Management Assignment: Strategic External Environment Faced by Tesco

Question

Task: Management Assignment Instructions: At a strategic level of decision making, a manager encounters problem that are largely unstructured and requires a great deal of judgment. Often decisions are unstructured and require consideration of several external variables that are beyond one’s direct control and are both complex and dynamic. As the Chief Executive Officer of an organization [of your choice] prepare an informed précis for your Board that presents a critical discourse on the strategic external environment that the company faces.

Answer

Introduction
Tesco is selected in the present context of management assignment which is a multinational groceries and merchandise retailer from England which is regarded to be the world’s third largest retailer in terms of revenue. The company was founded in the year 1919 by Jack Cohen and currently has diversified its business into a variety of areas including clothing, electronics, furniture, books, software, internet services, telecom, etc. As a Chief Executive officer of Tesco, following precis is being presented to the Board of the company in order to highlight a critical discourse on the strategic external environment faced by it.

Critical Discourse on Strategic External Environment Faced by the Company in Different Situations

The strategic external environment plays a key role in the process of strategy formulation for Tesco. Strategic decision making can be defined as the process in which the decisions are made on the basis of long term vision and goals which the help of unstructured information.

Brexit and its Economic Consequences

Brexit has created new challenges for the company as it has resulted in the increase in food prices which, in turn, has created a great impact on the sales of the company. The organizations also confronts pressure from various institutions and is required to balance global integration with the help of local adaptation. The organizations also required to ensure compliance with the European Union’s external tariffs on the goods which are imported from the non- European countries. These regulations have resulted into serious implications on the day to day operations of the organizations and therefore, the company is required to convert this challenge into an opportunity. The bigger organizations like Tesco will also face a mix of physical as well as technological checks for their monitoring with regard to its engagement in international trade. The companies will also face hurdles in obtaining the services from the migrant workers due to the restrictions created by Brexit (Chang, 2018).

Organizational Implications of Brexit

Brexit has significantly impacted the British firms and therefore, the multinational firms like Tesco are experiencing institutional pressures and need to balance in adapting to the local requirements while establishing a global integration. The organization is further required to adapt its organizational design as well as strategy in accordance with the new context. Large organization will also face hurdles in making acquisitions from other European countries. The heightened barriers with regard to trade will create the moving of goods across the borders a costly process. The barriers associated with trade are not limited with increased tariffs but also include the requirement for complying with verification and certification procedures for selling their goods and services within UK and EU (Moschieri and Blake, 2019).

Covid- 19

The ongoing COVID- 19 pandemic and subsequent lockdown have created an adverse situation for the economy of UK and for the smooth functioning of the operations of the organizations. There is a need for the organizations to act promptly as the cases are constantly rising. The number of deaths are also high which needs to be traced with the help of increased testing capacities. Different countries are adopting different response patterns in order to deal with their stage of the epidemic curve. The situation has impacted the country badly as it has led towards stay at home policy, ban of public gatherings, travel restrictions, etc. The companies are required to work with the help of remote workforce in those departments where possible in order to limit the spread of infection (McKinsey, 2020).

Consumer Panic Buying Developed During Covid- 19 Pandemic

Social media has played a severe role in creating panic buying among the customers. There are a number of reasons due to which consumers have resorted to panic buying such as uncertainties, buying as persuasion, insecurities, product unavailability proof, expert opinion and communication by the authorities. The rising cases of Covid-19 and the availability of real time information about the situation has further lead the consumers to ensure stockpiling of products. (Naeem, 2021)

Consumer’s Internet Shopping Behavior affected During Covid- 19 Pandemic

The internet shopping behavior of the consumers have been influenced during the COVID- 19 pandemic as a result of number of factors such as price, products, savings, administrative and security factors as well as psychological factors. The increased risk of getting infected with the virus has increased the demand and reliance on internet shopping by the consumers during the pandemic. The consumers were able to shop at their convenience and were able to get the products delivered at their doorstep. (Neger and Uddin, 2020)

Liability of the Supermarkets for Contaminated Food and Beverages

Nearly fifteen percent of the population across the globe is infected by foodborne diseases. The grocers, manufactures as well as supermarkets are suffer from the implications of food and beverage liability as they are governed by law of strict liability. They can be sued by the injured customers and therefore, food safety standards needs to be strictly handled for avoiding liability in respect of foodborne illnesses. (Cavico, Mujtaba, Muffler, Samuel and Polito, 2018)

Requirement for Improving Carbon Footprint of food and Packaging Waste Management

There is a significant contribution of retail sector towards waste production. Important role needs to be played by supermarkets in waste production and resource efficiency. More sustainable processes needs to be undertaken by supermarkets for managing environmental performance with the help of various waste management systems. The importance of recycling should also be duly understood by the supermarkets while designing the packaging of their products. Improvement programs needs to be designed by stores with the focus on reducing greenhouse gas emissions (Marrucci, Marchi and Daddi, 2020).

Virtual Supermarkets

Technology has created new challenges and situations for the supermarkets. It now requires the supermarkets to provide an high impact experience in the virtual supermarkets for ensuring customer engagement. A number of factors needs to be taken into consideration in this regard such as hypertexuality, interactivity, connectivity, etc. while designing virtual supermarkets. Immersive sensory experience needs to be provided for stimulating their minds. The technology is required to be used in the best possible manner for providing the best virtual experience to the customers. (Violante, Vezzetti and Piazzolla, 2019)

Conclusion
This report helps to conclude that external environment of Tesco is dynamic and is changing at a rapid pace. The company needs to adapt itself with these changes in order to meet the requirements of the customers and for standing out from the competition. Till now, the company has faced major challenges such as COVID- 19 pandemic and Brexit which has impacted its performance. However, the company is moving on the right path and is able to deal with these challenges and is capable of ensuring its smooth performance.

References
Cavico, F.J., Mujtaba, B.G., Muffler, S., Samuel, M. and Polito, N.M., 2018. Manufacturer, supermarket, and grocer liability for contaminated food and beverages due to negligence, warranty, and liability laws. Economy, 5(1), pp.17-39.

Chang, W.W., 2018. Brexit and its economic consequences. The world economy, 41(9), pp.2349-2373.

Marrucci, L., Marchi, M. and Daddi, T., 2020. Improving the carbon footprint of food and packaging waste management in a supermarket of the Italian retail sector. Waste Management, 105, pp.594-603.

McKinsey. 2020. COVID-19: Briefing materials- Global health and crisis response. McKinsey & Company.

Moschieri, C. and Blake, D.J., 2019. The organizational implications of Brexit. Journal of Organization Design, 8(1), pp.1-9.

Naeem, M., 2021. Do social media platforms develop consumer panic buying during the fear of Covid-19 pandemic. Journal of Retailing and Consumer Services, 58, p.102226.

Neger, M. and Uddin, B., 2020. Factors Affecting Consumers’ Internet Shopping Behavior During the COVID-19 Pandemic: Evidence From Bangladesh. Chinese Business Review, 19(3), pp.91-104.

Violante, M.G., Vezzetti, E. and Piazzolla, P., 2019. How to design a virtual reality experience that impacts the consumer engagement: the case of the virtual supermarket. International Journal on Interactive Design and Manufacturing (IJIDeM), 13(1), pp.243-262.