining power. This

affects the profitability of the firmtoo (Howell, 2009).


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Bargaining Power of Customers: Moderate- There exist wide range of buyers but has low

buying volumes. Also, there is standardized products which leads to moderate bargaining

power of customers.

Extent of Rivalry: High- There exist wide range of companies in retail sector that leads to

a cut throat competition within the industry (Steiner, 2010). With this, Tesco reframe

their strategies on regular basis so that they are able to attract large set of audience of

their side.

With this analysis, it is being found that company owns a strategic position in their

operational markets and hence able to manage their business operations in a highly dynamic

environment. However, there are few areas that needs to be addressed by Tesco in order to

ensure that they are able to sustain in market for longer. For this, they must offer products and

services as per the needs and wants of the customers in order to gain loyalty from their side.

C) Impact of International Business Environment on Tesco

International business environment possess high amount of uncertainty in their scope and

this certainly makes an impact over the business activity, same is the scenario with Tesco and

hence they have to frame appropriate strategies in this context so that they able to gain their

objectives in an effective manner. Company possess their operations in Asia, North America and

Europe that owns high deviation in cultural, political and legal settings. With this, they have to

frame different strategies for different operational market so that theyare able to run their

business in an effective manner (Simerson, 2011). This deviation affects their effectiveness and

also hampers their profit margin. Further, they have to reframe their organizational rules and

regulations in order to ensure that they are able to meet out with regional requirements in a

desired manner. Further, political situation also makes an impact over the business activity of

Tesco and hence they have to frame their working format in a manner through which are able


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to operate those markets effectively. For instance, in Singapore they have to adhere to legal

requirement in the context of employment and profit sharing up to a great extent which certainly

affects their profitability and hence they have to develop different set of strategies for this

purpose (Kambil, 2008).

Further, every country holds different types of apex bodies that aids in enforcing rules

and regulation regarding employment, competition, pricing strategy, procurement of materials

and disseminate of profits. In this context, Tesco needs to abide every rules and regulations so

that better results can be attained through it. With this situation, they have to make changes in

their operational settings and working criteria that may impact in terms of deviation in their

operational efficiency. Further, economic situation is another aspect that cause an impact over

the operations of Tesco (John, 2005). Recently, recession in Europe affects its sales and hence

their profit margin declined up to a great extent. With this discussion, it can be articulate that

international business environment certainly makes an impact over the efficiency of the

organization and at the same time influences them in making continuous improvement in their

operational strategies and practices (Griffith, 2012).

D) Benefits, Opportunities and Challenges of Globalization to Tesco

Globalization can be understood as a framework that supports in integrating economy of one

country with that of global economy. With this rise in time, globalization increased up to a great

extent from which different set of benefits and advantages being attained by organization

throughout globe (Bryson, 2011). In this context, benefits that are attained by Tesco from

globalization are as follows:

Free trade: This certainly supported Tesco in conducting free trade among different

countries from which they able to enhance their customer base in a significant manner.

Moreover, it aids in reducing the price of goods that are being imported from other


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countries with the help of globalization (Neely, 2007). They are also able to strengthen

their producst portfolio with this practice that certainly supported in meeting out with the

diverse needs of customers.

Free movement of labor: Further, company able to involve wide range of individuals that

belong to other nations and this setting aids them in framing strategies and practices

through which they are able to frame strategies as per the needs of varied customers

(Carlsson, 2003). Moreover, this situation aids them in developing a diverse employee

base which assist them in addressing external factors in an effective and efficient manner.

Increased Economies of Scale: With this, Tesco is able to boost their economies by

procuring goods from the source that cost them least and this particular setting supported

them in attaining higher operational efficiency. Additionally, profit margin of Tesco also

gets boosted with globalization and hence they able to sustain in an effective manner

(Linn, 2008).

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Besides benefits, there are various opportunities that are being attained by Tesco from

globalization. These are as follows:

Expansion: Globalization offers an opportunity to expand the business operation of Tesco

in different regions of the world in order to gain benefits that lies in different market

place. With this, Tesco possess an option in boosting their market share further by

entering in market that are unexplored by them (Delaney, 2004). This aids them in

attaining an edge over their rivals in a significant manner.

