Marketing Management

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MARKETING MANAGEMENT

Marketing Management

Marketing Management

Introduction

Tesco Plc employs over 326,000 people and operates in 2,318 stores throughout 12 countries around the world. The company made a profit of £2,029m in 2005 and continues to show increased sales revenue. This report will give a critical and insightful analysis of Tesco's current strategy in order to discover what makes them so successful. It will analyse the relevant theories of corporate strategy and review how they are used by Tesco's strategic management.

Strategy Theoretical Perspectives

Strategic management relates to the managerial decisions that deal with the long term performance of the corporation. It determines the overall vision and direction of the company. Before management can implement a strategic option it is essential they understand its suitability. Suitability relates to how appropriate the option is to the organisation, firstly they must consider their strategic position. A number of concepts have been devised by theorists and managers can use them to give insight to their current position.

PESTEL - This is a technique that is generally used to assess the external factors on the business. By considering the political, economic, sociological, technological, legal and environmental factors it can help with understanding of the opportunities and threats that the environment poses. Together with a SWOT analysis the company can begin to identify how they could exploit the opportunities and avert threats. The problem with this technique is that it only assesses the current situation and does not consider how the environment may change in the future.

Porter's five Forces - This is a concept devised by Michael Porter, it is used to gain an understanding of the current state of the industry that the company is operating in. The five forces are; the threat of new entrants, bargaining power of buyers, threat of substitute products, bargaining powers of suppliers and the rivalry among current competitors. Following analysis using this technique, management will not have sufficient information to automatically generate a business strategy for the organisation. However, it will give a clear overview of the current market environment and give some direction to further investigations.

Value Chain - The value chain considers all key activities within the organisation and how they add value to the company. Michael Porter suggested that the activities could be grouped fewer than two headings; Primary and Secondary/Support. Primary activities directly contribute to creating and delivering a product, whereas secondary activities are not directly involved in the production of the product but may increase effectiveness or efficiency. In performing a value chain analysis the first step is to break down all the key activities under the major headings defined in the model. Secondly asses the possibilities of cost advantage or differentiation. And finally, apply a corporate strategy that focuses on the activities that will help the company gain a corporate advantage.

BCG Matrix - This concept was devised by the Boston Consulting Group. It is used to consider the balance of a portfolio of businesses in terms of the relationship between market share and market ...
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