Internal and External Environmental Analysis
Part I: Internal and External Environment of Different Businesses
Most of the companies in the United States are small enterprises and covered 95% of the entire business. However, whether small or large firm is, all are sharing the same concept of providing best values to the customers. Blankson (2002) claims that “the three major components of this strategy are employees of those firms, profit concept and the identified market segments for their business operations”. Marketing strategies are unique for every business organization in the United States. On the other hand, lacking in the marketing strategies and product orientation leads to a loss in business.
This report focuses on the analysis of internal and external environment of 2 companies. This report selects the big giant in retail business known as Tesco and Sainsbury. It carries out a thorough industry and market environment analysis. For this purpose, the report also examines macro and micro external and internal environment and the capabilities using a range of tools and techniques for each market situation. In addition, this report also includes a summary of SWOT and Pestle analysis of the company.
Mother NatureClick thumbnail to view full-size
In the engineering sector, the US firms are establishing their strategies in the areas of tools for hulking machines. A scholar writes that “however, proper implementation of market orientations is not enough; the companies are still achieving little progress towards the marketing and customer satisfaction aspects. Although, the firms will have to perform beyond this level in order to compete with their national and international competitors” (Rafiq, 1996).
In the fashion industry, different marketing strategies have studied by the researchers and analyzers. The purpose of these studies is to investigate the marketing tools that will help in the managerial decisions making policies. In the US, the most common practice in relation with an implementation point of view is the introduction of temporary stores like Italy fashion industry.
The universities of the US are also changing their strategies in terms of fund raising, infrastructure and introduction of additional educational courses as compared, to their competitors on the national stage as well as at international levels. An investigator writes that “many institutes are redesigned and giving their statuses as universities so that these institutions of higher education do not lose their market segments” (Naude, 1999).
EHPLUS-HDRClick thumbnail to view full-size
The studied threats of SWOT analysis for Tesco are increased labor wages in the United Kingdom, rigorous competitions, and complicated conditions of the international markets. Other threats include increasing tax and variations in the stock markets. According to researchers every organization should develop a plan and strategy for analyzing the competition and the extent to which it provides threats to the discriminating business. A review conducted by DATAMONITOR shows that “therefore, the most important responsibility of the manager is to scrutinize the nature of the business and then develop the strategic planning for goal formulation and implementation” (datamonitor.com, 2004). The service concept of Tesco is the introduction of online services. Tesco group primarily focus on marketing, providing easier service and new formats for controlling and advancement of its services in different geographical locations. Customer value and satisfactions are the major factors for consideration to the Tesco Group.
Furthermore, information technology in this era plays a very crucial role for providing facilities to the customers. Internet option reduces the operation cost and improving the sales in multiple terms. A business research analyzer writes that “Tesco uses this theme for satisfying the customer’s needs via online shopping through a web link of tesco.com; this innovation is improving the business and enhancing the profits” (Hall, 2012).
Episode 167: The External Business Environment
Creating Value and Sustaining Competitive advantage
The company can sustain competitive advantage with the help of combine effects of marketing management strategies and the effective use of internet leads Tesco, on the top as most strategic business symbol. Changing in the business strategies, with respect to the technological changes and due to the emergence of internet, Tesco modified its operations that are cost effective and profit generated. Tesco is before now a recognized brand with diversifications in terms of customers and their loyalties.
Internet and globalization have enhanced the competition among the United Kingdom supermarkets. These businesses are competing with each other as well as with the outer contestants and developing the online grocery purchasing concept in their businesses. One of the examples is Tesco as it is performing its operation not only on its default marketing models, but also using advanced modes of operations in the system of online grocery. Brassington & Pettitt (2006) commented that “Tesco is enhancing its relationship marketing and integrated communication channels.” A group of researchers write that “Tesco is delivering its best and retain its customers by giving them excellent value, executing high-quality services and providing them friendly experience of shopping. All these practices lead to the effective customer relationship” (Ma, et.al, 2010).
From the SWOT analysis of Tesco, its strengths are market leadership, strong performance and strong brand image. Tesco has a good return in the United Kingdom and now it is preceding its expansions in the international market. It is operating for offering low selling prices, and it is strong enough in both food and non-food stuff. Almost the market share of Tesco in non-food items was £75 billion. It also offers online business. An investigator reports that “Tesco is committed with good quality brand image which is further linked with the finest worth and valuable goods” (Hall, 2012). Tesco has a well-built market presence in South Korea as compared to its opponents. Wal-Mart One and Carrefour also entered in the South Korean market, but both the companies got failure because of the ineffective knowledge of culture over there. Tesco offers an online access for downloading almost 60,000 titles of DVDs, online games and online grocery shopping option for non-food items to its customers through Tesco.com by the service named as Tesco Direct. The non-food range includes electrical products, books, wine, stuffs related music and movies under an online roof that is Tesco Extra. Tesco has a powerful brand representation. It is associated with outstanding quality, reliable products that provide a good experience of shopping to the customers.
Website review presents the facts that “Tesco is one of the largest retailers in the United Kingdom and innovation with expansion is the core objective of its success. Tesco entered into non-food times like garments, electronic, fitness and beauty products, etc. and also providing retailing services in finance and telecom sectors. Its operations are proceeding in the Central Europe, East and the U.S.” (www.tescoplc.co.uk; Tesco: Corporate Responsibility Review 2008).
The overall assessment of the company is SWOT analysis, which includes the strengths, weaknesses, opportunities and threats. With the help of SWOT analysis companies monitor the external and internal marketing environments (Kotler & Keller, 2008). Figure 03 shows a diagrammatic representation of SWOT analysis.
Weaknesses & Opportunities
Tesco is majorly dependent in the United Kingdom markets. Its weaknesses are: exceedingly dependent on the UK and Europe markets, insufficient returns and fragile inventory earnings. Although, the company is still in expansion, but profits are limited because of bad debts, insurance claims and credit card issues.
Opportunities for Tesco are: selling surroundings in the Europe, non-food item sales and expansions in the markets of India and other regions. Tesco has chances expand in Asian countries. Because of the largest international grocer status, Tesco provides reimbursement for its customer such as an online directory for shopping and online transaction with the internet technology.
Do firms really consider their internal environments in strategic management?
Measurement guidelines to verify Strategic Effectiveness
With the help of Complex adaptive systems and strategic management guidelines, Tesco measures its strategic effectiveness for the processing of information, developing ideas that can help in the expansion of profit and customer satisfaction. Effective communications channels are establishing for promoting management and customer interactions. Introducing of chat rooms in the online grocery domain is the example of this strategy for taking its stakeholders with in its loop. A group of investigators report that “interconnections between the company and industry, and state of the art internet facility are also possible with CAS as per the business needs. Overall, CAS brings an opportunity for Tesco to maintain its competitive advantage supported by the technology and customer feedbacks in the region as well as across the border” (Hackney, et.al, 2006). Tesco is considering as the leader in the retailing business in the United Kingdom. The phenomena that are leading the Tesco, for this position is the hollowing of step by step strategic planning that all together drives the organization mission and vision.