Technological Advancements: Further, Tesco is able to incorporate technological

advancements in their operations that essentially helped them in attaining different set of

opportunities that lies in foreign market.

Better product development: Tesco with the help of globalization is able to develop

their products and services in a desired manner from which they are able to attract large

set of audience on their side (Turki, 2011). Moreover, it assisted in offering services to

different customer as per clients requirement and this aids in attaining loyalty from their

side. This also emerged as an opportunity from globalization.

On the other hand, there are various challenges that are being faced by Tesco with the rise of

globalization and hence affected their operations. These are as follows:

High competition: Globalization opens the door for foreign players and also supported in

developing a platform from which one is able to make trade activities without any

restriction from local bodies. With this, wide range of organization entered into a specific

market and hence this leads to high amount of competition for Tesco (Chiware, 2010).

This also affected the marketing efficiency of cited organization.

Cultural Diversity: Tesco being a British firm are familiar with the culture of Britain but

when they enter into another operational market, then they have to frame strategies


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through which they are able to meet the cultural settings of different regions. This

certainly affected their operations and also makes an impact over their efficiency

(Klebanoff, 2012).

Technical development: Further, every countries possess different set of technical

assistance and hence this affects the operations of Tesco in procuring goods of varied

nature. With this, they are not able to manage their operations in a desired manner and

hence it affects their productivity.

E) Extent of Globalization on Tesco

Globalization gradually increased up to a great extent in modern era and this has supported

firms like Tesco in boosting their market share and also in attaining different set of benefits from

different operational markets. With globalization, Tesco is able to make free trade among

different countries of Asia, North America and Europe. With this, they are able to develop their

own distinctive image in front of target audience and hence able to enhance their sale volume up

to a significant level (Valvi and Fragkos, 2013). Moreover, it supported them in procuring goods

from different regions so that ultimate needs of customer can be satisfied in an effectual manner.

Moreover, globalization aided in making free labor movement within the operational areas of

Tesco and this supported firm in getting rid from labor shortage. Also, this assisted firm in

developing a team with diverse employees through which they able to frame strategies as per the

needs and wants of the customers (Carlsson, 2003). Globalization also aided in exchanging the

culture through which company able to sustain in every region without any deviation. With this,

better development of products and services can be done and hence overall efficiency of

operations get increased. Company now able to operate effectively in different regions and now

also able to boost their sales volume in a significant manner. Apart from this, Tesco is being

viewed as high technologically developed organization that possess both physical as well as

online stores in order to meet out with diverse needs of customers (Kourdi, 2010). This is the


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situation with the extent of globalization and hence they are able to meet out with diverse

needs of customers in a significant manner. Additionally, they able to offer quality services to

customers and hence able to gain loyalty from their side. Beside this, they are able to call for

capital from foreign investors also in order to meet out their financial needs (Ireland, Hoskisson

and Hitt, 2010). This helps in boosting their image in international context and hence their brand

value gets increased with the help of globalization.

F) Structure of Different International Organizations

International market possess wide range of activities that needs to be performed in a timely

manner so that business objectives can be attained in a particular manner. For this purpose, it is

required that organization must incorporate different set of structures so that better managing of

activities can be attained. In this context, there are different set of structures that are being

followed by international firm in order to run their global operations in a desired manner. These

are functional, divisional and matrix structure. Under functional, each set of uniform activities

are being grouped together in order to frame a department so that operations can be conducted in

a desired manner (Simmons and Lovegrove, 2005). Under this, marketing team, research team,

sales team, operations teams and other related works as a department so that each task can be

accomplished in a desired manner. This is being followed by organizations like Nike, Marriott,

Nokia and other with a purpose to attain their organizational objectives in a desired manner.

Another set of organizational structure is divisional structure which is usually being

followed by giant organization that are spread on different geographical areas. Under this, each

unit works as a system without any influence from head office. This is the structure which is

being followed by Tesco, Wall Mart, Apple, Microsoft and others. This aids them in

maintaining standardization in their bushiness activity and also be able to achieve their targets

in a significant manner (Valvi and Fragkos, 2013). Also, this set of structure possess formal


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communication in their operations in order to ensure that each set of activity is being executed in

a desired manner. Further, matrix can be articulated as hybrid structure that involves both

divisional and functional structure. This is the system that possess high amount of flexibility so

that better organizational activities can be attained. It is the system that is majorly being

followed by international production unit such as Ford, Chevrolet, Yamaha, Honda, steel

manufacturing firm and other production unit (Linn, 2008). With this model, firm can be able

to alter their structure at any point of time as per the needs and wants of management and hence

aids in attaining organizational effectiveness.

ACTIVITY 3

Evaluation of International Operations of Tesco

Tesco being a multinational retail organization able to manage their operations in more than

12 countries throughout globe and hence able to enhance their market share significantly.

Company possess different set of products and services that are standard in every outlet that is

gradually supporting them in meeting out the needs of customers in a desired manner. Further,

they offer products from both physical as well as from online stores in order to ensure that they

deliver high amount of comfort to their customers (Eshun, 2009). With this, sales volume of

Tesco certainly increased up to a great extent in every region and hence they are able to attain

an edge over their rivals like ASDA, Morrison, etc.

Further, it is also being observed that they possess technological advanced services in

their operations with a motive to ensure high customer loyalty. Also, it aids in acquiring

customers of other brands also and hence it gradually leads to boosting of their operational

efficiency. Contrary, they seek that each set of cultural requirement meets in a manner so that

sympathy from customers can be attained that assist them in boosting their sales volume. It is

also being viewed that they offer products as per the needs and wants of customers and this


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particular practice of Tesco supports them in attaining an edge over their existing rivals of

different region (Oetinger, 2004). Additionally, they abide rules and regulation of every region in

a required manner which aids them in sustaining efficiently in international markets and also

supports them in gaining opportunities of different market place. Also, they possess sound

segmentation and targeting criteria through which they able to boost their sales volume and also

it helps in achieving their short term goals in an effective manner (Wacker and Lummus, 2002).

However, it is being required by the firm that they must expand in different regions for the

purpose of boosting their efficiency further. It is required that they must enter into market like

Middle East, Gulf region, India and other related so that they are able to boost their operations

in much effective manner (Li and Solis, 2013).

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CONCLUSION

Hence, with the help of this strategy it can be articulate that business strategy is one of key

elements that supports organization in attaining their objectives in a significant manner and also

it acts as a path through which operational efficiency can be increased. Tesco being a retail giant

is able to incorporate different set of strategies in their operations through which they are

able to boost their competency and efficiency in a desired manner. Further, it acts as a path for

boosting their market share and also to retain majority of customers on their side.


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REFERENCES

Allio, M., 2006. Practical strategy development: a wise investment for middle market

businesses. Journal of Business Strategy.

Bryson, M. J., 2011. Strategic Planning for Public and Nonprofit Organizations: A Guide to

Strengthening and Sustaining Organizational Achievement. John Wiley & Sons.

Carlsson, R., 2003. The benefits of active ownership. Corporate Governance.

Chiware, E., 2010. Positioning the technological university library in higher education and

human resources development in Africa. Library Management.

Eshun, P. J., 2009. Business incubation as strategy. Business Strategy Series.

Hill, L., 2001. Resources, Resistances, and Economic Growth. International Journal of

Social Economics.

Howell, T. M., 2009. Critical Success Factors: The Measurable Path to Success. Taylor and

Francis.

Immordino, M. K., 2009. Organizational Assessment and Improvement in the Public Sector.

CRC Press.

Ireland, D. R., Hoskisson, E. R. and Hitt, A. M., 2010. Understanding Business Strategy

Concepts Plus, 3rd ed. Concepts Plus. Cengage Learning.

John, R., 2005. Global Business Strategy. Cengage Learning EMEA.

Johnson, G. and Scholes, K., 2002. Exploring Corporate Strategy. Prentice Hall.

Kambil, A., 2008. Purposeful abstractions: thoughts on creating business network

models. Journal of Business Strategy.


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